Low Income Housing Tax Credit (LIHTC)

The low-income housing tax credit (LIHTC) is a federal incentive for new construction and redevelopment. It is an efficient, market-based housing solution that relies on the private sector to finance, build, and operate affordable housing.ย 

Under the successful LIHTC program, states can award housing credits based on their own affordable housing priorities. They can target credits to housing units dedicated to certain populations such as seniors or veterans, or to specific regions most in need of affordable housing.

In many parts of the country, there is a severe shortage of affordable and workforce housing. Supply constraints, often related to restrictive state and local policies, exacerbate the problem. 

Position

Congress should significantly expand the low-income housing tax credit (LIHTC), along the lines of the Affordable Housing Credit Improvements Act (H.R. 3238ย andย S. 1557). The legislation would create and preserve more than two million affordable homes, support three million jobs, and generate $119 billion in sustainable tax revenue. The AHCIA was introduced in May 2023.

The Roundtable supports well-designed government programs such as the LIHTC that seek to increase the nationโ€™s stock of affordable, workforce, and market-rate housing. At the same time, The Roundtable opposes well-intentioned but poorly designed rent control regimes that distort markets, depress business investment, and contribute to housing shortages.

 

Background

Aย summary of the Affordable Housing Credit Improvements Act (AHCIA) โ€“ introduced in May 2023 โ€“ outlines its many provisions aimed at expanding and improving the application of the LIHTC, (among several other Roundtable-supported proposals)to increase the supply of affordable housing.

The legislation (H.R. 3238ย andย S. 1557) is led by Sens. Maria Cantwell (D-WA) and Todd Young (R-IN), along with Reps. Darin LaHood (R-IL) and Suzan DelBene (D-WA).

President Biden’s budget proposal submitted in 2023 would also expand the LIHTC, which subsidizes the production of rental housing for income-eligible tenants and is the largest federal incentive for affordable housing construction and rehabilitation.

The LIHTC It is one of many federal government housing assistance programs, which include portable vouchers that can be used in the private market; project-based rental assistance that provides subsidized rent in designated, private buildings; and subsidized rent in publicly owned buildings (public housing).

Since its inception in 1986, the LIHTC has financed the development of nearly 3.5 million affordable rental homes that house over eight million low-income households.

For more information and recent updates, reference our resources below.

Resources
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Affordable Housing
Expanding Housing Supply: Fannie Mae & Freddie Mac
Low Income Housing Tax Credit (LIHTC)
IRS Limitations on Private-Activity Bonds (PABs)
"YES In My Backyard" (YIMBY)
Surplus Federal Real Estate for Affordable Housing