Tax deal restores the 12.5 percent LIHTC Boost and Lowers 50 Percent Bond Financing Threshold through 2025.
This past Friday, the House Ways and Means Committee, chaired by Jason Smith (R-MO), passed The Tax Relief for American Families and Workers Act of 2024, a bipartisan tax package worth $78 million. During the markup, Affordable Housing Credit Improvement Act (AHCIA) lead sponsor Rep. Darin LaHood (R-IL) highlighted the Housing Credit provisions in the bill, and submitted to the record the industry letter signed by 88 national and state associations – including TAAHP. The legislation was approved with overwhelming bipartisan support on a 40–3 vote.
If enacted, this legislation would:
- 1) Restore the 12.5 percent increase in annual 9% low-income housing tax credit (LIHTC) allocations for 2023-2025. The provision in this agreement would not extend the 12.5 percent retroactively for 2022, but would restore it retroactively for 2023 and keep the provision in place for the next two years.
- 2) Lower the 50 percent bond financing threshold to 30 percent for Private Activity Bonds (PAB) issued before 2026 and placed in service after December 31, 2023.
According to Novogradac, these approved provisions are estimated to finance over 200,000 additional affordable homes than otherwise possible. It would also position both priorities for potential extension in 2025, when Congress is expected to enact major tax legislation due to the expiration of most provisions that were included in the Tax Cuts and Jobs Act of 2017 and now this current tax legislation.
The approval of this deal is just the first step. Congress has less than two weeks to enact the deal into law in advance of tax filing season, and the path to passage remains unclear. Potential avenues include positioning it as a standalone bill or attached to another legislative vehicle like an appropriations deal, both of which present logistical challenges. However, the strong bipartisan support displayed last week by the Ways and Means Committee keeps us optimistic about the final enactment of these provisions.
We are grateful for the advocacy and support from all our industry partners and TAAHP members. This wouldn’t have been possible without your hard work.