To amend the Internal Revenue Code of 1986 to reform the low-income housing credit, and for other purposes.
Sponsors
Legislative Progress
IntroducedMr. Young (for himself, Ms. Cantwell, Mrs. Blackburn, Mr. Wyden, …
Summary
What This Bill Does
The Affordable Housing Credit Improvement Act of 2025 significantly expands and strengthens the federal Low-Income Housing Tax Credit (LIHTC) program, the nation's primary tool for financing affordable rental housing. It more than doubles state allocation authority from $1.75 to $4.25 per capita, broadens geographic eligibility to include rural areas and Native American lands, and reduces barriers to housing development.
Who Benefits and How
Affordable housing developers and investors benefit substantially through increased tax credit allocations, new 30-50% basis boosts for projects in rural areas, Indian areas, and those serving extremely low-income households, and reduced bond financing thresholds (from 50% to 25%). Developers also gain from provisions allowing relocation costs to count as rehabilitation expenditures and exemptions from basis reductions when claiming energy efficiency deductions.
Low and moderate-income renters benefit from expanded housing production, stronger tenant protections (including domestic violence protections), and reduced barriers to access for veterans, students with disabilities, former foster youth, and Section 8 voucher holders.
Native American and Alaska Native communities benefit from new requirements that states consider their housing needs and designation of Indian areas as difficult development areas eligible for enhanced credits.
Rural communities benefit from inclusion as difficult development areas and uniform income eligibility rules that simplify development.
Who Bears the Burden and How
Federal taxpayers bear the cost of significantly expanded tax expenditures through higher credit allocations and new basis boosts. The bill does not include a cost estimate, but the expansion of state allocations alone represents roughly a 143% increase.
Local governments lose influence over affordable housing placement, as the bill prohibits states from considering local political support or opposition when allocating credits.
Property speculators face new restrictions on acquisition basis for buildings flipped within 10 years, limiting profits from quick resales.
State housing agencies face increased compliance burdens including new cost oversight requirements and consideration of Native American housing needs.
Key Provisions
- Increases per capita state housing credit allocation from $1.75 to $4.25 and minimum allocation from $2 million to $4.876 million
- Designates rural areas and Indian areas as difficult development areas eligible for 30% basis boost
- Creates new 50% basis boost for projects serving extremely low-income households (30% AMI or below)
- Reduces tax-exempt bond financing threshold from 50% to 25% for 4% credit eligibility
- Extends disaster reconstruction period to 37 months without credit recapture
- Prohibits states from considering local political support/opposition in credit allocation (anti-NIMBY provision)
- Expands tenant eligibility to include student veterans, persons with disabilities, domestic violence survivors, and former foster youth
- Requires LIHTC properties to protect domestic violence victims from eviction
- Renames the program from "Low-Income Housing Tax Credit" to "Affordable Housing Tax Credit"
Evidence Chain:
This summary is derived from the structured analysis below. See "Detailed Analysis" for per-title beneficiaries/burden bearers with clause-level evidence links.
Primary Purpose
Expands and strengthens the Low-Income Housing Tax Credit (LIHTC) program under Section 42 of the Internal Revenue Code by increasing state allocations, broadening eligibility criteria, and improving program administration to increase affordable housing production.
Policy Domains
Legislative Strategy
"Significantly expand affordable housing production by increasing tax credit allocations, broadening geographic eligibility (rural areas, Indian areas, difficult development areas), protecting vulnerable tenants, and streamlining program administration."
Likely Beneficiaries
- Real estate developers and investors building affordable housing (increased tax credits)
- Low and moderate income renters (more affordable housing units)
- Native American tribes and tribally designated housing entities (new difficult development area designation)
- Rural communities (rural area inclusion as difficult development areas)
- Extremely low-income households at or below 30% AMI (enhanced credits for ELI projects)
- Victims of domestic violence (enhanced tenant protections)
- Student veterans, married students, and former foster youth (expanded eligibility)
- State housing finance agencies (more allocation authority, reduced local political interference)
Likely Burden Bearers
- Federal government/taxpayers (forgone tax revenue from expanded credits)
- Local governments (reduced ability to influence LIHTC project locations)
- Current LIHTC property owners (restrictions on planned foreclosures to exit program)
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "the_secretary"
- → Secretary of the Treasury
- "housing_credit_agency"
- → State housing credit agency
- "the_secretary"
- → Secretary of the Treasury
- "housing_credit_agency"
- → State housing credit agency
- "the_secretary"
- → Secretary of the Treasury
- "applicable_housing_credit_agency"
- → State housing credit agency
- "indian_tribal_government"
- → Indian tribal government or Alaska Native corporation
- "tribally_designated_housing_entity"
- → Tribally designated housing entity under NAHASDA
- "housing_credit_agency"
- → State housing credit agency
Key Definitions
Terms defined in this bill
A project meets average income requirements if it meets the minimum requirements specified in section 42(g)(1)(C), allowing projects to serve households at varying income levels averaging to the required threshold.
A casualty loss that is the result of a Federally declared disaster.
For 2025: ,876,000 minimum floor for small states; adjusted for inflation in subsequent years.
A census tract designated by HUD where the average income does not exceed a specified percentage of area median gross income.
For 2025: .25 per capita; for 2026: 1.25 times the 2025 amount adjusted for cost-of-living; after 2026: adjusted annually for inflation.
Any Indian area as defined in section 4(11) of the Native American Housing Assistance and Self Determination Act of 1996 (25 U.S.C. 4103(11)) and any housing area as defined in section 801(5) of such Act.
Any non-metropolitan area, or any rural area as defined by section 520 of the Housing Act of 1949, which is identified by the qualified allocation plan.
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology