The U.S. House of Representatives passed a bipartisan tax bill, the “Tax Relief for American Families and Workers Act of 2024” (H.R. 7024), by a vote of 357 to 70 on January 31. In a victory for low-income families, the bill expands the Child Tax Credit (CTC), though families with incomes below $50,000 report spending nearly a third of their CTC payments on rent. Meanwhile, though the tax bill includes provisions to expand the Low-Income Housing Tax Credit (LIHTC), key reforms to LIHTC were left out of the bill. Expanding LIHTC without reforms means that many LIHTC-supported homes will remain unaffordable for the people who need them most. NLIHC will continue monitoring the legislation as it moves to the U.S. Senate and will keep calling on advocates to urge their Senators to adopt key reforms in any future expansion of LIHTC.
The “Tax Relief for American Families and Workers Act of 2024” (H.R. 7024) includes provisions to enhance the Child Tax Credit, expand business tax credits for research and development, support communities impacted by disasters with small business tax credits, end a pandemic-era employee retention tax credit, and expand the LIHTC. In the case of LIHTC expansion, the tax bill would restore a temporary 12.5% increase and support the use of private activity bonds to finance affordable housing.
The bill passed on January 31 after a brief period of debate in which members of the House Freedom Caucus argued that the CTC expansion would result in an unwelcome growth of the “welfare state.” Meanwhile, House Appropriations leader Representative Rosa DeLauro (D-CT) argued that because the business tax breaks included in the bill far outnumber the benefits for working families, the bill does not achieve parity between working families and corporate interests.
Senator Ron Wyden (D-OR), chair of the Senate’s Committee on Finance and lead author of the bill along with House Ways & Means Committee Chair Representative Jason Smith (R-MO), called the House’s passage of the tax bill a “real victory.” Congressional Progressive Caucus chair Representative Pramila Jayapal (D-WA) also celebrated passage of the bill, particularly the impact CTC expansion would have on working families, while also drawing attention to the unfinished business involving LIHTC reform. “[A]s Washington State grapples with a shortage of more than 170,000 affordable housing units, this package was a missed opportunity to support new permanent housing for people experiencing homelessness and other extremely low-income households through LIHTC,” said Rep. Jayapal.
LIHTC is the nation’s primary source of financing for the construction and preservation of affordable housing. However, on its own, the tax credit rarely suffices to support the building or preservation of homes affordable to households with the greatest needs. LIHTC is targeted to build homes affordable to households earning up to 50% or 60% of the area median income. As a result, extremely low-income households can generally only afford rent in a LIHTC development if they also receive rental assistance. The majority (58%) of extremely low-income renters living in LIHTC developments who do not receive rental assistance are severely cost burdened, paying more than half their limited incomes on rent. One emergency or unexpected expense can send these households into homelessness.
Read the text of the “Tax Relief for American Families and Workers Act of 2024” here.
Read NLIHC’s statement on the tax bill here.
Read NLIHC President and CEO Diane Yentel’s tweet thread on the bill here.
Read Congressional Progressive Caucus chair Rep. Jayapal’s statement on the bill here.