Bipartisan Tax Bill Awaits Senate Action; New Data Show Child Tax Credit’s Impact on Rural Children

While the bipartisan tax bill has yet to reach debate or a vote in the U.S. Senate, new data from the Center on Budget and Policy Priorities reveal that changes made by the bill to the Child Tax Credit (CTC) would benefit children in rural areas. The tax bill – which expands the Child Tax Credit (CTC) but does not include key reforms to the Low-Income Housing Tax Credit (LIHTC) – was passed by the U.S. House of Representatives on January 31 (see Memo 2/5). Take action to urge your Senators to include reforms to LIHTC in the bill so the credit better serves extremely low-income households, including those experiencing homelessness.

The Center on Budget and Policy Priorities (CBPP) reported last week that an estimated 16 million children in families with low incomes would benefit from the CTC expansion in the House-passed “Tax Relief for American Families and Workers Act of 2024” (H.R. 7024). The proposed improvements in the tax bill mean that an estimated 27% of children under 17 living in rural areas would benefit from the Child Tax Credit in the first year of the bill’s implementation. Comparatively, 22% of children under 17 living in metropolitan areas would benefit from the CTC improvements if the bill passes the Senate and is signed by President Biden.

While the changes to the CTC would positively impact low-income families, LIHTC is still largely inaccessible to rural communities, and LIHTC provisions in the tax bill neglect reforms that would make housing in rural areas more affordable to those most in need. NLIHC will continue monitoring the legislation as it moves to the Senate and keep calling on advocates to urge their Senators to adopt key reforms in any expansion of LIHTC.

The tax bill would restore a temporary 12.5% increase to LIHTC and support the use of private activity bonds to finance affordable housing. However, expanding LIHTC without making key reforms would leave LIHTC-supported homes unaffordable for the people who need them most. LIHTC, on its own, rarely suffices to support the building or preservation of homes affordable to households with the greatest needs because the credit is targeted to the construction of homes affordable to households earning up to 60% of area median income. As a result, extremely low-income households can generally only afford rent in a LIHTC development if they 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 CBPP’s article, “House-Passed Bipartisan Tax Bill’s Child Tax Credit Expansion Would Especially Help Children Living in Rural Areas,” here.