Senator Ron Wyden (D-OR), chair of the U.S. Senate Committee on Finance, and Representative Jason Smith (R-MO), chair of the U.S. House of Representatives Committee on Ways and Means, released legislative text for their previously announced framework for a bipartisan tax bill (see Memo, 1/16). The tax bill includes provisions to expand the Child Tax Credit (CTC) in exchange for extending corporate tax cuts that had been set to expire, as well as provisions that expand the Low-Income Housing Tax Credit (LIHTC). However, the bill fails to include key reforms that would increase the affordability and accessibility of homes financed by LIHTC to people with the lowest incomes. NLIHC has released a statement on the tax bill and the continued need for federal affordable housing investments, and NLIHC President and CEO Diane Yentel summarized the urgent need for reforms on X (formerly Twitter).
Senator Wyden and Representative Smith created the framework for the bill, which will be introduced as the “Tax Relief for American Families and Workers Act of 2024.” The legislation (H.R.7024) was also amended in a House Ways and Means Committee markup held on January 19. The bill 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, expand the Low-Income Housing Tax Credit (LIHTC), and end a pandemic-era employee retention tax credit. In the case of LIHTC, the tax bill would restore a temporary 12.5% increase and support the use of private activity bonds to finance affordable housing. During the January 19 House Ways and Means Committee markup, several members of Congress cited the need for LIHTC reforms, but amendments to add such reforms failed or were withdrawn. Representative Gwen Moore (D-WI) called the tax bill a “missed opportunity.” She noted her appreciation for LIHTC changes, but observed that the bill would not help Tribal communities in any way. Ultimately, the legislation passed with amendments by a 40-3 vote, with Representatives Moore (D-WI), Sanchez (D-CA), and Doggett (D-TX) voting against it.
While the legislation expands LIHTC, it fails to include key reforms to ensure homes built with LIHTC are affordable to the lowest income and most marginalized households, including those experiencing homelessness. NLIHC has advocated for three key reforms to be included in any LIHTC expansion: a 20% set aside of tax credits for extremely low-income households or those experiencing homelessness; and the designation of both rural and Tribal communities as “difficult development areas” (DDAs), which would boost housing development.
By failing to include these critical reforms to LIHTC in the tax bill, Congress has continued to neglect the housing needs of those most at risk of homelessness. Most notably, and in the wake of HUD’s report showing the highest recorded levels of homelessness, Congress has failed to use a legislative vehicle – this time, the tax package – to serve those most vulnerable. LIHTC is the nation’s primary source of financing for the construction and preservation of affordable housing, but on its own, the tax credit is rarely used to build or preserve homes affordable to households with the greatest and clearest needs.
Take Action!
It is not too late to urge your members of Congress to include LIHTC reforms in any upcoming tax legislation. While the tax bill has passed out of committee in the House, it remains yet to pass in the full House or Senate. Take action today:
- Contact your members of Congress and urge them to include key reforms to the Low-Income Housing Tax Credit (LIHTC) in any tax legislation so the nation’s largest source of federal financing for affordable housing can better serve rural and tribal areas, as well as those most at risk of homelessness. These bipartisan reforms – included in the “Affordable Housing Credit Improvement Act,” endorsed by over 200 members of Congress – would:
- Expand the Extremely Low-Income (ELI) Basis Boost for housing developments that set aside at least 20% of units for households with extremely low incomes or those experiencing homelessness.
- Designate Tribal and rural communities as “Difficult Development Areas” (DDAs), which would make it more financially feasible for developers to build affordable homes in these areas.
- Additionally, any federal investment in “middle-income housing,” such as that included in the “DASH Act” (S.680/H.R.6970), would be a wasteful and misguided use of federal funds. To address housing costs for middle-income households, Congress should pass legislation incentivizing or requiring local and state governments to address restrictive zoning and land use policies that prevent the private sector from building homes and drive up the costs for all renters. Read more about the Middle-Income Tax Credit here.
Read the “Tax Relief for American Families and Workers Act of 2024” framework announcement here.
Read NLIHC’s statement on the tax bill here.