Bipartisan Tax Package Proposes Expansion of Low-Income Housing Tax Credit

On Friday, Jan. 19, the House Ways and Means Committee marked-up H.R. 7024, the Tax Relief for American Families and Workers Act.  The bill now heads to the House of Representatives’ floor for a vote.  For the last several months, Congress has worked on a new bipartisan tax package to extend expiring business tax cuts and expand the child tax credit.  As the bill moves closer to a vote, Congress has added a provision aimed at addressing the pressing issue of affordable housing. The proposed framework, a result of negotiations led by Senate Finance Chair Ron Wyden (D-Ore.) and House Ways and Means Chair Jason Smith (R-Mo.), focuses on expanding the Low-Income Housing Tax Credit (LIHTC) to bolster the supply of affordable housing across the nation.

The bipartisan agreement suggests raising the current 9 percent ceiling of the Low-Income Housing Tax Credit to 12.5 percent. This move is intended to provide greater incentives for developers to engage in affordable housing projects, potentially increasing the overall supply.  To facilitate access to tax-exempt financing for affordable housing projects, the proposed framework lowers the threshold for private activity bonds. This adjustment is designed to streamline the financing process and encourage more investment in low-income housing initiatives.

Also in the package is language that would provide wildfire relief by excluding qualifying relief payments from a recipient’s income.