One Federal Low-Income Housing Program is Actually Being Expanded

While the “One Big Beautiful Bill” gutted many federal housing assistance programs, it expands the Low-Income Housing Tax Credit (LIHTC) program, which could lead to the construction of over one million new housing units in the next decade. According to an article by Jared Brey in Governing, “Since its inception, the program has helped finance more than 54,000 projects, including 3.7 million housing units.”

The program makes it easier to finance affordable housing construction. New rules established in the OBBB could yield 1.22 million additional homes. However, Brey notes that “That estimate assumes all states will devote certain types of bonds exclusively to affordable housing construction” and that enough financing will be available.

According to Brey, many LIHTC projects are paired with other federal funding such as Section 8 housing vouchers (which many tenants in LIHTC housing use to pay rent) and HOME grants. The cuts to those programs could impact the effectiveness of LIHTC. 

Brey details the changes to the program, one of which expands the number of 9 percent tax credits each state gets annually, and another which lowers the threshold for bond financing. According to Yonah Freemark of the Urban Institute, the program has been successful in large part because of its involvement of private entities. “The fact that it involves bankers, lawyers, syndicators and investors means that all those people have skin in the game. In that sense it’s kind of brilliant in the American context.”