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119-hr-8626119th CongressWALLET

Workforce Housing Tax Credit Act

Sponsored By: Representative Panetta, Jimmy [D-CA-19]

Introduced

Summary

Middle‑Income Housing Tax Credit — This bill would create a new federal tax credit to encourage building and rehabbing rental housing that serves middle‑income households. The credit would run for 15 years and focus on projects that reserve most units for households at or below 100% of area median gross income.

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  • Families and tenants: Middle‑income households would gain more rent‑restricted units targeted to those at or below 100% of area median gross income. Projects must reserve 60% of units for that group and carry extended‑use covenants that limit rent increases and protect tenants if commitments end.
  • Developers and nonprofits: Developers could claim a 15‑year credit based on a building's qualified basis. The Secretary would set rates so the credit's present value equals about 50% of basis for new unsubsidized buildings and 20% for other buildings, and the law favors nonprofit participation with set‑asides and special financing rules.
  • State housing agencies: States would receive an annual allocation floor equal to the greater of $1 per resident or $1.5 million plus carryovers, and a 5% rural set‑aside for nonmetro projects. Agencies must run market studies, limit allocations to what a project needs, and file new reports.

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Bill Overview

Analyzed Economic Effects

5 provisions identified: 1 benefits, 0 costs, 4 mixed.

Tenant protections and unit rules

If enacted, the bill would define qualified middle‑income housing projects as those with at least 60% of units rent‑restricted and at least 20% meeting income/rent tests at or below 100% of area median gross income. Gross rent for restricted units would be capped at 30% of an imputed income limit and the bill sets rules for how occupancy is imputed (one person for a unit without a separate bedroom; 1.5 per separate bedroom). Buildings would need recorded extended‑use covenants that protect tenants and run at least until 15 years after the credit period ends, and tenants would keep eviction and rent protections if the commitment terminates. Tenants' rights of first refusal or purchase would not by themselves void credits, but tenant purchases must meet a minimum price equal to outstanding secured principal (excluding debt added in the prior five years) plus taxes tied to the sale.

New middle-income housing tax credit

If enacted, the bill would create a new middle‑income housing tax credit for qualifying buildings placed in service after December 31, 2025. The credit would run 15 years and be set so new, unsubsidized buildings get a 15‑year present value equal to 50% of qualified basis and other buildings 20%, using a discount rate equal to 72% of the average federal mid‑ and long‑term rates. The bill would require owners to reduce a building's tax basis by the amount of credit allowed. The credit would also be treated in code so it can reduce BEAT exposure and related provisions would be updated to reference the new section.

Eligible basis and rehab rules

If enacted, the bill would set which costs count toward eligible basis for the credit. New buildings would use adjusted basis at the start of the credit period. Existing buildings generally must be acquired by purchase and not placed in service within the prior 10 years to use adjusted basis, though the bill allows waivers in limited cases. Rehabilitation spending that meets a 24‑month threshold (for example 20% of adjusted basis or a per‑unit test) could be treated as a separate new building. Buildings in qualified census tracts or difficult development areas would get a 30% boost to eligible basis. Special rules would limit how much qualified nonprofit financing can count (generally capped at 60%) and require present‑value treatment or repayment rules for below‑market loans, with tax increases and interest if repayment deadlines are missed.

State credit caps and rural boost

If enacted, the bill would set how much credit each State can award and when allocations take effect. A State ceiling would equal the unused prior year ceiling plus the greater of $1 per resident or $1.5 million, plus returned amounts; the $1 and $1.5 million amounts would be indexed after 2026. States would also get an extra increase equal to 5% of the base that may be used only for rural projects. The bill would require a set‑aside so at least 10% of each State ceiling goes to projects where a qualified nonprofit owns an interest and materially participates.

Treasury and HUD coordination rules

If enacted, the bill would require the Treasury Secretary to consult with HUD and issue regulations or guidance that align definitions and streamline rules for HUD‑funded low‑income buildings, including Native American programs. This change would not itself change funding but would aim to reduce paperwork and make rules more uniform for projects that mix HUD assistance and tax credits.

Sponsors & CoSponsors

Sponsor

Panetta, Jimmy [D-CA-19]

CA • D

Cosponsors

  • Rep. Sykes, Emilia Strong [D-OH-13]

    OH • D

    Sponsored 10/1/2026

  • Rep. Carey, Mike [R-OH-15]

    OH • R

    Sponsored 4/30/2026

  • Rep. Nunn, Zachary [R-IA-3]

    IA • R

    Sponsored 4/30/2026

  • Rep. Fitzpatrick, Brian K. [R-PA-1]

    PA • R

    Sponsored 8/31/2026

  • Rep. Lawler, Michael [R-NY-17]

    NY • R

    Sponsored 8/31/2026

Roll Call Votes

No roll call votes available for this bill.

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