Affordable Housing Credit Improvement Act of 2025
Sponsored By: Representative LaHood
Introduced
Summary
Rewrites and expands the Low‑Income Housing Tax Credit to boost construction and affordability for very low‑income renters. It would rename the program the Affordable Housing Credit and change how states get credits, who counts as low‑income, and how projects qualify and claim credits.
Show full summary
- Families and residents: Would change tenant rules so most full‑time students under age 24 do not count as low‑income occupants, allow tenant‑based voucher payments to be excluded from rent calculations in certain projects, and add protections for survivors of domestic violence and for veterans.
- Developers and owners: Would raise state allocations and set the minimum allocation at $4,876,000 in 2025, create a bigger credit when at least 20% of units serve extremely low‑income households, treat relocation costs as eligible rehab expenses, and tighten acquisition‑basis and foreclosure timing rules.
- States, tribes, and rural areas: Would require housing agencies to apply community revitalization and cost‑reasonableness criteria, add Indian areas and rural areas to difficult development area rules with specific NAHASDA exceptions, and bar prioritizing local official approval or contributions in allocation plans.
Bill Overview
Analyzed Economic Effects
11 provisions identified: 7 benefits, 2 costs, 2 mixed.
Bigger credit for deepest‑rent units
Projects that set aside at least 20% of units for extremely low‑income households could get a larger tax credit. The qualifying portion of the building would count as 150% of its usual eligible basis, if the housing agency says the boost is needed for feasibility. This would apply to projects with new credit allocations after enactment, and to certain bond‑financed projects with bond issue dates after December 31, 2025.
Easier bond‑financed credit access
For some bond‑financed projects, the bill would lower the financing threshold from 50% to 25% for obligations first counted after enactment. It would also stop an energy deduction rule from reducing eligible basis for these housing projects. Parts of this would apply to projects with allocations after enactment and to bond issues dated after December 31, 2025.
Relief for disasters and rehab costs
This bill would protect credits after damage if owners rebuild in time. No recapture would apply if reconstruction happens within 25 months; for federally declared disasters, agencies could allow up to 12 more months. During that period, a building’s basis would be held harmless; if not rebuilt in time, past credits would be recaptured. It would also let relocation and temporary housing costs count as rehabilitation expenses when section 280B does not apply. The casualty rule would cover events after the date 25 months before enactment; the rehab‑cost rule would cover costs paid after December 31, 2024.
Tighter limits on basis and foreclosures
This bill would cap acquisition basis for buildings last placed in service less than 10 years before purchase. The acquisition part of basis could not exceed the lowest price paid in the prior 10 years (with inflation) plus seller improvements, and recent owners within five years could not use the rule. It would also delay ending the credit period after a foreclosure until 61 days after notice to the IRS and the state agency; they could block termination if they find a scheme. The basis rule would apply to buildings placed in service after December 31, 2024, and the foreclosure rule to acquisitions after December 31, 2024.
Higher state housing credit amounts
This bill would raise how much housing credit each state can allocate. For 2025, the per‑person amount would be $4.25 and the state minimum would be $4,876,000. Amounts for 2026 and later would grow with cost‑of‑living formulas and rounding rules. These changes would apply to calendar years after December 31, 2024.
More places qualify for extra credits
This bill would expand where projects can get special housing‑credit treatment. Indian and rural areas would be added to the difficult development area rules, with conditions for tribal financing or sponsors. The population cap for some DDA designations would rise from 20% to 30%, and the cap on qualified census tracts would be repealed. The new DDA rules would apply to buildings placed in service after December 31, 2025, and the cap changes would apply to designations made after December 31, 2025.
More flexible housing bond refunding
This bill would relax refinancing rules for some tax‑exempt housing bonds. Within 12 months of a loan repayment, new bonds that refinance the original issue could be treated as refundings, up to the refunded principal. It would also extend a one‑refunding timing limit from 4 years to 10 years and add exceptions. Parts would apply to issues on or after enactment, and parts would apply to repayments after July 30, 2008.
New tenant income and rent rules
This bill would change who can qualify for low‑income units and how rent is counted. A unit would keep its low‑income status if it first housed tenants at or below 60% of area median income and rent caps stay in place; for some cases, 80% may apply. Projects that elect the option would not count tenant‑based vouchers as rent. But a unit rented only by people under 24 who are full‑time students would not count, unless they meet listed exceptions. Rural projects would use one uniform income rule. Most of these rules would start for tax years after December 31, 2024, and the student and voucher rules would start for tax years after December 31, 2025.
New rules for state credit selection
State housing agencies would need to update how they choose projects. They would have to consider if development costs are reasonable and whether a project backs a clear community revitalization plan. Agencies could not score projects based on local officials’ support or opposition and could not favor local government money over other funding. They would also need to consider the needs of enrolled tribal members and others defined by NAHASDA. These changes would apply to qualified allocation plans adopted after December 31, 2025.
Protections for survivors and veterans
This bill would bar owners of tax‑credit properties from denying or ending a lease only because of domestic violence, sexual assault, stalking, or dating violence when the tenant is the victim. Tenants could enforce this in State court, and survivors who stay after a split lease would not be treated as new tenants. It would also allow veteran occupancy preferences while still meeting public‑use rules. These protections would take effect 30 days after enactment for most leases, and the veteran rule would apply to buildings placed in service before, on, or after enactment.
Average‑income test for bond projects
Projects choosing certain tax‑exempt bond treatment would need to meet the Average Income Test. This would apply to elections made after March 23, 2018. Issuers and borrowers would face an added eligibility check.
Sponsors & CoSponsors
Sponsor
LaHood
IL • R
Cosponsors
Sessions
TX • R
Sponsored 4/8/2025
Issa
CA • R
Sponsored 4/8/2025
Mullin
CA • D
Sponsored 4/8/2025
Nunn (IA)
IA • R
Sponsored 4/8/2025
Vasquez
NM • D
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Langworthy
NY • R
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Stevens
MI • D
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DelBene
WA • D
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Tenney
NY • R
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Beyer
VA • D
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Feenstra
IA • R
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Panetta
CA • D
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Buchanan
FL • R
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Larson (CT)
CT • D
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Kelly (PA)
PA • R
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Davis (IL)
IL • D
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Estes
KS • R
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Sanchez
CA • D
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Miller (WV)
WV • R
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Sewell
AL • D
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Murphy
NC • R
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Chu
CA • D
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Kustoff
TN • R
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Moore (WI)
WI • D
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Fitzpatrick
PA • R
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Evans (PA)
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Moore (UT)
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Schneider
IL • D
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Malliotakis
NY • R
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Gomez
CA • D
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Carey
OH • R
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Horsford
NV • D
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Yakym
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Suozzi
NY • D
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Miller (OH)
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Lieu
CA • D
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Emmer
MN • R
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Neguse
CO • D
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Hudson
NC • R
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Mrvan
IN • D
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Reschenthaler
PA • R
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McCollum
MN • D
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Houchin
IN • R
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McBride
DE • D
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Flood
NE • R
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Kelly (IL)
IL • D
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Finstad
MN • R
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Schakowsky
IL • D
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Kiley (CA)
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Omar
MN • D
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Salazar
FL • R
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Peters
CA • D
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Huizenga
MI • R
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Ramirez
IL • D
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Balderson
OH • R
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Budzinski
IL • D
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Moolenaar
MI • R
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Pappas
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Gooden
TX • R
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Beatty
OH • D
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Garcia (CA)
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Bergman
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Goodlander
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Fleischmann
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Dingell
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Kim
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Casten
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Cole
OK • R
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Vargas
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Carter (GA)
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Tlaib
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Walberg
MI • R
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Bera
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Calvert
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Rouzer
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Houlahan
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Barr
KY • R
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Foster
IL • D
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Lawler
NY • R
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Quigley
IL • D
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Guest
MS • R
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Dean (PA)
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Taylor
OH • R
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Goldman (NY)
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Evans (CO)
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Morelle
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Zinke
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Amo
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Bost
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Huffman
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Ezell
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Craig
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Stauber
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Harder (CA)
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Crank
CO • R
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Ross
NC • D
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Rose
TN • R
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Keating
MA • D
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Smucker
PA • R
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McGovern
MA • D
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Ogles
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Swalwell
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DesJarlais
TN • R
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Scanlon
PA • D
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Gonzales, Tony
TX • R
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McGarvey
KY • D
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Newhouse
WA • R
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Davis (NC)
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Owens
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Liccardo
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Timmons
SC • R
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Golden (ME)
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Bentz
OR • R
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Pingree
ME • D
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Mackenzie
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Moore (NC)
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Khanna
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Levin
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De La Cruz
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Himes
CT • D
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IA • R
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Underwood
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TX • D
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Green (TN)
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Tran
CA • D
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Messmer
IN • R
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Riley (NY)
NY • D
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Harrigan
NC • R
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Turner (OH)
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CA • D
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Edwards
NC • R
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McClain Delaney
MD • D
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LaLota
NY • R
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Vindman
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Roll Call Votes
No roll call votes available for this bill.
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