Last week, the House passed the Inflation Reduction Act along a party-line vote and on Tuesday, President Biden signed the bill, enacting it into law. While the bill does not directly include any investments in housing programs, it does include several climate-related provisions that could have a significant impact on the use of renewable energy technologies and energy efficiency in affordable housing.

Specifically, the Investment Tax Credit (ITC), which is used to finance renewable energy technologies, such as solar panels, and the Section 45L new energy-efficient home credit would no longer reduce basis when used in conjunction with LIHTC properties. Moreover, the bill provides a 20 percent bonus for ITC facilities used in conjunction with covered affordable housing programs and a ten percent bonus for ITC facilities in low-income communities. It also appropriates $837.5 million through HUD to provide direct loans and grants to improve the energy and water efficiency and climate resilience of HUD-financed affordable housing properties. Additionally, the bill establishes a 15 percent alternative minimum tax for certain corporations, against which LIHTCs can be taken.