On July 4, President Donald Trump signed the One Big Beautiful Bill Act (H.R. 1) into law. The bill permanently lowers the bond-financed by test to 25 percent and boosts the nine percent LIHTC by 12 percent.
By the numbers:
- Together, these provisions amount to a $15.7 billion investment in the Housing Credit.
- They will help finance 1.22 million affordable rental homes over the next decade, according to estimates from Novogradac.
- These changes represent the largest expansion of the LIHTC program in its history.
Thank you for many years of sustained advocacy from our members and partners. These changes would not have been possible without your steadfast support. We look forward to working together on implementation!
What Else?
Beyond the LIHTC provisions in H.R. 1, the bill also includes:
- A permanent extension of the New Markets Tax Credit with $5 billion in annual allocation authority;
- A permanent reauthorization of the Opportunity Zone program, with a new designation period on July 1, 2026, taking effect on Jan. 1, 2027, with new designation periods to follow every ten years. The bill also makes the following changes to the program:
- Reduces the substantial improvement threshold for existing structures (from 100 to 50 percent) for rural Opportunity Zones;
- Defines a low-income community as a census tract with (1) a poverty rate of at least 20 percent, or (2) census tracts with a median family income (MFI) of less than 70 percent (down from 80 percent) of the metro area MFI (or statewide MFI for census tracts outside a metro area);
- Eliminates contiguous census tracts; and
- Adds reporting requirements.
- Rescinds unobligated balances from HUD’s Green and Resilient Retrofit Program and EPA’s Greenhouse Gas Reduction Fund;
- Eliminates 179D, the Energy Efficient Commercial Buildings Deduction, and 45L, the New Energy Efficient Home Credit, after June 30, 2026;
- Restores a 100 percent depreciation bonus on property acquired after Jan. 19, 2025. Property is considered “acquired” for this purpose no later than when a written binding contract is signed to acquire it; and
- Permanently raises the Base Erosion Anti-Abuse Tax (BEAT) rate to 10.5 percent in 2026 and preserves the allowability of U.S. tax credits (including LIHTC).
What’s Next?
Congress now turns its attention to FY 2026 funding as the September 30 deadline quickly approaches.
The House THUD Appropriations Subcommittee will markup its bill on Monday, July 14 at 6 p.m. ET, followed by a Full Appropriations Committee markup scheduled for Thursday, July 17 at 10 a.m. ET.
The Senate has yet to release its markup schedule.
Countdown Begins: With the scheduled August Recess, the House has just 24 working days and the Senate has 34 days until the end of the fiscal year. Expect to see a short-term continuing resolution as lawmakers buy themselves more time to finalize the funding bills.
