Fact Sheet: How the 2025 Tax Bill Can Boost Housing Supply
Introduction
In every state and in every district, constituents have a top priority in common: more affordable housing. And as Congress is moving quickly to prepare a reconciliation package, lawmakers have an opportunity to provide meaningful investments into affordable housing supply for renters and homeowners.
A 2025 tax package must include key provisions from the Affordable Housing Credit Improvement Act and enact the Neighborhood Homes Investment Act.
These popular housing supply bills are pro-growth, pro-family solutions that empower working families to access modest, affordable homes while also investing in communities and local economies.
How the 2025 Tax Bill Can Boost Housing Supply
The Affordable Housing Credit Improvement Act (H.R. 2725, S. 1515)
This legislation is the most popular, bipartisan housing bill in Congress, and would expand and strengthen the Low-Income Housing Tax Credit (Housing Credit), the nation’s most effective tool to finance affordable rental housing. The Senate bill was introduced by Senators Maria Cantwell (D-WA), Todd Young (R-IN), Marsha Blackburn (R-TN), and Ron Wyden (D-OR), and the House bill was introduced by Representatives Darin LaHood (R-IL-16), Suzan DelBene (D-WA-01), Claudia Tenney (R-NY-24), Don Beyer (D-VA-08), Randy Feenstra (R-IA-04), and Jimmy Panetta (D-CA-19). Key provisions include:
Expand 9% Credit: Restore the expired 12.5% cap boost and grow allocations by 50% over two years.
Modernize 4% Credit Rules: Lower the bond financing threshold to 25%, unlocking more rental housing.
Support Rural Areas: Automatically qualify rural developments for added equity.
Serve Vulnerable Populations: Provide up to 50% basis boost for homes serving extremely low-income and special needs households, including homeless veterans.
The Neighborhood Homes Investment Act (H.R. 2854, S. bill number forthcoming)
Introduced by Senators Todd Young (R-IN) and Mark Warner (D-VA), along with Representatives Mike Kelly (R-PA) and John Larson (D-CT), the bipartisan, bicameral legislation would create anew tax incentive to build and preserve more than 500,000 affordable, single-family homes for homeownership over ten years in under-resourced communities.
Closes the Value Gap: Covers up to 40% of construction and 50% of rehab costs in places where homes can’t be built affordably.
Targeted: Credits go to communities with low home values, low median incomes, and high poverty rates. States are given flexibility to serve areas with the highest need, such as rural areas and communities affected by natural disasters.
Serves Working Families: The program serves families earning up to 140% of the area median income who are in need of a new home or repair assistance.
Accountable: Credits are only claimed after homes are completed and sold to eligible homeowners.
The Neighborhood Homes Investment Act enjoyed substantial bipartisan support in the 118th Congress, with more than 100 cosponsors, including several members of tax committees.
NAAHL
The National Association of Affordable Housing Lenders’ (NAAHL) members are the leading investors and lenders who invest in affordable housing through the Low-Income Housing Tax Credit and who would likely create a new market for single-family development and rehab through the Neighborhood Homes Investment Act.
NAAHL urges Congress to include the two housing supply bills in the 2025 tax package so that we can invest more in affordable housing supply for renters and homeowners.