House Republicans Pass Reconciliation Bill Including Key LIHTC Provisions

Affordable Housing Supply
Written By NAAHL Admin

This morning, the House passed its reconciliation bill, including key provisions to strengthen and expand the Low-Income Housing Tax Credit, by a 215-214 vote. NAAHL has strongly called for the inclusion of these LIHTC provisions and other affordable housing supply priorities in any tax package.

While the bill includes critical LIHTC updates, it also includes provisions that will reduce the availability of certain tax credits used in affordable housing development and preservation, as well as reductions in access to certain programs, like Medicaid, that provide vital support to low-income households that are also served by LIHTC.

What happened? Overnight, the House Rules Committee completed a markup and adopted a Rule for consideration the bill. This morning, the House voted on a 215-214 vote to pass the reconciliation bill. 215 Republicans voted in favor of the bill, with Representatives Thomas Massie (R-KY) and Warren Davidson (R-OH) joining all Democrats in opposing the bill and Representative Andy Harris (R-MD) voting present.

The final bill included changes from the House Committee-passed provisions, including further restrictions on Medicaid with earlier starts to work requirements, accelerated termination of clean energy tax credits provided in the Inflation Reduction Act, and increases in the State and Local Tax (SALT) deduction. These changes reflect negotiations between House Republican leadership and members over the past several days that were necessary to secure the votes for passage.  

SUMMARY: Affordable housing & community development tax policies in or out of the House-passed reconciliation bill:

  • Includes key LIHTC provisions drawing from the bipartisan Affordable Housing Credit Improvement Act

  • Does NOT include enactment of the bipartisan Neighborhood Homes Investment Act

  • Does NOT include an extension of the bipartisan New Markets Tax Credits

  • Does NOT include modernization of Historic Tax Credits.

  • Includes a suite of provisions to extend, expand, and modify Opportunity Zones

  • Includes an accelerated termination of clean energy tax credits from the Inflation Reduction Act

See a full overview below.

What’s next? The bill now heads to the Senate, where we expect to see significant changes. It’s not clear whether provisions of the bill will be marked up by Senate Committees, or whether changes to the text will move directly through the Senate floor. The bill will also have to comply with special rules in the Senate to maintain its privileged status that allows it to pass in the Senate with a simple majority vote. The Senate Parliamentarian will judge whether it complies with those rules. Complying will likely require changes to the text. NAAHL will continue advocating to maintain the LIHTC improvements and include the Neighborhood Homes Investment Act in the final bill. Click here to see a NAAHL Fact Sheet on Housing Supply Priorities for a 2025 Tax Package.

Click here to see the full bill text before the manager’s amendment.

Click here to see the manager’s amendment. 

Ways & Means Tax Provisions Included

  • Extensions of Tax Cuts and Jobs Act (TCJA) tax provisions.

  • President’s key priorities, including no tax on tips, no tax on overtime, and new Trump Accounts (similar to “baby bonds”).

  • Key provisions from the Affordable Housing Credit Improvement Act, a NAAHL priority.

    • Extension of the 12.5% allocation increase for 2026 – 2029

    • Lowers 50% test to 25% for obligations made after December 31, 2025 and before January 1, 2030

    • Adds 30% basis boost for rural and Native communities for buildings placed in service after December 31, 2025 and before January 1, 2030

  • Extension, expansion, and reform to Opportunity Zones

    • Modifies the definition of low-income community (to having a poverty rate of 20% or having a median household income which does not exceed 70% of the metro area median household income/statewide median household income for non-metro areas)

      • Also provides that census tract median income must be less than 125% of statewide median family income for non-metro tracts and less than 125% of the metro area median income for metro area tracts to qualify as a low-income community

    • Creates a new round of OZs

      • Allows governors (subject to Treasury approval) to designate up to 25% of low-income communities as OZs, of which a certain minimum number must be in a rural area. That minimum number is the lesser of:

        • 33% of OZ designations (or the percentage of the U.S. population living in a rural area in the preceding year, if that number is greater than 33%); or

        • The number of low-income communities in the state that are entirely in a rural area.

      • OZ designation under this new round does not include contiguous tracts.

      • OZ designation under this new round lasts from January 1, 2027 through December 31, 2033.

      • Allows for a larger step-up basis (30% vs. 10%) after 5 years for investments in a rural opportunity fund.

      • Allows improvements to existing structures in Rural Opportunity Funds to be 50% of adjusted basis of the property (rather than 100%).

    • Ends OZ designations for the first round on December 31, 2026

    • Allows up to $10,000 of ordinary income to receive the 10-year benefit of OZs.

    • Includes reporting requirements for Opportunity Funds with financial penalties for noncompliance and an annual reporting requirement on Opportunity Fund information by the Secretary of Treasury.

  • Phase-out and restrictions on Clean Electricity Investment Credit

    • Eliminates the credit for investments where construction begins more than 60 days after enactment and for investments placed in service after December 31, 2028 unless the facility is an advanced nuclear facility (in which case construction must begin by December 31, 2028 to claim the credit).

    • Does not allow credit to be claimed for any investment in which there is any “material assistance” from a prohibited foreign entity for investments that begin construction after December 31, 2025.

    • Prohibits access to the credit for “specified foreign entities” or “foreign-influenced entities” and prohibits access to the credit if, 2 years after enactment, payments to a prohibited foreign entity exceed a threshold level and provides for recapture of the credit if certain payments to a prohibited foreign entity are made within 10 years of the investment being placed in service.

    • Disallows claiming the credit for residential solar or wind leasing arrangements.

    • Modifies the low-income communities bonus credit.

  • Phase-out or repeal of other Inflation Reduction Act Energy Efficiency and Electric Vehicle provisions, including:

    • Energy Efficient Home Improvement Credit (repealed)

    • Residential Clean Energy Credit (repealed)

    • New Energy Efficient Home Credit (repealed)

  • Increasing the debt ceiling by $4 trillion. As a reminder, Secretary Bessent wrote to Congress asking it to raise the debt ceiling by mid-July.

House Financial Services Committee Provisions Included

  • Reduction in CFPB funding from up to 12% of Federal Reserve operating expenses to 5% of Federal Reserve operating expenses

  • Changes to CFPB Civil Penalties Fund

  • Rescission of unobligated Inflation Reduction Act Green and Resilient Retrofit Program (GRRP) funding, estimated to be about $138 million

  • Changes to Office of Financial Research funding

  • Moving of Public Company Accounting Oversight Board functions to SEC

NAAHL Admin
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NAAHL Urges Congress to Include Bipartisan Housing Bills in 2025 Tax Package to Boost Housing Supply and Deliver Relief to Renters and Homeowners