Historic Tax Credit Growth Act

Summary#

This bill changes federal rules for the historic rehabilitation tax credit. Major changes in the bill text include:

  • Full credit in year placed in service: The rehabilitation credit is set at 20 percent and may be allowed in the taxable year the building is placed in service. This change applies to property placed in service after December 31, 2023.

  • Bigger credit for certain small projects: The bill adds a special rule for "qualifying small projects." For those projects the credit rate is 30 percent (instead of 20 percent) and qualified rehabilitation expenditures taken into account are limited to $3,750,000. For qualifying small projects in a rural area, the expenditure limit is $5,000,000. The rule allows taxpayers to transfer all or part of these credits under a certificate system and includes rules on tax treatment, recapture, reporting, and Treasury regulations. This subsection applies to property placed in service after enactment.

  • Changes to building eligibility test: The bill amends a rule by inserting "50 percent of" before "the adjusted basis" in the listed statutory provision. That change applies to property placed in service after enactment.

  • Removes a basis adjustment for the rehabilitation credit: The bill adds an exception so that the usual basis adjustment in section 50(c) does not apply to the rehabilitation credit, and it makes a related change for credits allowed to a lessee. This change applies after enactment.

  • Modifies rules for certain tax-exempt use property: The bill narrows the application of disqualified lease rules so those rules apply only for government entities; for other tax-exempt entities the tax-exempt use determination is made under section 168(h) without regard to disqualified leases. This change applies after enactment.

The bill was introduced in the House on April 17, 2025, and was referred to the Committee on Ways and Means.

What it means for you#

  • If you own or are rehabbing a certified historic building, the bill would allow the rehabilitation credit to be taken in the year the building is placed in service for properties meeting the dates above.
  • Small projects that qualify could get a higher 30 percent credit up to the specified expenditure caps. Rural small projects have a higher cap than nonrural small projects.
  • Those credits for qualifying small projects may be transferable to other taxpayers under a certificate and reporting system. The bill also changes some tax basis and tax-exempt lease rules that affect how credits and property use are treated.
  • Effective dates vary by provision: section 2 applies to property placed in service after Dec 31, 2023; several other changes apply to property placed in service after the date of enactment.

Expenses#

No publicly available information on federal budgetary costs. The bill creates new certification, transfer, and reporting requirements that may affect tax administration, but the bill text does not include a cost estimate.

Proponents' View#

No publicly available information.

Opponents' View#

No publicly available information.