Summary#
The Affordable Housing Equity Act of 2025 would amend the Internal Revenue Code of 1986. Its stated goal is to increase the low-income housing tax credit for certain projects designated to serve extremely low-income households. It has been referred to the House Ways and Means Committee and is not law.
- For a building to qualify, at least 20% of its residential units must be designated for households whose income is no more than the greater of 30% of area median gross income or 100% of the federal poverty line.
- The housing credit agency must designate the increase as necessary for the building to be financially feasible as part of a qualified low-income housing project.
- For the qualifying portion of the building, the bill would set eligible basis at 150% of the amount otherwise determined. Eligible basis is an amount used in calculating the tax credit; the bill does not set a specific credit amount.
- The change would apply to buildings receiving housing credit allocations after enactment. A separate timing rule applies to certain buildings financed with tax-exempt obligations issued after December 31, 2025.
What it means for you#
- Project owners and developers: If a project meets the income and unit tests, and the housing credit agency makes the required designation, the qualifying portion could use a higher eligible basis in the tax-credit calculation. The bill does not require an agency to make that designation.
- Housing credit agencies: Their designation that the increase is needed for financial feasibility is a condition for using the higher basis. The bill does not set out an application process or decision timeline.
- Households seeking very low-cost housing: The bill sets income limits for units counted toward the project test. It does not itself guarantee that a unit will be available, set a rent, or create a process for applying.
- Other taxpayers and the public: The bill does not directly change individual tax rates or create a general housing benefit. Any effect on federal tax revenue is not estimated in the supplied material.
Money#
No publicly available information on the bill’s estimated cost.
- The bill would increase eligible basis for qualifying building portions, which could increase the tax credit calculated for them. The amount would depend on other tax rules.
- The bill does not specify new spending, fees, fines, or staffing.
What is unclear#
- The Internal Revenue Code provisions being amended were not supplied, so the current rules and the exact effect of the cross-referenced subparagraph cannot be verified here.
- The bill does not set criteria for when an agency should find the increase necessary for financial feasibility.
- It does not explain how projects apply for the agency designation, how decisions are reviewed, or whether agencies must report their decisions.
- The bill does not explain how this tax-credit change would interact with other housing programs.
- The bill uses terms such as “area median gross income” and “financially feasible”; definitions or rules elsewhere in the Code may apply, but those materials were not supplied.
Case for#
- The bill appears intended to help projects include units for households with very low incomes by allowing a higher eligible basis for those units.
- Requiring the housing credit agency to find the increase necessary for financial feasibility limits the change to projects the agency judges need it.
- Raising eligible basis for only the qualifying portion ties the tax-credit increase to the units designated for eligible households.
Case against#
- The bill does not say how agencies should judge financial feasibility, leaving an important condition without criteria in the bill.
- The tax benefit could increase federal revenue losses, but no estimate is available in the supplied material.
- The bill does not itself guarantee that qualifying units will be built, occupied by eligible households, or offered at a particular rent.