Neighborhood Homes Investment Act Introduced in House

Congressmen Mike Kelly (R-PA) and John Larson (D-CT) today introduced the Neighborhood Homes Investment Act of 2025 (NHIA) (H.R. 2854). The legislation, one of NCSHA’s top policy priorities, seeks to increase the supply of affordable for-sale housing through a new tax credit.

The bill establishes the Neighborhood Homes Credit (NHC) to promote new construction or substantial rehabilitation of affordable owner‐occupied housing located in distressed neighborhoods. Modeled after the Low-Income Housing Tax Credit (Housing Credit), the NHC would allow project sponsors to receive a credit to cover the difference between the cost to rehabilitate a home in a distressed neighborhood, or build a new home on an empty lot, and the price for which the home is sold. The maximum credit amount would be the lesser of the excess of development costs over the sales price, 40 percent of development costs, or 28 percent of the national median price for new homes.

As with the Housing Credit, the program would be overseen by the Treasury Department and Internal Revenue Service, which would allocate credit authority to each state. Each state would be required to designate a single agency to award the credits, and each agency would be expected to develop a Qualified Allocation Plan for its NHC program.

Each state’s NHC allocation would be equal to its state population times $9, with a small-state minimum of $12 million. States would be allowed to carry forward unused credits for three additional years.

The version of the bill introduced this Congress includes additional flexibility for states that would allow them to allocate up to 20 percent of their NHCs to census tracts located anywhere in the state that the state determines needs additional housing investments. States that receive the minimum NHC allocation can use up to 40 percent of their credits in such tracts.

NCSHA has published a summary and FAQs with more details about the bill and how the NHC would work.

According to an estimate by Novogradac, the NHC is expected to finance the development and rehabilitation of more than 503,000 housing units in 10 years, generating $151 billion in economic activity and creating 1.1 million jobs.

In addition to Kelly and Larson, the legislation is cosponsored by Representatives Randy Feenstra (R-IA), Vern Buchanan (R-FL), Carol Miller (R-WV), Mike Carey (R-OH), David Kustoff (R-TN), Nicole Malliotakis (R-NY), Nathaniel Moran (R-TX), Terri Sewell (D-AL), Danny Davis (D-IL), and Jimmy Panetta (D-CA). All original cosponsors are members of the House Ways and Means Committee, which has jurisdiction over tax legislation. Senators Todd Young (R-IN) and Mark Warner (D-VA) are expected to introduce companion legislation in the Senate soon.

NCSHA thanks Representatives Kelly and Larson for spearheading this critical legislation. We will be working with our allies to advocate for the passage of this bill.