The Low Income Housing Tax Credit (Housing Credit) is a federal tax credit created by President Reagan and Congress in the Tax Reform Act of 1986 designed to encourage private sector investment in the new construction, acquisition, and rehabilitation of rental housing affordable to low-income households. Over the last three decades, the Housing Credit has become the most successful affordable rental housing production program in history.

The Housing Credit offers a dollar-for-dollar reduction in a taxpayer’s income tax liability in return for making a long-term investment in affordable rental housing. State agencies award Housing Credits to developers, who then sell the Credits to private investors in exchange for funding for the construction and rehabilitation of affordable housing. These funds allow developers to borrow less money and pass through the savings in lower rents for low‐income tenants. Investors, in turn, receive a 10‐year tax credit based on the cost of constructing or rehabilitating apartments that cannot be rented to anyone whose income exceeds 60 percent of area median income (AMI).

The program allows states to allocate Housing Credits to developments they select pursuant to qualified allocation plans (QAPs) they develop that identify the type, location, and other characteristics of affordable housing needed throughout the state. The QAPs must describe the criteria agencies will apply in allocating the Credit and are subject to review after a public hearing and comment process. In this way, the Housing Credit empowers states to respond to the housing needs, priorities, and challenges they consider most important.

Integral to the Housing Credit program is the multifamily Housing Bond program, which states use to finance approximately 40 percent of Housing Credit rental homes every year. Not only do Housing Bonds make possible the production of substantial numbers of new Housing Credit properties, but they are essential to state efforts to preserve affordable housing.

Housing Credit Allocating Agencies

Housing Credit Legislative and Advocacy Information



NCSHA Blog Posts

  • October 20, 2017

    This week, IRS published Revenue Procedure 2017-58, which sets out 2018 inflation adjustments for various tax provisions, including the Low Income Housing Tax Credit (Housing Credit) volume cap and the private-activity tax-exempt bond volume cap. In 2018, each state’s Housing Credit authority will be $2.40 per capita or $2,765,000 for the small state minimum. This is an increase over 2017, during which each state received $2.35 per capita or the small state minimum of $2,710,000.

  • September 27, 2017

    This morning the Administration and Republican leaders in both the House and Senate together released their Unified Framework for Fixing Our Broken Tax Code, a broad tax reform outline intended to serve as a template for the tax-writing committees to develop tax reform legislation. We are excited to report that the Administration and congressional leaders propose to retain the Low Income Housing Tax Credit, saying that "the framework explicitly preserves business credits in two areas where tax incentives have proven to be effective in promoting policy goals important in the American economy: research and development (R&D) and low-income housing."


    Housing Credits - Resources

    • August 1, 2017

      NCSHA President Grant Whitaker, who serves as president and chief executive officer of the Utah Housing Corporation, testified on behalf of NCSHA before the Senate Finance Committee on August 1st.

    • July 17, 2017

      On behalf of our Housing Finance Agency (HFA) members, the National Council of State Housing Agencies (NCSHA) appreciates this opportunity to provide comments to the Senate Finance Committee on how the Committee can reform the current tax system in ways that further strengthen proven housing resources—specifically the Low Income Housing Tax Credit (Housing Credit) and tax-exempt private activity Housing Bonds (Housing Bonds)—thereby helping grow the economy, create jobs, and improve the lives of households across the nation. These critical programs, which HFAs administer in virtually every state, are essential to our nation’s ability to develop affordable rental housing and provide homeownership opportunities to people of modest means.