30 Years Strong

The low-income housing tax credit has financed more  than 2.9 million affordable homes over three decades.

The LIHTC Through the Years

1986
The low-income housing tax credit program, Sec. 42 of the Internal Revenue Code, is enacted for three years as part of the Tax Reform Act of 1986.

1989
A task force headed by Sen. George Mitchell (D-Maine) and Sen. John Danforth (R-Mo.) issues a report on the LIHTC program with recommendations to (1) require states to have specific written allocation plans that are subject to a public hearing process; and (2) require that tax credit properties serve low-income families for 30 years.

1993
The Revenue Reconciliation Act makes housing tax credit authority “permanent,” and additional program changes are made.

1997
The Government Accountability Office releases a favorable report about the LIHTC program.

2005
Congress turns to the tax credit to help rebuild the Gulf Coast following Hurricane Katrina.

2013
The Bipartisan Policy Center’s Housing Commission, chaired by former U.S. Sens. George Mitchell and Kit Bond (R-Mo.) and former Department of Housing and Urban Development secretaries Mel Martinez and Henry Cisneros, strongly urges that the LIHTC not only be preserved but expanded.

2015
Congress approves a permanent 9% rate for the LIHTC.

2016
Sens. Maria Cantwell (D-Wash.) and Orrin Hatch (R-Utah) introduce legislation to expand the annual LIHTC allocation authority by 50% and make other key changes to the program.

The low-income housing tax credit (LIHTC) is the most successful federal program ever for the production and preservation of affordable housing.

The LIHTC has financed more than 2.9 million affordable housing units and provided 6.7 million low-income households with homes they can afford across the nation over the past three decades.

The critical and versatile program is used to produce quality affordable housing and meet the unique needs of communities big and small. It has provided much-needed homes for working families, seniors, veterans, disabled individuals, as well as the chronically homeless in urban, suburban, and rural locales. It also has been a key tool in rebuilding communities after devastating natural disasters, including tornadoes, floods, and hurricanes.

Established as part of the Tax Reform Act of 1986 under President Ronald Reagan, the program has earned strong bipartisan support throughout its history. This support was most recently seen over the summer, when Sens. Maria Cantwell (D-Wash.) and Orrin Hatch (R-Utah) introduced legislation to expand and further strengthen the LIHTC program. Their new legislation, S. 3237, builds on the two senators’ earlier proposal in May to increase the LIHTC program by 50% to help create or preserve approximately 1.3 million affordable homes over a 10-year period, an increase of 400,000 more units than are now possible under the current program.

“The housing credit leverages private equity investment to create 100,000 jobs in our communities each year,” Cantwell says. “Sen. Hatch and I want to expand this proven economic development tool and job-creation engine to provide even more affordable housing that America desperately needs.”

Housing credits are needed because it’s not economically feasible to build affordable housing with restricted rents without a way to make up the difference between what it costs to build a property and the income that can be generated to support the development costs. LIHTCs play a major role in a development’s budget, with developers using the credits to raise the needed equity for their projects and keep down their debt levels.