The low-income housing tax credit (LIHTC) is one of only two credits to be explicitly retained in a tax reform outline prepared by the Republican leadership. The other is the research and development tax credit.

The nine-page Unified Framework For Fixing Our Broken Tax Code envisions repealing other business credits, including New Markets, historic, and renewable energy tax credits. “The committees may decide to retain some other business credits to the extent budgetary limitations allow,” says the document, referring to the House Committee on Ways and Means and the Senate Committee on Finance.

The outline also proposes to reduce the corporate tax rate to 20%, which could devalue the LIHTC for investors. The proposal is seen as a starting point for negotiations, and some observers believe a higher rate may emerge as congressional leaders dig into the hefty job of revising the tax code.

The National Association of Home Builders (NAHB) applauded the framework.

“By lowering the pass-through rate, the plan will reduce the tax bill of thousands of small businesses and help to spur job and economic growth. More importantly, the blueprint maintains the low-income housing tax credit, the most indispensable tool to help produce affordable rental housing," said Granger MacDonald, NAHB chairman. "The plan also retains a business interest deduction for small businesses, which would ensure that our future tax code is truly pro-growth."

On the other hand, some affordable housing advocates were disappointed that the outline didn't address their call to reform the mortgage interest deduction (MID), a $70 billion annual tax expenditure that primarily benefits higher-income households, with a significant amount of the benefit going to the top 1% of earners in the country.

The National Low Income Housing Coalition-led United for Homes campaign calls on the president and Congress to embrace smart reforms to the MID. This includes reducing the amount of a mortgage eligible for a tax break from $1 million to $500,000—impacting fewer than 6% of mortgages nationally—and converting the deduction into a credit, providing a greater tax break to 25 million low- and moderate-income homeowners, including 15 million mortgage holders who currently do not benefit from the MID.

Stay tuned for more details.