A new bill recently reintroduced in Congress seeks to strengthen the Low-Income Housing Tax Credit (LIHTC) program by targeting resources more directly toward extremely low-income (ELI) renters or those earning no more than 30 percent of Area Median Income (AMI) or at or below the federal poverty line. The Affordable Housing Equity Act of 2025 (H.R. 3964) would provide a 50 percent eligible basis boost for projects that reserve at least 20 percent of units for ELI households and are deemed financially infeasible without such a boost. 

What You Need to Know: According to recent HUD LIHTC tenant data, nearly half of LIHTC tenants are extremely low-income, yet the rents in many LIHTC-financed sites remain out of reach for this group. The Affordable Housing Equity Act seeks to change that by allowing designated projects to increase the eligible basis of ELI units to 150 percent, making it more feasible for developers to offer lower rents. 

To qualify, projects must reserve at least 20 percent of units for households earning ≤30 percent AMI and receive approval from the state housing credit agency confirming the basis boost is essential to project viability. The provision would apply to new 9 percent credit allocations made after the bill’s enactment, as well as bond-financed projects issued after Dec. 31, 2025.

The Bottom Line: While existing LIHTC rules allow for a 30 percent basis boost in difficult-to-develop areas, those boosts aren’t tied specifically to affordability depth. The Affordable Housing Equity Act, however, would create a national standard to ensure that a subset of housing credit resources are consistently directed to the renters most at risk of eviction and homelessness. As Congress continues tax reform negotiations, the industry is watching closely to see if this bill will gain traction or be folded into the broader Affordable Housing Credit Improvement Act.