House Passes Tax Bill that Boosts LIHTCs

The House of Representatives recently passed a $78 billion tax bill, Tax Relief for American Families and Workers Act (H.R. 7024), with wide bipartisan support. The bill is the result of a deal struck by House Ways and Means Committee Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR) after months of negotiation.

One level deeper: Speaker of the House Mike Johnson (R-LA) brought the bill to the floor under suspension of the rules, a process by which he could fast-track the vote by bypassing the House Rules Committee, limiting debate, and prohibiting amendments on the floor. Use of this procedure requires a two-thirds majority of the members voting to pass. And, ultimately, the vote exceeded that threshold, passing 357 – 70, with five members not voting. Support for the bill was strong in both parties, with 169 Republicans voting in favor compared to just 47 opposed. Democrats voted for it by a 188 to 23 margin.

The bill includes two provisions that would allow state housing finance agencies to finance more affordable rental homes with low-income housing tax credits. This bill would temporarily increase the amount of credits allocated to states by 12.5 percent for calendar years 2023 through 2025. The measure also provides more flexibility when using bonds to finance a LIHTC project.

What’s next: The bill goes to the Senate for consideration and the ultimate fate of this bill is uncertain. Senate Majority Leader Chuck Schumer (D-NY) supports the legislation, but Minority Leader Mitch McConnell has not yet signaled his position. Some senators have expressed concerns with certain provisions in the legislation, and it is unclear if, and when, the upper chamber will vote on the bill.