IRS Allocates Unused LIHTCs to 28 States

They’ll get an additional $8.2 million in unused federal LIHTC carryovers.

Each year the IRS allocates a certain amount of LIHTCs to each state using a formula allocation method, which is based on a state’s population and established in Section 42 of the Internal Revenue Code. In addition to the credits allocated by this formula method, each year, states are also permitted to allocate to the state housing finance agency (HFA) LIHTCs that were unused by recipients of tax credits allocated in a prior year, and LIHTCs from the prior calendar year that were not previously allocated by the HFA.

However, tax credits that aren’t allocated by a state HFA within two years must be returned by the HFA to the IRS, which then places them in a national pool of unused tax credits. The IRS then reallocates these national pool credits to state HFAs that fully utilized their entire LIHTC allocation for the prior calendar year. It’s important to note that a state having unused LIHTC authority doesn’t mean that demand for LIHTCs is weakening. Unused authority sometimes results from states having too little remaining LIHTC authority to be allocated to an affordable housing site.

Revenue Procedure 2023-32 released in October 2023 provided the Housing Credit National Pool amounts for qualified states for calendar year 2023. It initially announced an allocation of $3.2 million in unused LIHTCs. Twenty-eight states received unused LIHTC carryovers from the national pool. The IRS recently issued a supplement to this revenue procedure (2024-18), which provides that the IRS will allocate an additional $8.2 million in unused federal LIHTC carryovers to the same 28 states.

Additional Unused LIHTC Reallocation Amounts

Qualified State            Additional Amount Allocated

Connecticut                 $136,793

Delaware                     $38,417

Florida                         $839,149

Georgia                       $411,670

Illinois                          $474,636

Maryland                    $232,551

Massachusetts            $263,383

Michigan                     $378,520

Minnesota                   $215,671

Montana                     $42,358

Nebraska                     $74,237

Nevada                        $119,876

New Jersey                  $349,382

New Mexico                $79,722

New York                     $742,288

North Carolina            $403,601

Ohio                            $443,478

Oregon                        $159,952

Pennsylvania               $489,347

Rhode Island               $41,259

South Dakota              $34,322

Texas                           $1,132,815

Utah                            $127,535

Vermont                      $24,409

Virginia                        $327,575

Washington                 $293,706

West Virginia               $66,965

Wisconsin                   $222,286