Last week, the House Ways and Means Committee held a markup on its provisions in the reconciliation bill. Like every other reconciliation bill considered in recent history, the bill includes a wide range of highly partisan provisions that will ensure no bipartisan support. It may lose enough Republicans to defeat this version of the legislation. The housing provisions of the bill, however, have strong bipartisan support and would be the most consequential and positive housing legislation this century, IF enacted into law. That’s still a big if. It bears remembering that President Joe Biden’s “Build Back Better” proposal also included many bipartisan and equally important housing provisions, but failed because it could not gain any bipartisan support to be enacted into law. With Republicans holding an even narrower margin in the House as the Democrats did in 2021, and a marginal advantage in the Senate, the same fate could befall President Trump’s Big Beautiful Bill (acronymic irony noted), resulting in the loss of the housing provisions.
There have been two key challenges to getting housing legislation passed. The first is that the current dysfunction in Congress has doomed it to be a small part of larger, highly partisan bills. The second is that when considering what legislation goes into bills with a chance of passing, housing has consistently been left out, regardless of the party in charge. Housing affordability is often in the top ten issues being considered, but when only a few are included, housing is left out. As a result, Housers have a big box full of participant ribbons. Hopefully, this time will be different.
While NHC is not taking a position on the broader House bill, we strongly support its housing provisions, which expands the Low-Income Housing Tax Credit (LIHTC), preserves and makes permanent the mortgage interest deduction (MID), and seeks to extend, expand, and improve the Opportunity Zones tax incentive.
The LIHTC remains the most effective tool to build and preserve affordable rental housing. This bill proposes a meaningful expansion of the credit, incorporating key provisions from the Affordable Housing Credit Improvement Act (AHCIA) designed to increase the supply of rental housing in urban, rural, and tribal communities. The bill restores and extends the 12.5% state allocation Housing Credit cap increase that expired at the end of 2021 for 2026 – 2029. Restoring the higher cap would meaningfully increase affordable rental production. The requirement for tax-exempt bond financing for a multifamily Housing Bond to receive the full 4% Housing Credits is also lowered from 50% to 25% for obligations made after December 31, 2025, and before January 1, 2030. This modification would allow states to use their bond authority more efficiently. According to a 2025 estimate, lowering the bond financing threshold from 50 percent to 25 percent could produce or preserve as many as 1.14 million additional affordable rental homes over 2025-34, assuming all of the “freed” bond cap is used for rental housing and sufficient gap financing is available.
For rural communities, the bill does even more. The House Ways and Means bill provides a 30% basis boost for buildings placed in service after December 31, 2025, and before January 1, 2030 in rural communities by modifying the definition of Difficult Development Areas (DDAs). While some properties in rural and Indian areas may qualify as DDAs and are thus eligible for up to a 30 percent basis boost, most rural areas do not qualify under current DDA standards.
Not all Republicans are pleased with the inclusion of the LIHTC. Rep. Glenn Grothman (R-Wis.) told the Washington Examiner that he opposes the LIHTC provision. “It’s ridiculous that the credit is still in a Republican bill, much less that they’re expanding it,” Grothman said. “I mean, I think it shows a lack of sincerity on the part of leadership in trying to shrink the role of government.” AHCIA is cosponsored by 139 Members of the House of Representatives, including 69 Democrats and 70 Republicans.
Preserving the home mortgage interest deduction ensures that millions of American homeowners—especially middle-class families—can continue to build wealth and stability through homeownership. These provisions reflect the bill’s balanced approach to strengthening our nation’s housing ecosystem by promoting multifamily rental housing development and supporting single-family borrowers.
The bill’s proposed enhancements to Opportunity Zones (OZs)—especially its increased focus on rural communities—will help spur long-term investment in distressed communities by incentivizing capital to flow into areas that need it most. These zones have already begun transforming neighborhoods by supporting local development, job creation, and housing expansion. The bill moves the end date of the designation for OZs from the initial round from December 31, 2026 to 2028. It includes a new round of Opportunity Zone designations from January 1, 2027 through December 31, 2033. And at least 33 percent of designated OZs must be comprised entirely of a rural area, as defined in the Consolidated Farm and Rural Development Act. Where there are fewer than 33 percent of rural qualified OZs, all eligible rural areas must be designated.
The definition of “low-income community” (LIC) is narrowed to census tracts that have a poverty rate of at least 20 percent or a median family income that does not exceed 70 percent of the area median income. Previously it was 80 percent. The bill adds a provision that LICs will not include any census tract where the median family income is 125 percent or greater of the area median family income. Under current law, a limited number of other census tracts that are not low-income communities can be designated if they are contiguous to a designated low-income community and the median family income of such tracts does not exceed 125 percent of the median family income of the contiguous low-income community.
Finally, the House bill includes much needed information reporting, including tax filing requirements for qualified opportunity funds and investors, as well as disclosures from qualified opportunity zone and qualified rural opportunity zone businesses. It institutes fines and other repercussions for noncompliance. The reporting requirements will likely be subject to objections under the Byrd rule in the Senate, so are likely to require separate legislation.
Unfortunately, the bill does not include an extension for New Markets Tax Credits or any provisions from the Neighborhood Homes Investment Act, which should also be added in the Senate. As Congress works toward final passage, housing must be a cornerstone of the bill to deliver on the promise of broad-based prosperity and economic opportunity and begin to effectively address the affordable housing crisis, as promised in the President’s day one executive order on housing affordability.