House Narrowly Passes Budget Bill
WASHINGTON, D.C. — The U.S. House of Representatives narrowly passed budget reconciliation tax legislation last week by a 215-214 vote. The bill includes key measures to expand affordable housing, extend the Opportunity Zones (OZ) incentive, and scale back certain clean energy tax credits. It now heads to the Senate.
The final House version includes four notable changes to the Low-Income Housing Tax Credit (LIHTC) program, effective from 2026 to 2029:
Lowering the 50% financed-by test threshold for developments using private activity bonds,
Reinstating the 12.5% increase in 9% LIHTC allocations that lapsed in 2021,
Allowing up to a 30% basis boost for properties in rural areas, and
Allowing up to a 30% basis boost for properties in tribal communities.
Additional provisions in the House-passed bill include an extension of the Opportunity Zones incentive, the creation of new OZ designations, and accelerated phaseouts and new restrictions on clean energy tax credits—particularly for entities of concern—originally established in the Inflation Reduction Act of 2022.
As the bill moves to the Senate, lawmakers are expected to consider further revisions. Possible additions include extending the New Markets Tax Credit (NMTC) and incorporating elements of the Historic Tax Credit Growth and Opportunity (HTC-GO) Act. The Senate is also likely to propose changes to both the Opportunity Zones and clean energy tax provisions.
