Proposed Bill Ends Low-Income Housing Tax Credit: What This Means for Affordable Rent

This bill, simply titled the Low-Income Housing Tax Credit Elimination Act, does exactly what it says on the tin. It proposes to immediately shut down the federal Low-Income Housing Tax Credit (LIHTC) program. The core provision in Section 2 states that no new housing tax credits will be calculated or issued for any building that starts service after this law is enacted. Essentially, the government is proposing to turn off the faucet for the main tool used to build affordable rental housing in the U.S.

The Affordable Housing Funding Cliff

To understand the real-world impact, you first need to know what LIHTC is. It’s not direct government spending; it’s a tax incentive. The government gives tax credits to private investors (like banks or corporations) who, in turn, invest that money into building or renovating housing units that must be kept affordable for low-income tenants for decades. For the last 30+ years, LIHTC has been the single largest source of funding for affordable housing development in the country. This credit is what makes the numbers work for developers—both non-profit and for-profit—to build a complex where rents are capped for people making 50% or 60% of the area median income.

What Happens When the Faucet Turns Off?

If this bill passes, the immediate effect is that the pipeline for new affordable housing projects dries up. Think about any new apartment complex you see being built that promises affordable units; chances are, it relies heavily on LIHTC to get off the ground. Under this bill, those projects stop. State and local housing finance agencies that rely on allocating these credits would have nothing left to give. For a developer planning a 100-unit project today, the ability to sell those tax credits to investors is what funds the bulk of the construction loan. Without that mechanism, that project—and thousands like it across the country—simply won’t get built.

Who Feels the Heat?

The people who will feel this change most acutely are the low-income renters themselves. If the supply of affordable housing stalls, competition for existing units increases, pushing rents up and making it harder for working families, seniors on fixed incomes, and entry-level workers to find stable housing. Imagine a single parent working two jobs who is already struggling to find a two-bedroom apartment that doesn't eat up 50% of their paycheck. Eliminating the primary federal tool for creating new affordable units means their search just got exponentially harder.

Furthermore, this creates a major headache for the entire affordable housing ecosystem—developers, contractors, non-profits, and the construction workers they employ. While the bill does cut a federal tax expenditure, it does so by directly removing the engine that drives affordable housing creation, without proposing any alternative funding mechanism. For those busy people juggling rising costs and housing insecurity, this bill is a clear signal that the already tough fight for affordable housing is about to get much, much tougher.