HB3964, titled the Affordable Housing Equity Act of 2025, would amend the Internal Revenue Code to expand the low-income housing tax credit for certain projects serving extremely low-income households. The bill creates a special rule for buildings in which at least 20 percent of residential units are reserved for households with incomes at or below the greater of 30 percent of area median gross income or 100 percent of the federal poverty line, and only where a housing credit agency determines that the increased credit is needed to make the project financially feasible.
For qualifying units, the bill increases the eligible basis used to calculate the credit to 150 percent of the otherwise applicable basis, effectively making the tax credit more valuable for developers of these projects. The measure applies prospectively to buildings receiving housing credit allocations after enactment, or, for certain bond-financed projects, to issues dated after December 31, 2025.
Impact
The bill would amend section 42 of the Internal Revenue Code, which governs the federal low-income housing tax credit (LIHTC) program. Its practical effect would be to increase federal tax incentives for developers and investors in affordable housing projects that set aside a significant share of units for extremely low-income households, potentially improving project feasibility and encouraging more deeply affordable rental housing production.
Sentiment
Based on the available context, the bill appears to have a supportive policy framing focused on expanding affordable housing supply for the lowest-income renters. There is no recorded committee debate or vote history in the provided materials, so no formal opposition or bipartisan division is documented here. The introduction by members of the House and referral to Ways and Means suggests it is at an early legislative stage.
Contention
The main policy issue embedded in the bill is whether increasing the tax credit is the best way to spur development of housing for extremely low-income households, since the proposal directs more federal tax subsidy to a narrower class of projects. Potential points of contention would likely involve cost to the Treasury, whether the income targeting is sufficiently strict, and whether the housing credit agency’s feasibility determination gives too much or too little discretion. No specific objections or supporters are recorded in the provided transcript or vote materials.