Workforce Housing Tax Credit Act

Key Points

• This bill creates a brand-new federal tax credit for building and rehabilitating rental housing aimed at middle-income workers. It targets households earning up to 100% of area median income who make too much to qualify for low-income housing programs but still struggle with high rents.
• The tax credit runs for 15 years and covers up to 50% of a new building's qualified basis (or 20% for federally subsidized buildings). There is a minimum credit rate of 5% for non-subsidized buildings and 2% for subsidized ones, giving developers a reliable incentive.
• Rents in qualifying units must stay at or below 30% of the imputed income limit for each unit, and building owners must sign an extended commitment to keep units affordable for at least 15 years after the credit period ends. Evictions and rent hikes are restricted even after the commitment expires.
• Each state gets a credit ceiling based on population ($1.00 per person or $1,500,000 minimum), adjusted for inflation starting in 2027. State housing agencies decide which projects receive credits using a required allocation plan that prioritizes areas with insufficient affordable housing and projects near transit hubs.
• At least 10% of each state's credit ceiling is reserved for projects involving qualified nonprofit organizations, and an extra 5% boost goes to projects in rural areas. States can also transfer some of their middle-income ceiling to the existing low-income housing tax credit program if local needs call for it.
• The credits apply to buildings placed in service after December 31, 2025. Buildings in high-cost areas or difficult development zones get a 130% boost to their eligible basis, making the credit more generous where construction costs are highest.