Congress moves to eliminate federal affordable housing tax credit
H.R. 3540 — Low-Income Housing Tax Credit Elimination Act · Filed by Glenn Grothman (R-WI) · 1 cosponsor · Introduced May 21, 2025 · Referred to committee
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What it does
This bill eliminates the Low-Income Housing Tax Credit (LIHTC) by prohibiting any new buildings from qualifying for the credit after the bill's enactment. The LIHTC is a federal tax incentive that has financed affordable housing development for decades; ending it would halt new affordable housing projects that rely on this funding mechanism, shifting costs to other sources or reducing affordable housing supply.
Why we flagged it
The bill's sole operative mechanism is a sunset clause terminating the Low-Income Housing Tax Credit prospectively. It is a direct elimination of a major federal affordable housing funding tool, not a reform or restructuring.
What the text implies
- Eliminates the primary federal funding mechanism for affordable housing development; no replacement funding source is specified, likely resulting in sharp contraction of new affordable housing supply.
- Existing buildings already placed in service retain their credits through the credit period, but no new projects can access the incentive, creating a cliff effect in affordable housing investment.
The full analysis lists 4 implications of this text.
Who it affects
Eliminating the LIHTC removes the primary federal tax incentive financing affordable housing development. Low-income renters and prospective homebuyers lose access to housing units that would have been built under the credit; housing costs rise or supply contracts for the most economically vulnerable populations.