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.
- State housing finance agencies and nonprofit developers lose a key tool for financing mixed-income and workforce housing projects, potentially increasing reliance on direct appropriations or state/local funding.
- Real estate investment trusts (REITs) and institutional investors who structure LIHTC syndications lose a major asset class, redirecting capital away from affordable housing toward other real estate segments.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
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.
Named in the bill
Internal Revenue Code Section 42, Low-Income Housing Tax Credit (LIHTC), Department of Housing and Urban Development, State housing finance agencies, Nonprofit housing developers, Real estate investment trusts
Where it stands
1 cosponsor: 1 Republicans.
- May 21, 2025 — Introduced · Congress.gov: “Introduced in House”
- May 21, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (432 characters) on Apr 14, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,222 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
As of — page rendered 2026-10-20.
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