New $1.5B annual housing tax credit targets working families—but complexity favors big developers.
H.R. 893 — Working Families Housing Tax Credit Act · Filed by Patrick Ryan (D-NY) · Introduced Jan 31, 2025 · Referred to committee
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What it does
This bill creates a new federal tax credit called the 'Working Families Housing Tax Credit' (Section 42A of the Internal Revenue Code) to incentivize construction and rehabilitation of rental housing for working families earning up to 180% of area median income. Developers and property owners who build or rehabilitate qualifying buildings receive tax credits worth 2–5% of construction costs annually over 15 years, with higher credits (up to 130% of basis) in high-cost areas. The bill requires 20% of units to serve households at 60% of median income and 40% to serve households up to the designated income limit, with rents capped at 30% of tenant income.
Why we flagged it
The bill's core function is to create a new federal tax credit mechanism for residential rental housing development, modeled on the existing Low-Income Housing Tax Credit (Section 42) but with a broader income-targeting band (up to 180% AMI vs. 60% AMI). It is a tax-expenditure subsidy for real estate development.
What the text implies
- The bill allows developers to elect when to begin the 15-year credit period, creating timing arbitrage opportunities and potential for strategic allocation of credits across multiple projects.
- The 'difficult development area' designation can be made by state housing agencies without federal oversight, potentially allowing credits to flow to less-needy areas if agencies prioritize developer relationships.
The full analysis lists 5 implications of this text.
Who stands to gain
real estate developers; property owners and investors; construction companies