Historic Tax Credit Growth and Opportunity Act of 2025

Bill Number: H.R. 2941
Origin Chamber: House
Congress: 119th Congress, Session 1
Policy Area: Taxation
Status: Introduced
Latest Action: 2025-04-17: Referred to the House Committee on Ways and Means.
Last Updated: 2026-06-16T14:55:18Z

AI-Generated Summary

Purpose of the Legislation

The Historic Tax Credit Growth and Opportunity Act of 2025 aims to enhance the historic rehabilitation tax credit under the Internal Revenue Code of 1986. This credit incentivizes the restoration of historic buildings by making it more accessible, generous, and flexible, particularly for smaller projects and rural areas, to promote preservation, economic development, and job creation.

Key Provisions

Full Credit in Year of Service (Sec. 2): The 20% tax credit for qualified rehabilitation expenditures (costs for restoring certified historic structures) is now fully available in the taxable year when the building is placed in service (i.e., ready for use), rather than spread over multiple years.
Enhanced Credit for Small Projects (Sec. 3): Introduces a special 30% credit rate for "qualifying small projects" (new restorations placed in service after enactment with no prior credit claimed in the previous two years).
Expenditure cap: $3.75 million (increased to $5 million for projects in rural areas, defined as areas outside cities/towns over 50,000 population or adjacent urbanized zones per Census data).
Allows taxpayers to elect to transfer all or part of the credit to another party (e.g., for cash), with rules for certification, tax treatment (no deduction for buyers, income exclusion for sellers), recapture if the project fails, and IRS reporting.
Expanded Eligibility for Buildings (Sec. 4): Lowers the "substantial rehabilitation" threshold—now only 50% of the building's adjusted basis (its tax value after depreciation) in qualified expenditures is required, making more partial projects eligible.
No Basis Adjustment for Credit (Sec. 5): Eliminates the rule that reduces the building's tax basis (depreciable value) by the credit amount, allowing full depreciation benefits alongside the credit. This applies to both owners and lessees.
Eased Rules for Tax-Exempt Property (Sec. 6): Limits restrictions on credits for buildings used by tax-exempt entities (e.g., nonprofits). "Disqualified lease" rules (which block credits if leased to tax-exempt users under certain terms) now apply only to government entities, not private nonprofits.

Effective Dates:

Sec. 2 applies to buildings placed in service after December 31, 2023.
All other sections apply to buildings placed in service after the date of enactment.

Significant Changes to Existing Law

Acceleration and Increase: Shifts from phased credits to immediate full 20% availability and boosts to 30% for small/rural projects, expanding beyond the prior flat 20% rate.
Transferability: Newly permits selling credits for small projects, similar to rules under Section 6418 for other credits, which was not previously allowed for historic rehabilitation credits.
Lower Thresholds and Exceptions: Reduces rehabilitation spending requirements from 100% to 50% of adjusted basis; removes basis reduction (previously a 100% offset); and narrows tax-exempt use restrictions to governments only, broadening eligibility compared to prior blanket rules.

These changes make the credit more attractive and less punitive, addressing limitations that deterred smaller or nonprofit-involved projects.

Potential Impacts

On Citizens and Economy: Encourages more private investment in restoring historic buildings, potentially creating jobs in construction and tourism, especially in rural areas. Homeowners, developers, and small businesses may save on taxes or access cash via transfers, spurring urban revitalization and rural development.
On Government Agencies: The IRS will need to implement new certification, transfer, and reporting processes, increasing administrative workload but with guidance modeled on existing credit transfer rules. The U.S. Treasury may see short-term revenue loss from higher/more credits claimed (estimated billions over time), offset by economic growth.
International Relations: Minimal direct impact, though it could indirectly support U.S. cultural heritage preservation, appealing to international tourism and heritage organizations.

Main Stakeholders Affected

Taxpayers and Developers: Building owners, real estate investors, and contractors benefit from easier access, higher rates, and transfer options, particularly for small-scale or rural projects.
Nonprofit and Community Organizations: Groups involved in historic preservation (e.g., museums, charities) gain from relaxed tax-exempt rules and basis adjustments, enabling more partnerships.
Rural Communities: Higher caps and incentives target underserved areas, aiding local economies.
Government and Regulators: IRS and state historic preservation offices handle certifications and oversight; federal budget affected by credit expansions.
Historic Preservation Advocates: Entities like the National Trust for Historic Preservation support increased funding for maintaining cultural sites.

Notable Legal, Constitutional, or Political Implications

Legal: Aligns with existing tax credit frameworks (e.g., Sections 46-50 of the Internal Revenue Code) but introduces transferability, requiring IRS regulations to prevent abuse (e.g., via recapture rules if projects fail). No challenges to credit eligibility certifications from the National Park Service.
Constitutional: No apparent issues; tax incentives are standard congressional authority under Article I, Section 8 (taxing and spending powers). Changes promote equal treatment by easing burdens on private vs. public entities.
Political: Bipartisan sponsorship (Reps. LaHood and Suozzi) signals broad support for cultural/economic policy. Could influence future tax reforms by modeling credit transfers, but may face debate over federal revenue costs amid budget constraints. Neutral on partisan divides, focusing on heritage and growth.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. LaHood, Darin [R-IL-16]

Cosponsors (48)

Rep. Suozzi, Thomas R. [D-NY-3], Rep. Bishop, Sanford D. [D-GA-2], Rep. Boyle, Brendan F. [D-PA-2], Rep. Schrier, Kim [D-WA-8], Rep. Budzinski, Nikki [D-IL-13], Rep. Krishnamoorthi, Raja [D-IL-8], Rep. Yakym, Rudy [R-IN-2], Rep. Cleaver, Emanuel [D-MO-5], Rep. Davids, Sharice [D-KS-3], Rep. Matsui, Doris O. [D-CA-7], Rep. Omar, Ilhan [D-MN-5], Rep. Harder, Josh [D-CA-9], Rep. Craig, Angie [D-MN-2], Rep. Tenney, Claudia [R-NY-24], Rep. Moore, Gwen [D-WI-4], Rep. Mrvan, Frank J. [D-IN-1], Rep. Riley, Josh [D-NY-19], Rep. Strickland, Marilyn [D-WA-10], Rep. Carter, Troy A. [D-LA-2], Rep. McClain Delaney, April [D-MD-6], Rep. Stanton, Greg [D-AZ-4], Rep. Kustoff, David [R-TN-8], Rep. Jayapal, Pramila [D-WA-7], Rep. Pou, Nellie [D-NJ-9], Rep. Gillen, Laura [D-NY-4], Rep. Turner, Michael R. [R-OH-10], Rep. Magaziner, Seth [D-RI-2], Rep. Castor, Kathy [D-FL-14], Rep. Carey, Mike [R-OH-15], Rep. Sorensen, Eric [D-IL-17], Rep. Wittman, Robert J. [R-VA-1], Rep. Miller, Carol D. [R-WV-1], Rep. McGuire, John J. [R-VA-5], Rep. Landsman, Greg [D-OH-1], Rep. Doggett, Lloyd [D-TX-37], Rep. Ross, Deborah K. [D-NC-2], Rep. McCollum, Betty [D-MN-4], Rep. Fitzgerald, Scott [R-WI-5], Rep. Mannion, John W. [D-NY-22], Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Moran, Nathaniel [R-TX-1], Rep. Kennedy, Timothy M. [D-NY-26], Rep. Latimer, George [D-NY-16], Rep. Goldman, Daniel S. [D-NY-10], Rep. Thanedar, Shri [D-MI-13], Rep. Davis, Donald G. [D-NC-1], Rep. Meng, Grace [D-NY-6], Rep. Deluzio, Christopher R. [D-PA-17]

Recent Actions

2025-04-17: Referred to the House Committee on Ways and Means.
2025-04-17: Introduced in House
2025-04-17: Introduced in House

Bill Versions

Historic Tax Credit Growth and Opportunity Act of 2025 — issued 2025-04-17 — PDF (9 pages)