Workforce Housing Tax Credit Act
- Bill Number
- H.R. 8626
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-04-30: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-05-15T18:24:40Z
AI-Generated Summary
Purpose
The Workforce Housing Tax Credit Act (H.R. 8626) creates a new tax credit under Internal Revenue Code section 42A to encourage investment in rental housing for middle-income households (those earning up to 100% of area median gross income, or AMGI). It aims to increase the supply of affordable workforce housing by providing developers and investors with tax incentives similar to the existing low-income housing tax credit (LIHTC under section 42).
Key Provisions
- Credit Calculation:
- Credit equals an applicable percentage (set by the Treasury Secretary to yield ~50% present value of qualified basis for new non-federally subsidized buildings over 15 years; ~20% for others; minimums of 5% or 2%) times the qualified basis.
- Qualified basis = smaller of (unit fraction or floor space fraction) of middle-income units × eligible basis (adjusted basis of building).
- Qualified Middle-Income Housing Project:
- At least 60% of units must be rent-restricted (rent ≤30% of imputed income limit based on 100% AMGI) and occupied by households ≤100% AMGI.
- At least 20% of units must be middle-income units not counted under LIHTC (section 42).
- Eligibility:
- Applies to new buildings, certain existing buildings (purchased after 10 years out-of-service), and rehabilitation expenditures (min. 20% of basis or per-unit threshold).
- Boosts (130%) for high-cost qualified census tracts or difficult development areas.
- 15-year credit period; requires extended use commitment (min. 15 years post-credit period) recorded as a covenant.
- Allocation and Limits:
- State housing credit agencies allocate from a state ceiling ($1.50 per capita or $1.5M min., adjusted for inflation post-2026; carryovers/returns).
- 10% set-aside for nonprofits; rural boost; option to transfer ceiling to LIHTC.
- Must follow qualified allocation plan prioritizing long-term affordability, need, transit proximity, etc.
- Reporting and Compliance:
- Taxpayer certifications; agency reports to IRS; penalties for noncompliance.
- Excludes low-income units; coordinates with LIHTC (e.g., basis reductions).
Significant Changes to Existing Law
- New Parallel Credit: Adds section 42A alongside LIHTC (section 42), targeting 60-100% AMGI (vs. LIHTC's typical ≤60% AMGI focus). Middle-income units explicitly exclude LIHTC units.
- Integration with Business Credits: Adds to general business credit (section 38); adjusts basis rules (section 1016), at-risk rules, and base erosion tax.
- Effective Date: Applies to buildings placed in service after December 31, 2025.
- Mirrors LIHTC Structure: Adopts ~90% of LIHTC rules (e.g., allocations, extended use, rehab) with tweaks for middle-income focus.
Potential Impacts
- Government Agencies: Increases IRS oversight and state agency workloads (allocations, monitoring); promotes coordination with HUD programs.
- Citizens: Boosts rental housing supply for middle-income families (e.g., teachers, firefighters), potentially lowering rents/stabilizing costs; tenant protections (e.g., no evictions post-extended use without cause).
- Developers/Investors: Attracts equity via syndication; incentives for rehab, rural/high-cost areas.
- Housing Market: Complements LIHTC; may spur 10s of thousands of units annually (based on LIHTC scale).
Main Stakeholders
- Developers and Investors: Claim credits; must meet affordability rules.
- Middle-Income Renters (≤100% AMGI): Beneficiaries of rent-restricted units.
- State Housing Credit Agencies: Allocate credits; enforce compliance.
- Nonprofits: 10% set-aside; ownership/material participation priority.
- Existing LIHTC Owners: Coordination to avoid overlap; ceiling transfer option.
Notable Legal, Constitutional, or Political Implications
- Legal: Heavy delegation to Treasury Secretary for rates/regulations (similar to upheld LIHTC); enforceable tenant rights in state courts; anti-abuse rules (e.g., recapture for noncompliance).
- Constitutional: Valid tax expenditure; no takings/narrow tailoring issues (voluntary incentives).
- Political: Expands housing tax incentives amid affordability crisis; neutral bipartisan appeal (sponsors: Panetta, Carey, Nunn); prioritizes workforce housing without displacing low-income programs.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (2)
Rep. Carey, Mike [R-OH-15], Rep. Nunn, Zachary [R-IA-3]
Recent Actions
- 2026-04-30: Referred to the House Committee on Ways and Means.
- 2026-04-30: Introduced in House
- 2026-04-30: Introduced in House
Bill Versions
- Workforce Housing Tax Credit Act — issued 2026-04-30 — PDF (87 pages)