Affordable Housing Equity Act of 2025

The Affordable Housing Equity Act of 2025 would modify the federal low-income housing tax credit (LIHTC) by creating a new, higher credit for projects that designate a substantial portion of their units for extremely low-income households. Specifically, if at least 20% of the building’s units are set aside for households with income at or below the greater of 30% of area median gross income (AMI) or 100% of the federal poverty line, and the housing credit agency designates that the increased credit is needed for the project to be financially feasible, then those units receive a boosted credit. The bill increases the eligible basis for those units to 150% of the basis that would apply without this provision, and those units would be excluded from certain standard calculations applying to the rest of the building. The measure applies to LIHTC allocations issued after enactment, and to certain 42(h)(4)(B) bonds issued after December 31, 2025. In short, the bill aims to widen the use of LIHTC to deliver more housing affordable to the deepest income levels by offering a higher tax credit for qualifying extremely low-income units, contingent on agency approval and project feasibility.