Sponsors (2)
The bill speeds tax relief and liquidity to low-income housing developers—likely accelerating affordable housing production—but does so at the cost of lower near-term federal revenue and added compliance/administrative burdens.
Developers and owners of low-income housing (including small-business owners and financial institutions) can carry back LIHTC-related tax attributes up to five years, letting them recover tax benefits sooner and improving project liquidity.
Low-income individuals stand to gain from faster construction or rehabilitation of affordable housing because increased liquidity and tax relief make projects more likely to proceed or accelerate.
Taxpayers and state governments benefit from clearer statutory guidance to the IRS and taxpayers on how the credit and carryback rules apply, reducing legal uncertainty for tax planning.
All taxpayers could face reduced federal revenue in the short term because extending LIHTC carrybacks lowers near-term tax receipts, potentially increasing deficits or crowding out other federal spending priorities.
Developers, financial institutions, and the IRS may incur higher compliance and administrative costs because the changes to the Internal Revenue Code are complex and will likely require new guidance and implementation work.
Based on analysis of 2 sections of legislative text.
Allows a five-year carryback for the low-income housing tax credit, letting credit holders apply unused credits to prior taxable years.
Official title: Amend the Internal Revenue Code of 1986 to allow 5-year carrybacks for the low-income housing tax credit.
Introduced August 7, 2026 by Ruben Gallego · Last progress August 7, 2026
Allows owners or developers who claim the low-income housing tax credit (LIHTC) to carry back unused credits up to five years to earlier taxable years, increasing near-term tax relief. The change applies to taxable years beginning after the date of enactment and alters section 39(a)(3) of the Internal Revenue Code.