S 5625: Affordable Housing Construction Act

S 5625 in plain English: This bill would increase the per-capita and small-state minimum dollar amounts used to calculate Low-Income Housing Tax Credit (LIHTC) allocations under the federal tax code, raising the per-capita figure from $1.75 to $9.79 and the small-state minimum from $2,000,000 to $11,340,000, with inflation adjustments reset to a 2026 base year.

Stated purpose

The bill aims to expand the Low-Income Housing Tax Credit (LIHTC) program by increasing the amount of credits available to states and adding larger credits for affordable housing projects that meet certain building standards, in order to encourage construction of more affordable housing.

Key points

• Raises the per-capita LIHTC allocation amount from $1.75 to $9.79
• Raises the small-state minimum LIHTC allocation from $2,000,000 to $11,340,000
• Resets the inflation adjustment baseline from 2001 to 2026, with new caps applying after 2027

Arguments supporters make

• The current credit amounts have not kept up with rising construction costs, and this large increase gives developers the financial push needed to actually build more affordable units.
• Bonus credits for prevailing wages, renewable energy, and transit access encourage not just more housing, but higher-quality, more sustainable, and better-located housing for low-income families.
• Expanding LIHTC builds on a proven, bipartisan tool that has financed affordable housing for decades without directly spending federal dollars the same way a grant program would.

Arguments opponents make

• Raising the per-capita credit amount from $1.75 to $9.79 — more than a fivefold increase — represents a very large reduction in federal tax revenue, and critics may argue the cost to taxpayers is not justified by the number of units likely to be produced.
• Requiring prevailing wages as a condition for the largest credit boost could raise construction costs significantly, potentially reducing the number of projects that pencil out and offsetting some of the housing supply gains the bill seeks.
• Tax credits primarily benefit investors and developers rather than renters directly, and skeptics argue that subsidizing construction through the tax code is a less efficient or equitable way to address housing affordability than other approaches.

Tradeoffs

The bill offers larger financial incentives to spur affordable housing construction, but the added credit conditions — like prevailing wages and renewable energy requirements — may increase project costs and complexity, potentially limiting how many developers participate or how many units get built. The expanded credits also reduce federal tax revenue, creating a tension between the cost to the public and the housing benefit delivered.

Current status in Congress: In committee.

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