Some Good News for Affordable Housing: The “One Big Beautiful Bill” Boosts LIHTC and More

On July 4, President Trump signed the sweeping “One Big Beautiful Bill” (OBBB) into law. Buried in the fireworks are some serious wins for affordable housing—and especially for developers and investors using the Low-Income Housing Tax Credit (LIHTC).

More Credits to Go Around

Starting in 2026, states will see a permanent 12.5% increase in their annual LIHTC allocation. For states like Maine and New Hampshire—each with roughly $4 million in 2024 credits—that’s an extra $500,000 a year to support critically needed affordable housing.

4% Deals Just Got Easier

The OBBB slashes the tax-exempt bond financing requirement from 50% of project cost down to 25%—and this change is permanent. That means more flexibility and greater reach for agencies like MSHA and NHHFA, who can now spread their bond volume across more projects. Expect more viable 4% deals as a result.

Bonus Depreciation: Locked In

The bill makes 100% bonus depreciation permanent, a move that enhances the after-tax returns for investors, especially in 4% credit transactions. That’s another arrow in the quiver when assembling project capital stacks.

Beyond Housing: Big Wins for Community Development

The OBBB doesn’t stop at LIHTC. It also:

· Makes the New Markets Tax Credit program permanent, with a $5 billion annual allocation.

· Makes Opportunity Zones permanent and includes incentives to channel capital into rural Opportunity Zones.