NLIHC Statement on Congress’s Bipartisan Tax Proposal

Congressional leaders announced earlier this week a bipartisan tax proposal that expands the Child Tax Credit and certain provisions of the Low-Income Housing Tax Credit (LIHTC). However, the proposal fails to significantly expand LIHTC or to include key reforms to ensure homes built with these resources are affordable to America’s lowest-income and most marginalized households, including those experiencing homelessness.

“By failing to include critically needed reforms to our nation’s largest source of financing for affordable rental housing, Congress continues to neglect the housing needs of those experiencing or at risk of homelessness,” stated NLIHC President and CEO Diane Yentel. “Increased homelessness is the tragic, yet predictable, consequence of underinvesting in the resources and protections that help people find and maintain safe, affordable housing. Despite the clear and pressing need, this tax package’s housing provisions will do little to help states and communities address America’s growing homelessness crisis and will leave too many unhoused people without a safe, affordable place to call home.”

Homelessness in the U.S. increased by 12% in 2023 to the highest level recorded since the federal government began counting the number of people experiencing homelessness in 2007. More than 650,000 people experience homelessness on any given night, and millions more are at risk of homelessness due to sky-high rents, increased eviction filings, and depleted or expired pandemic-era resources and protections.

The primary cause of homelessness is the lack of rental homes affordable to households with the lowest incomes and the widening gap between wages and housing costs. There is a national shortage of more than 7.3 million homes affordable and available for renters with the lowest incomes – a shortage that worsened significantly during the pandemic. Without affordable, available housing options and higher incomes, more than 10 million of America’s lowest-income households, disproportionately people of color, pay at least half their income on rent and utilities. With so much money going to keep a roof over their heads, renters with the lowest incomes are forced to live precariously, always one unexpected expense – for a broken-down car or unreimbursed medical bill – away from housing instability, eviction, and, in the worst cases, homelessness. Yet Congress only provides housing assistance to one in four eligible households.

The tax package restores a temporary 12.5% increase to the Low-Income Housing Tax Credit that previously expired in 2021, and it supports the increased use of private activity bonds to finance affordable housing. Reforms to incentivize developers to prioritize extremely low-income households and to help build more affordable rental homes in rural and Tribal areas are not included in the deal announced today.

The Low-Income Housing Tax Credit is the nation’s primary source of financing for the construction and preservation of affordable rental housing, but on its own, the tax credit is rarely used to build or preserve homes affordable to households with the greatest and clearest needs. Apartments built with the Low-Income Housing Tax Credit are typically too expensive for extremely low-income households to afford. The majority (58%) of extremely low-income renters living in developments financed with the Low-Income Housing Tax Credit who do not receive additional support through rental assistance are severely cost-burdened, paying more than half their limited income on rent. Despite living in federally financed affordable housing, these households are often one emergency or unexpected expense away from the risk of homelessness.

To fully address the affordable housing and homelessness crises, Congress must provide the significant, long-term investments needed to preserve and expand housing stock affordable to people with the lowest incomes. Congress must also make rental assistance universally available, create a permanent emergency rental assistance program, and strengthen and enforce robust tenant protections.