H.R.3964 - Affordable Housing Equity Act of 2025 (119th Congress)
Summary
H.R. 3964, the Affordable Housing Equity Act of 2025, proposes an amendment to the Internal Revenue Code of 1986. The amendment aims to increase the low-income housing tax credit specifically for projects that are designated to serve extremely low-income households. The bill was introduced in the House of Representatives on June 12, 2025, and was referred to the Committee on Ways and Means.
The bill targets households with aggregate incomes not exceeding the greater of 30% of the area median gross income or 100% of the federal poverty line. It allows for an increase in the eligible basis of such housing projects to 150% of the basis determined without regard to this provision.
The effective date of the amendment applies to buildings receiving housing credit dollar allocations after the enactment date, or for certain bond-financed buildings, to obligations issued after December 31, 2025.
Expected Effects
The primary effect of this bill, if enacted, would be to incentivize the development of affordable housing for extremely low-income households. This is achieved by increasing the financial attractiveness of such projects through enhanced tax credits.
This could lead to an increase in the supply of housing units available to this demographic. It may also encourage developers to allocate a larger portion of their projects to extremely low-income households.
Potential Benefits
- Increased Affordable Housing: The bill directly promotes the creation of more affordable housing units for extremely low-income households.
- Financial Feasibility: By increasing the tax credit, the bill makes projects targeting this demographic more financially viable for developers.
- Targeted Support: The bill specifically targets those with the greatest need, ensuring resources are directed where they are most impactful.
- Community Development: Increased availability of affordable housing can contribute to stronger, more diverse communities.
- Potential Economic Stimulus: Construction and management of these housing projects can create jobs and stimulate local economies.
Potential Disadvantages
- Potential for Increased Tax Burden: Increased tax credits could potentially lead to a higher tax burden on other taxpayers or necessitate cuts in other government programs.
- Complexity of Implementation: The specific requirements and designations may create administrative complexities for housing credit agencies and developers.
- Risk of Inefficient Allocation: There is a risk that the increased credit may not always be allocated to the most deserving or effective projects.
- Limited Scope: The bill only addresses housing for extremely low-income households, potentially neglecting other segments of the population in need of affordable housing.
- Potential for unintended consequences: Artificially inflating the eligible basis could lead to market distortions.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble). The Preamble states that one of the purposes of the Constitution is to "promote the general Welfare". Providing affordable housing to extremely low-income households can be argued to fall under this clause.
Furthermore, Congress has the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States (Article I, Section 8, Clause 1). The low-income housing tax credit is a mechanism by which Congress can use its taxing power to promote the general welfare.
However, the Constitution does not explicitly mandate the provision of housing. Therefore, the extent to which this bill aligns with the Constitution is subject to interpretation.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).