Legislative Update
Affordable Housing Credit Improvement Act (AHCIA)
A bipartisan LIHTC expansion package. Its two largest provisions —
a permanent 12% increase in each state's Housing Credit allocation and
a permanent reduction in the 4% bond financing threshold from 50% to 25%,
subject to statutory effective-date and bond-issue rules,
— were enacted into law via the reconciliation bill signed
on July 4, 2025. Remaining AHCIA provisions are still pending as H.R. 2725
and S. 1515 in the 119th Congress.
Published: June 10, 2026
Enacted provisions: 12% credit increase · 25% bond threshold (Jul 2025 reconciliation)
Remaining AHCIA: H.R. 2725 · S. 1515 (in committee)
+12%
Permanent Housing Credit allocation increase (enacted Jul 2025)
25%
Private activity bond financing threshold (down from 50%, subject to post-2025 effective-date rules)
~1.6M
Additional affordable homes projected over a decade if full AHCIA enacts (per the bipartisan sponsors)
100+ R + D
House cosponsors of the remaining AHCIA bill (59 R / 58 D); 30 in the Senate
Major Development — July 2025 reconciliation
On July 4, 2025, the President signed a reconciliation bill that includes the
largest investment in the federal Low-Income Housing Tax Credit in decades. Two of AHCIA's
cornerstone provisions are now Enacted into law:
- Permanent +12% Housing Credit allocation: each state's 9% LIHTC ceiling is permanently increased by 12% for calendar years beginning after December 31, 2025, expanding the annual allocation available to state housing finance agencies including CHFA.
- Permanent 25% private activity bond threshold: down from 50% for qualifying buildings placed in service after the statutory effective date, with the 25% path tied to post-2025 bond issuance and minimum basis-financing rules. Lowering the bond test materially improves the feasibility of 4% bond deals, especially in high-cost markets.
What this means for the Colorado LIHTC pipeline
- Larger annual 9% round: CHFA's allocation rises permanently — more credits available each year for competitive 9% deals across the state.
- 4% bond deals pencil more often: the 25% bond test reduces the bond cap required for a deal to qualify for 4% credits, expanding the pool of financially viable 4% projects.
- Pricing implications: investor demand will adjust to the new supply of allocations and bond-eligible projects; sponsors should track equity-pricing updates from syndicators.
Remaining AHCIA provisions still pending
H.R. 2725 (House) and S. 1515 (Senate) carry additional AHCIA provisions that did not move
with the July 2025 reconciliation bill — including expanded rural/tribal feasibility,
tenant-population set-asides, qualified census tract designation adjustments, and program
simplification. Both measures remain referred to their tax-writing committees (Ways & Means;
Senate Finance) and are most likely to advance as part of a broader tax extenders package.
Bill Name & Sponsors — pending AHCIA 2025
Bill Affordable Housing Credit Improvement Act of 2025
| Chamber |
Bill |
Lead Sponsor |
Status |
| House |
H.R. 2725 |
Rep. Darin LaHood (R-IL) |
Referred to Ways & Means (Apr 8, 2025); 100+ cosponsors |
| Senate |
S. 1515 |
Sen. Todd Young (R-IN) |
Referred to Finance (Apr 29, 2025); 30 cosponsors |
Likelihood of further enactment
With the two largest AHCIA provisions already enacted via the July 2025 reconciliation
bill, the political pressure for a standalone AHCIA passage is lower. The remaining
provisions are more likely to advance piecemeal in subsequent tax or housing-supply
packages.
What to watch
- Ways & Means and Senate Finance markup calendars for housing-credit provisions.
- End-of-session tax extenders packages that could carry remaining AHCIA elements.
- CHFA's implementation guidance for the enacted 12% allocation and 25% bond threshold.
- Treasury and IRS regulations interpreting the bond-test change for projects placed in service from 2026 onward.
Key Provisions Impacting LIHTC Production
1) Expand 9% credit allocations
- Increases resources available to allocating agencies over multiple years.
- Why it matters: more 9% authority generally supports more new construction and preservation deals closing each year.
2) Lower the 4% bond financing threshold
- Commonly described as moving the private activity bond financing test from ~50% to ~25%, subject to post-2025 placed-in-service, bond-issuance, and minimum basis-financing requirements.
- Why it matters: expands the number of projects that can qualify for 4% credits, improving feasibility in high-cost markets.
3) Improve feasibility for rural/underserved areas
- Adjustments intended to help projects pencil in rural, tribal, and other hard-to-reach communities.
Market Impact: LIHTC Pricing
- Demand support: more projects and more credits can increase investor deployment needs.
- Pricing sensitivity: outcomes depend on rates, corporate tax appetite, and CRA-driven demand.
- Timing: pricing effects are typically strongest once enactment becomes likely (or is final).
Impact Timeline
- Enactment year: market reprices risk and updates forward commitments.
- 12–24 months: HFAs implement allocation changes; 4% volume rises as bond deals pencil.
- 24+ months: measurable increase in starts and closings as the pipeline turns.