Senate Finance Committee Chairman Mike Crapo (R-ID) late yesterday released the tax title of the Senate reconciliation bill, following House passage of that chamber’s version of the legislation last month. The Senate bill contains an even greater expansion of the Housing Credit than that provided by the House-passed bill. The Senate’s draft amendment contains two major provisions:
- Increasing 9 Percent Credit Housing Credit authority by 12 percent permanently
- Lowering the 50 percent private activity bond (PAB) threshold test to 25 percent permanently
While the increase in Housing Credit authority is slightly smaller on a percentage basis and the Senate bill does not contain the up-to-30 percent basis boosts for properties in rural and tribal communities, its expansion of Housing Credit resources overall outpaces what is provided in the House bill due to the permanent nature of the provisions.
Novogradac will soon provide updated estimates of unit production under the Senate language, however, based on its prior estimate for the Affordable Housing Credit Improvement Act’s permanent provisions, the Senate bill would produce more than one million affordable homes over the next decade than otherwise possible. The House-passed bill would have increased the 9 Percent Credit by 12.5 percent, instead of 12 percent, for four years; lowered the 50 percent test for bond-financed 4 Percent Credit properties for four years, and created the two basis boosts for rural and tribal communities for four years; it would have produced 527,700 additional affordable homes nationwide.
Senate leadership still needs to reach buy in amongst Republican members, with several members expressing disagreements with aspects of the bill not related to affordable housing. Senate and House Republicans also need to work out differences between the chambers and find an agreement that can pass both chambers. Slim Republican majorities and vastly different priorities of various members will make this a difficult task. Major sticking points remain related to Medicaid cuts, the state and local tax deduction limit, and the phase-out schedule for clean energy tax cuts, among others.
Depending on how negotiations go, the Senate could consider the bill next week in a floor vote. They would need to keep to this pace if Congress is to pass the bill before July 4, as Republican leaders hope. Timing could slip, but leadership cannot push it back too far, as the bill must pass before the nation hits the X-date after which Treasury would no longer be able to use extraordinary measures to prevent a default on the debt. Treasury Secretary Bessent estimates the X-date would occur sometime in August. Both the House and Senate versions of the bill would raise the debt limit, preventing default.
ACTION encourages advocates to remain engaged with Republican members in both chambers. Once Novogradac updates its estimates for the Senate bill, ACTION will include that information in its reconciliation one-page factsheets, so stand by for updated materials soon.
