Legislative State-of-Play
Federal Government Shuts Down
On October 1, the federal government shut down after Congress failed to reach a spending deal for Fiscal Year 2026, which started that day. As with all government shutdowns, the impact on affordable housing depends on the length of the shutdown: the longer the government is shuttered, the greater the impact. While the Housing Credit itself is largely not impacted by the shutdown, as it is a tax credit administered by states, the impact on HUD programs is more nuanced, depending on the program and the extent to which HUD staff—most of whom are furloughed—are required for program operations.
Federal agencies are required to post contingency plans ahead of shutdowns detailing which offices and programs will remain functioning, and to what degree. Explore the contingency plans of the IRS, HUD, and USDA. HUD’s indicates that households receiving HUD assistance will keep receiving on-time rent payments through November, among other limited functions. For more details on the impact of a shutdown, see ACTION co-chair NCSHA’s blog post.
Discussions Continue about Additional Tax Legislation
Several news articles in recent weeks have highlighted comments made by Members of Congress about their interest in additional tax legislation later this year. Both chambers’ chief tax-writers, Senate Finance Committee Chairman Mike Crapo (R-ID) and House Ways and Means Committee Chairman Jason Smith (R-MO-08), have spoken publicly about potential tax legislation that could be negotiated by the end of 2025. Chairman Crapo reiterated his previous comments about many provisions from the budget reconciliation process earlier this year being left on the cutting room floor, while stating his preference that a second tax bill this year be bipartisan. Chairman Smith indicated that he’s open to a tax package that deals with an expiring healthcare subsidy. Other key tax-writers and members of leadership have also commented on a tax package that could include this healthcare subsidy and other proposals with strong support. While another tax package in this Congress is far from a certain, ACTION is preparing for any opportunity to advance additional AHCIA provisions should a vehicle become more likely.
Rep. Gomez Hosts Housing Affordability Summit
On September 3, AHCIA original cosponsor Rep. Jimmy Gomez (D-CA-34) hosted a National Housing Affordability Summit, an all-day event that convened Members of Congress and affordable housing advocates and stakeholders – including several ACTION members. Throughout the summit, the importance of the Housing Credit was raised as a critical tool for financing the creation and preservation of affordable housing.
September AHCIA Cosponsorship Update: AHCIA Clears 200 Cosponsors in Congress!
Are we still building cosponsorship of the AHCIA after the tax reconciliation bill was enacted some of our Housing Credit priorities? YES! And we need your help to leverage the momentum from the reconciliation votes to keep adding Republicans to the bill. This is important should there be additional opportunities to advance a tax package in the remainder of this Congress and to build an even stronger foundation of support for the next Congress.
The AHCIA currently has over 37 percent of Congress cosponsoring, with support evenly divided by Republicans and Democrats. In the House, there were two new cosponsors this past month, bringing the total number of cosponsors there to 159.
- Josh Riley (D-NY-19)
- Pat Harrigan (R-NC-10)
We are continuing to add Republicans and Democrats to the bill in pairs and numerous Democrats are still in the queue to join as cosponsors, so please keep up your efforts to enlist more Republicans.
Administration Updates
IRS Finalizes Average Income Test Recordkeeping and Reporting Regulations
On September 30, the IRS published final regulations for the Average Income Test (AIT) recordkeeping and reporting. The final regulations replace proposed and temporary regulations issued in 2022, which were published together with the final rule implementing the AIT more broadly. The final recordkeeping and reporting regulations include new adjustments suggested by ACTION members NCSHA and Novogradac in a joint comment letter intended to simplify reporting for owners and streamlining the process of correcting noncompliance.
As a reminder, the AIT allows owners of Housing Credit properties to serve households earning up to 80 percent of area median income (AMI), as long as the average unit designation in each building is no more than 60 percent of AMI, meaning that to serve higher-income (but still low-income) households, owners would also need to target some units to households further down the income spectrum to achieve the average. This allows for greater income diversity and cross-subsidization so that more units can be built for extremely low-income households. It also makes development in rural areas more feasible by expanding the population who could live in Housing Credit developments. Enactment of the AIT in 2018 was one of the early victories for the AHCIA, from which it originated.
HUD Establishes Difficult Development Areas and Qualified Census Tracts for 2026
On September 30, HUD published designations for 2026 Difficult Development Areas (DDAs) and Qualified Census Tracts (QCTs) across the country in the Federal Register. Housing Credit properties built in DDAs or QCTs can receive a basis boost of up to 30 percent. The DDAs and QCTs go into effect for Housing Credit allocations made after December 31, 2025, or for PAB-financed properties with bonds issued after December 31, 2025, and are placed in service after December 31, 2025.
Census Bureau Releases 2024 American Community Survey Data
On September 11, the Census Bureau released the first batch of data from the 2024 American Community Survey (ACS), one of the Bureau’s key annual surveys. The ACS is used by HUD to calculate income limits for affordable housing properties. The Bureau’s own analysis of its data indicates that, in 2024, the average renter household is housing-cost-burdened, meaning they spent at least 30 percent of their income on housing costs. Specifically, the average renter household in 2024 spent 30.9 percent of their monthly income on rent and utilities. ACTION will be using this ACS data to update its national, state, and congressional district fact sheets in the coming months. The Census Bureau will release more ACS data in several tranches from October through January.
ACTION Membership
In September, the ACTION Campaign welcomed five new members to the coalition!
Please join us in welcoming the following new members:
- Heartland Energy Consultants, Iowa
- Badger State Housing Alliance, Wisconsin
- Falcon Capital Advisors, Virginia
- CB-Emmanuel Realty, LLC, New York
- Family Promise of Bradley County, Tennessee
Help ACTION continue to grow our membership and advocacy strength by encouraging your networks to support affordable housing and the Housing Credit by joining the coalition. Membership is free.
Together, we can demonstrate to Members of Congress the widespread support for the Housing Credit across the country. You can also help strengthen our reach by following the ACTION Campaign’s LinkedIn page and inviting your connections to follow and join us.
Housing Credit in the News
- A September 4 article in Capital & Main explores the Housing Credit’s expansion in OBBBA and how it will benefit California.
- A September 10 article in Newsweek provides an excellent overview of the Housing Credit and its importance for financing affordable housing.
- A September 15 article in Governing magazine covers the expansion of the Housing Credit in OBBBA.
- A September 25 article in RE Business Online covers the expansion of the Housing Credit in OBBBA.
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