HR-8626-119
Referred to the House Committee on Ways and Means.
What it does
This bill would create a new federal tax credit — the Middle-Income Housing Credit — modeled closely on the existing Low-Income Housing Tax Credit (Section 42 of the Internal Revenue Code). It would provide tax credits to developers of rental housing projects where at least 60% of units are occupied by tenants earning at or below 100% of area median income and rents are capped at 30% of that income threshold. Credits would be allocated by state housing agencies, with each state receiving a per-capita ceiling ($1.00 per resident, minimum $1,500,000 annually), and would apply over a 15-year credit period. New buildings not receiving federal subsidies would receive credits worth 50% of qualified basis; other buildings would receive credits worth 20% of qualified basis.
Who benefits
Renters earning between roughly 60% and 100% of area median income — often called "workforce" or "middle-income" renters — who are typically priced out of market-rate housing but earn too much to qualify for existing low-income housing programs. Real estate developers and investors who would receive tax credits to offset construction or rehabilitation costs. State housing finance agencies, which would gain new allocation authority and administrative resources. Nonprofit housing organizations, which are guaranteed at least 10% of each state's credit ceiling. Residents of high-cost urban and suburban areas where the affordability gap for middle-income earners is most acute. Indirect beneficiaries include local governments that may see reduced housing cost burdens and employers whose workers would have access to nearby affordable housing.
Who is hurt
Federal taxpayers broadly, who would bear the cost of reduced tax revenue from the new credit. Market-rate landlords and developers who may face increased competition for middle-income tenants. Existing low-income housing developers who may compete with middle-income projects for state agency attention, financing, and land. Very low-income renters (below 60% of area median income) who are not served by this program and whose housing needs may receive relatively less policy focus. Tenants in buildings that exit the program after the extended use period ends, who could face rent increases or displacement after the 3-year post-termination protection window closes.
Supporters argue
Supporters argue that the existing Low-Income Housing Tax Credit serves households below 60% of area median income but leaves a significant "missing middle" — workers such as teachers, nurses, and first responders who earn too much for subsidized housing yet cannot afford market-rate rents in high-cost areas. They contend that structuring the new credit parallel to the proven LIHTC framework reduces implementation risk and leverages decades of state agency expertise. Research from the Urban Institute and others documents that middle-income renters in major metros spend well above 30% of income on housing, and that new supply at this income tier can ease broader affordability pressures through filtering effects across the rental market.
Opponents argue
Opponents argue that the bill directs scarce federal tax expenditure resources toward households who are better positioned financially than the lowest-income renters, potentially crowding out or deprioritizing funding for those with the greatest housing need. They contend that the 100% of area median income threshold is relatively high — in many metros this exceeds $80,000 for a family of four — meaning the credit could subsidize housing for households who are not in acute distress. Critics also note that tax credit programs have historically produced housing at costs significantly above market construction rates, and that direct rental assistance or zoning deregulation could address middle-income affordability more efficiently per dollar of federal expenditure.