HR-893-119
Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, and Transportation and Infrastructure, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsored by Patrick Ryan (D-NY)
What it does
This bill would create a new federal tax credit — the "Working Families Housing Credit" — added to the Internal Revenue Code as Section 42A. It would provide tax credits to developers who build or rehabilitate rental housing where at least 40% of units are rent-restricted and occupied by tenants earning up to an average of 100% of area median income, with individual unit income limits ranging from 70% to 180% of area median income. Credits would be allocated to states based on population (at least $1.00 per resident or $1,500,000, whichever is greater), distributed by state housing credit agencies over a 15-year credit period, and would require prevailing wage compliance and long-term affordability commitments of at least 15 years beyond the credit period.
Who benefits
Moderate-income renters (earning roughly 70%–180% of area median income) who would gain access to more rent-restricted housing. Real estate developers and investors who would receive tax credits offsetting construction or rehabilitation costs. Nonprofit housing organizations, which are guaranteed at least 10% of each state's credit ceiling. Workers in construction and rehabilitation trades who would benefit from prevailing wage requirements. Residents of high-cost urban areas and rural or tribal communities, which receive a 130% basis boost. State housing credit agencies, which gain new allocation authority. Indirect beneficiaries include local governments that may see reduced housing cost burdens and employers whose workers could afford to live closer to job centers.
Who is hurt
Taxpayers broadly, who would forgo federal revenue through the credit. Market-rate landlords and developers who may face increased competition for tenants in the moderate-income range. Existing low-income housing tax credit (LIHTC, Section 42) projects, which could face competition for state agency allocations and financing. Very low-income renters (below 60% of area median income) who are not the primary target of this credit and may see limited new supply at their income level. For-profit developers who may be disadvantaged relative to nonprofits given the set-aside. Taxpayers in low-population states may receive proportionally less benefit relative to housing need.
Supporters argue
Supporters argue that the existing Low-Income Housing Tax Credit (Section 42) primarily serves households below 60% of area median income, leaving a significant gap for teachers, firefighters, police officers, and other moderate-income workers who earn too much to qualify for deeply subsidized housing but too little to afford market-rate rents in high-cost areas. They contend that expanding the credit structure to reach households up to 180% of area median income — while maintaining affordability requirements and prevailing wage standards — would stimulate private development in a segment of the rental market that receives little federal support, addressing a documented shortage of workforce housing without direct federal expenditure beyond the tax credit mechanism.
Opponents argue
Opponents argue that extending housing tax credits to households earning up to 180% of area median income — well above the poverty line in most markets — dilutes scarce federal housing resources away from the lowest-income renters who face the most severe housing instability. They contend that the existing LIHTC program already faces chronic under-funding relative to demand, and that creating a parallel credit structure competing for developer attention and state agency capacity could crowd out deeply affordable units without meaningfully reducing rents for moderate earners, since market forces already serve much of the 100%–180% AMI range in many regions.
Constitutional context
The bill amends the Internal Revenue Code and is a revenue measure, making the Origination Clause (Art. I, §7, cl. 1) relevant — it was introduced in the House, satisfying that requirement. Congress's broad authority to tax and spend under the Taxing and Spending Clause (Art. I, §8, cl. 1) provides the primary constitutional basis for structuring housing policy through tax credits.
Checks and balances
Congress gains authority to shape housing development through a new tax credit mechanism; state housing credit agencies serve as the primary check by controlling allocation of credits within each state's ceiling, and the IRS/Treasury retain regulatory authority over credit calculations and compliance.
Historical precedent
The Low-Income Housing Tax Credit (Section 42), created by the Tax Reform Act of 1986, established the structural model this bill closely mirrors — using per-capita state allocations, credit periods, qualified basis calculations, and extended use agreements to incentivize affordable rental housing development.