historic expansion for affordable housing passed in reconciliation bill

On Thursday, July 3rd Congress passed H.R. 1, the One Big Beautiful Bill Act, that includes important priorities from the Affordable Housing Credit Improvement Act (AHCIA) and provides the largest boost to the federal Housing Tax Credit in 25 years. The bill was signed into law on July 4th. Provisions in the legislation will:

Permanently increase the Housing Credit volume cap for 9 percent properties by 12 percent beginning in calendar year 2026; and
Permanently lower the private activity bond financing threshold from 50 percent to 25 percent for 4 percent Housing Credit properties with bonds issued after December 31, 2025.

The housing provisions are estimated to finance 1.22 million affordable rental homes nationwide over 10 years, according to our partners at Novogradac. In Colorado, this will contribute to an estimated:

30,600 additional affordable rental homes;
45,800 jobs;
$5.17 billion in wages and business income; and
$1.79 billion in federal, state, and local taxes.

The bill includes a permanent 100 percent bonus depreciation for qualified properties, which may benefit Housing Credit investors. It also preserves the tax-exempt status of Private Activity Bonds (PAB). While the House version of the legislation included basis boosts for properties in rural and Native American areas, the enacted bill did not include these provisions.

The legislation also makes permanent the mortgage interest deduction and permanently reinstates the deductibility of mortgage insurance premiums for qualified homebuyers.

In addition to the housing provisions, the bill permanently extends the New Markets Tax Credit program—a key tool for economic development—which was set to expire at the end of 2025. CHFA is proud of the leadership from affordable housing advocates who voiced their support for housing to be included in the tax package and garnered support for the AHCIA. At the same time, CHFA acknowledges that cuts to critical safety net programs may exacerbate needs for the low- and moderate-income Coloradans that we serve.

CHFA is working to ensure that the expanded federal Housing Credit resources are ready to be deployed for affordable housing projects. CHFA will hold a PAB Issuer Roundtable session with local government and housing authority bond issuers to share information on strategies to support additional affordable rental developments.

If you have any questions, please reach out to Jerilynn Francis, Chief Communications and Community Partnerships Officer, or Julia Selby, Legislative Liaison and Policy Analyst.