About the LIHTC Program

Created as part of the Tax Reform Act of 1986, and made permanent in 1993, the Low Income Housing Tax Credit (LIHTC) under Section 42 of the Internal Revenue Code is designed to help meet a growing need for affordable housing in the United States. Nearly one million affordable housing units have been created through the use of the credit since it was enacted, but unmet demand for such housing continues to far exceed the supply.

Under the LIHTC program, each state receives a specific tax credit per person residing in the state. Individual states determine how the credits are allocated, based on a plan adopted by a state's housing agency. Qualified new construction and substantial rehabilitation projects are eligible for either a 9 percent or 4 percent tax credit; based upon eligible project costs each year for 10 years.