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Biden Budget Proposal Would Expand LIHTC, Make NMTC Permanent and Create Neighborhood Homes Tax Credit

Thursday, March 9, 2023 - 3:30PM

President Joe Biden unveiled a $6.9 trillion fiscal year (FY) 2024 budget blueprint Thursday that includes a $28.3 billion expansion of the low-income housing tax credit (LIHTC), the $15.6 billion creation of a neighborhood homes tax credit (NHTC), permanency for the new markets tax credit (NMTC), $73.3 billion (a $1.1 billion increase) in proposed spending for the U.S. Department of Housing and Urban Development (HUD) and $341 million for U.S. Treasury’s Community Development Financial Institutions (CDFI) Fund, an increase of $17 million or 5% from 2023.

Biden’s FY 2024 tax proposals as outlined in Treasury’s “Greenbook” would do the following:

  1. LIHTC: Increase the per-capita allocation amount to each state from $2.75 in 2023 to $4.25 in 2024, $4.88 in 2025 (with similar increases in the small state minimum) and annually adjust amounts thereafter from the new totals; reduce the 50% financed-by requirement for private activity bond financing to 25% on a permanent basis starting in 2024; repeal the qualified contract provision from the date of enactment; and replace the “right of first refusal” with a purchase option,
  2. NHTC: Create a credit at $6 per capita or $8 million for small states to cover the gap between construction cost and sales price for rehabilitated or newly built single-family homes in low-income communities, and
  3. NMTC: Make the NMTC permanent at $5 billion per year indexed for inflation after 2026.

A Notes from Novogradac blog post next week will provide more information when program-by-program details are available.

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