How the “One Big Beautiful Bill” Will Impact Affordable Housing

On July 4, the federal government enacted sweeping legislation under the “One Big Beautiful Bill” Reconciliation Act, ushering in the largest expansion of affordable housing programs in more than two decades. For those of us working in the affordable housing sector, this is more than a policy shift. It’s a historic moment with wide-ranging implications for financing, development, and long-term planning.

At its core, the bill permanently strengthens the Low-Income Housing Tax Credit (LIHTC) program, stabilizes several key housing incentives, and unlocks new opportunities for rural and underserved communities. These reforms come at a critical time, as demand for affordable rental housing continues to outpace supply nationwide.

The bill increases the annual 9% LIHTC allocation by 12% starting in 2026, raising the per-capita ceiling from $3.00 to $3.36. While that may seem modest, it translates into roughly $132 million in additional tax credits per year, capital that can significantly expand affordable housing production.

Even more transformative is the reduction of the private activity bond financing threshold from 50% to 25% for 4% LIHTC deals. This technical change is expected to unlock over a million new units over the next decade by enabling more projects to qualify for 4% credits with less debt burden.

For developers, these provisions offer greater predictability and an incentive to initiate long-term projects. For states and housing agencies, they present both opportunities and operational challenges, including the need to revise Qualified Allocation Plans and prepare for increased application volumes.

The bill also makes permanent the New Markets Tax Credit (NMTC) program with a $5 billion annual cap and extends the Opportunity Zones program through 2033. These programs work alongside LIHTC to fund affordable housing and mixed-use developments in low-income and rural communities.

However, not every proposed enhancement survived the reconciliation process. Provisions aimed at supporting rural and tribal housing—such as a 30% basis boost for eligible properties—were dropped from the final legislation.

At CSH, we understand how crucial tax policy is to the success of affordable housing development. Our Affordable Housing team helps clients navigate the full lifecycle of housing projects—from feasibility and tax credit structuring to compliance, audit, and reporting. With the new law in place, our experts are actively working with clients to:

The legislation’s housing provisions go into effect January 1, 2026, but the time to prepare is now. Housing agencies, developers, and nonprofit sponsors alike must align strategies, secure additional gap financing, and build operational capacity to meet the demand this bill is poised to generate.

At CSH, we’re here to help you unlock the potential of these changes and turn policy into progress. Let’s talk about how your housing strategy fits into this new era.