Texas Set to Gain 96,500 Affordable Homes Over the Next Decade
On Friday, July 4th, President Trump signed the “One Big Beautiful Bill Act” (H.R. 1)—a sweeping budget reconciliation package that includes the most substantial expansion of federal affordable housing resources in 25 years. The bill passed narrowly 217–214, with all Democrats and two Republicans voting no, and mirrors the version approved by the Senate.
This legislation is a generational victory for affordable housing—and Texas stands to gain more than nearly any other state.
What’s in the “One Big Beautiful Bill”?
The Housing Credit provisions in the reconciliation bill include two long-sought reforms:
- A permanent 12% increase in 9% LIHTC allocations, beginning in 2026
- A permanent reduction in the 50% bond financing threshold to 25% for properties placed in service after December 31, 2025—provided at least 5% of land and building costs are financed with bonds issued after that date.
Together, these changes are projected to finance 1.22 million additional affordable homes nationwide over the next 10 years, according to Novogradac:
- 80,000 units from the 9% LIHTC expansion
- 1,143,000 units from the 4% bond threshold reduction
Why This Matters for Texas
Texas will be among the top three beneficiaries of the bill. With no major increase to our limited state housing credit since 2023 and no housing trust fund, Texas relies heavily on the federal Housing Credit to meet the growing housing affordability crisis.
According to Novogradac’s Texas-specific analysis, the reconciliation bill is projected to deliver over the next decade:
- 96,500 new affordable rental homes
- 144,600 jobs
- $16.3 billion in wages and business income
- $5.6 billion in tax revenue
In addition, the lowered 50% test is a game-changer for Texas, where the multifamily bond cap has been oversubscribed for years. By freeing up bond volume, the 25% test opens the door to more developments, faster timelines, and less red tape.
Beyond Housing Credits
The One Big Beautiful Bill also includes several other provisions that impact affordable housing and economic development:
- A permanent $5 billion annual extension of the New Markets Tax Credit (NMTC)
- Expansion of the Opportunity Zones (OZ) program
- Restoration of 100% bonus depreciation
- A phase-down of green energy tax credits from the Inflation Reduction Act, requiring solar and wind projects to be placed in service by the end of 2027 to remain eligible
Note: This bill does not address HUD funding, which will be taken up in future appropriations legislation.
What Happens Next
Once enacted, these changes will reshape how affordable housing is built—especially in high-growth states like Texas, where rising costs and funding constraints have left thousands of families waiting.
TAAHP applauds its national partners and congressional leaders who fought for these Housing Credit provisions. TAAHP leadership will continue working with the Texas Department of Housing and Community Affairs (TDHCA) and stakeholders across Texas to ensure this federal expansion turns into real, shovel-ready housing that meets Texas’ growing housing needs.
TAAHP remains committed to advocating for the remaining key provisions in the bi-partisan Affordable Housing Credit Improvement Act (AHCIA) such as:
- Make more developments serving extremely low-income and formerly homeless tenants financially feasible
- Support Housing Credit developments for veterans
- Encourage developments in rural and Native American communities
- Facilitate the revitalization of higher-poverty communities and the development of more properties in high-opportunity areas
- Facilitate safe tenant relocation during the rehabilitation of Housing Credit properties
- Ensure properties are given enough time to rebuild after a casualty loss
- Allow flexibility for existing tenants’ income recertifications when refinancing properties
- Prohibit local approval requirements that can prevent developments from moving forward due to Not in My Backyard (NIMBY) opposition
- Clarify that states can determine the definition of a community revitalization plan
- Better align Housing Credit rules with the Violence Against Women Act
- Ensure that rules designed to prevent college students from living in Housing Credit properties do not unfairly penalize residents seeking to further their education