Biden Budget Proposal Seeks Increase to LIHTC Program
The White House budget proposal seeks an increase to the LIHTC program. The fiscal 2024 plan calls for a $28 billion expansion in LIHTCs over 10 years as well as lowering the 50 percent bond test to 25 percent.
The context: The budget proposal President Biden released marks the beginning of a long process in Congress to set a budget for the federal government and then fund it. It outlines President Biden’s policy priorities and sets an aspirational top-line number. Federal agencies then prepare detailed documents outlining requests in support of their activities and programs. The plan sets up a framework for discussions.
The White House budget proposal would reduce deficits by nearly $3 trillion over 10 years, but the proposal contains tax increases on the wealthy and new spending that have led GOP lawmakers to declare it dead on arrival. Currently, House Republicans have not produced a plan of their own, which President Biden has said is a prerequisite for negotiations.
One level deeper: Under the Biden administration proposal, each state would receive $4.25 per capita in new potential credits for allocation, with a small state minimum of $4,901,620 in 2024. For 2025, the amounts would increase to $4.88 and $5,632,880. For 2026 and subsequent years, the amounts would be the same as the prior year and indexed for inflation.
The budget plan also calls for lowering the bond test. Under the budget plan, a building would be eligible to earn LIHTCs on the basis of 25 percent private-activity bond financing of the building and land. This change from 50 percent would apply to buildings placed in service in taxable years beginning after Dec. 31, 2023.