01
What the credit is
The Low-Income Housing Tax Credit (LIHTC) is the largest federal program for building affordable rental housing in the United States. It works by forgoing revenue: the federal government hands states an annual ration of tax credits, states award them to developers through competition, and developers sell the credits to investors — banks and corporations — who use them to cut their own tax bills over ten years. The cash the investors pay becomes the equity that builds the apartments.
Because the subsidy flows through the tax code rather than an appropriations bill, no single agency tracks what it costs or what it produces. This page assembles that picture from the four federal bodies that each hold one piece of it.
02
What it costs
The cost of the credit is an estimate of revenue the Treasury never collects because investors claim the credit. Two federal scorekeepers — the Joint Committee on Taxation and the Treasury’s Office of Tax Analysis — publish these estimates each year.
Estimated federal revenue forgone for the credit
Joint Committee on Taxation, individuals plus corporations, in billions of dollars per fiscal year. Bars are the current projection (pamphlet JCX-45-25, December 2025).
The steep climb after 2025 reflects the One Big Beautiful Bill Act (July 2025), which permanently raised each state’s credit ceiling by 12 percent for buildings placed in service after December 31, 2025.
What a “tax expenditure” is and is not
The figures above are tax-expenditure estimates: the revenue the Treasury forgoes because of the credit, calculated by holding taxpayer behavior fixed. This is not the same as the dollar value of credits states award, nor is it cash the government spends. The Joint Committee is explicit that a tax-expenditure figure is also not what repealing the credit would raise, because that would change behavior. Read these numbers as a proxy for the credit’s federal cost.
Source: Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2025–2029 (JCX-45-25), pp. 2, 23–25.
The trend over four decades
In the mid-2000s the estimate ran under $5 billion a year. It crossed $10 billion around 2020 and is projected to reach $18 billion by 2029. But the year-by-year series is not clean: each annual pamphlet is a fresh forecast under a new economic baseline and new law, so the same year can carry different numbers in different reports.
Two scorekeepers, one total
The Joint Committee and the Treasury estimate the cost separately, and both attribute nearly all of it to corporations — the banks and companies that buy the credits — with only a tiny share claimed by individuals. Their totals track closely (for fiscal 2026, $15.0 billion versus $15.17 billion). Treasury’s ten-year estimate for 2025–2034 is $168 billion.
03
What it buys
Against that cost, the program has placed roughly 3.9 million housing units into service since 1987, of which about 3.6 million are income-restricted. Here is the production, year by year.
Housing units placed in service each year
HUD national LIHTC database. Total units per project, by year the project opened. The most recent two to three years are undercounts — HUD is still collecting them.
What a unit costs to build
Median total development cost per unit for new-construction projects, by allocating agency. GAO study of 1,849 nine-percent projects completed 2011–2015, in 2015 dollars.
GAO declined to call these costs high or low, stressing that cost must be judged against local conditions. The variation is large: within California, the gap between the cheapest and most expensive project reached $606,000 per unit.
A caution on the credit-value figures in HUD’s data
HUD records an annual credit amount for each project, but the field is populated for only about two-thirds of projects and contains clear data-entry errors — including a single eight-unit project recorded with a $700 million annual credit, which is physically impossible. For that reason this page draws its per-unit cost figures from GAO’s audited study rather than from arithmetic on the raw HUD field, and flags the HUD credit field wherever it is used.
04
How the money flows
The credit reaches an apartment building through a chain of steps written into Section 42 of the tax code.
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The ration
Each year the IRS sets a per-resident credit ceiling. For 2026 it is $3.416 per person, or a floor of $3.95 million for the smallest states. Multiplied across the U.S. population, that is roughly $1.17 billion in new nine-percent credit authority a year — and because each award is claimed over ten years, about $11.7 billion in credit value over its life.
Rev. Proc. 2025-32; national total is a derived estimate, not an official figure.
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Two credits
The 9 percent credit (formally a 70-percent-present-value credit) funds new construction and is rationed by the ceiling. The 4 percent credit (30-percent present value) is paired with tax-exempt bonds, is not capped by the ceiling, and in practice has no hard limit beyond a state’s bond volume. A project must have at least half its cost bond-financed to claim it.
26 U.S.C. § 42(b), § 42(h)(4).
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Syndication
Developers sell the credits to investors, usually through middlemen called syndicators. Investors do not pay a full dollar per dollar of credit: in GAO’s study the price rose from about 80 cents in 2011 to 93 cents in 2015. Equity covered about two-thirds of development cost for new construction.
GAO-18-637, pp. 12–13.
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The lock-in
In exchange, the apartments must stay affordable. The credit is claimed over 10 years, compliance is monitored for 15 years, and an extended-use agreement keeps rents restricted for a 30-year minimum. Units in poorer neighborhoods (qualified census tracts) or high-cost areas get a 30 percent boost to their eligible cost basis.
26 U.S.C. § 42(f), (i), (h)(6), (d)(5).
The credit ceiling, per resident
IRS annual inflation adjustment, dollars per person. The 2018–2021 bump was a temporary 12.5 percent increase; it lapsed in 2022 and returned permanently at 12 percent in 2026.
Nine percent vs. four percent
Share of projects by credit type, in five-year periods. The four-percent bond-financed credit has grown from a sliver to a large share of production.
05
Where it lands
Because the ration is per resident, the biggest states produce the most units. California and New York alone account for nearly a fifth of every LIHTC unit ever built.
Units placed in service by state, 1987–2024
HUD national database. Sort by units, projects, or income-restricted units.
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Who lives there
Loading tenant data from HUD’s annual report…
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Sources & method
Everything on this page is drawn from primary federal sources. Nothing here is modeled or estimated except where explicitly labeled “derived.”
HUD national LIHTC database (through 2024)
Project counts, units, states, credit type and construction type. 55,345 projects, 3.9 million units. Downloaded in full and tabulated here.
huduser.gov →Joint Committee on Taxation
Tax-expenditure estimates, Estimates of Federal Tax Expenditures for Fiscal Years 2025–2029 (JCX-45-25) and prior pamphlets back to 2005.
jct.gov →Government Accountability Office
Per-unit development cost, cost drivers, and credit pricing, from GAO-18-637 (2018, analyzing 2011–2015 projects) and the 2023 snapshot GAO-24-107064.
gao.gov →IRS & the U.S. Code
The credit ceiling from Revenue Procedure 2025-32; program mechanics from 26 U.S.C. § 42; the 2025 changes from the One Big Beautiful Bill Act (P.L. 119-21).
uscode.house.gov →Known limitations
- Tax-expenditure figures are estimates, not spending, and not a clean annual time series — each pamphlet re-forecasts under a new baseline.
- The most recent two to three years of HUD unit counts are undercounts; projects keep being added as agencies report them. HUD notes 2025 data will not arrive until spring 2027.
- HUD’s credit-amount field is incomplete (about two-thirds of projects) and contains errors, so per-unit cost here comes from GAO’s audited sample, whose data vintage is 2011–2015 — older than the unit counts.
- The ~$1.17 billion national credit-authority figure is derived arithmetic, not an official IRS total; the true figure is somewhat higher because small states receive a fixed floor.
- The database counts units placed in service, not units still affordable today. Some early projects have exited the program.