CARH’s BROADCAST EMAIL—Legislative Alert

May 28, 2025

On Thursday, May 22, 2025, the House of Representatives by a vote of 215-214 (one member voted present) passed H.R. 1, the One Big Beautiful Act, a multi-trillion-dollar package of spending and tax cuts championed by President Trump. Many of the tax cuts provided in H.R. 1 were originally enacted during the first Trump Administration and were set to expire at the end of this year. Passage of this 1,116-page budget reconciliation bill followed intense negotiations between the Administration, Republican Leadership, and intra-party factions within the Republican party seeking deeper spending cuts and additional tax relief.

The next step in the legislative process is now the Senate, where the bill’s fate is far from certain. Many in the Senate have pledged to pursue amendments to key provisions in the bill, citing concerns that the bill would further add to the growing federal government’s deficit and the need to reexamine elimination of many tax breaks, specifically energy-related incentives currently in place. The Senate is in recess this week, but negotiations with Senate leadership and the key committee chairs are being held. There is growing pressure to deliver a final bill to the President’s desk by July 4th.

H.R. 1 contains provisions long supported by CARH. These provisions, if enacted into law, could be very beneficial for rural housing, both in terms of new construction but also for preservation of the existing portfolio. Under the terms of the House-passed bill, the following changes would apply to the Housing Credit and Bond programs for the years 2026-2029:

  • A restoration of the 12.5% increase in 9% Housing Credit allocations that had expired in 2021,
  • A reduction in the 50% financed-by test for housing financed by private activity bonds to 25%,
  • Up to 30% basis boost for properties in rural and tribal communities.

Also included in the bill is an extension of the Opportunity Zone (OZ) incentive, with a minimum of 33% designated for rural areas; investments made after December 31, 2026, can be deferred until the end of 2033; a 10% basis step-up in non-rural areas and a 30% basis step-up in rural areas for investments held five years; allowing up to $10,000 in ordinary income to be invested; lowering the investment threshold for existing property in a rural OZ from 100% of the basis to 50%; and reporting requirements. Finally, the bill reinstates full expensing (100% bonus depreciation) for a qualified property-including equipment and machinery-acquired and placed in service after January 19, 2025, and before January 1, 2030. This would allow businesses to immediately deduct the entire cost of eligible assets in the year they are placed in service, rather than depreciating them over several years.

What should CARH members do to weigh in on the tax provisions of H.R. 1?

Several of the provisions in the tax portion of H.R. 1 were taken from the Affordable Housing Credit Improvement Act (H.R. 2725 and S.1515), which CARH has consistently advocated for over multiple sessions of Congress. We would recommend sending an email to your Senators making the following points:

  • Rural housing construction and preservation projects rely on a limited number of funding sources, with the Housing Credit and Housing Bond programs serving as essential tools.
  • The Housing Credit is narrowly targeted and exemplifies the best of the public-private partnership between government, local communities, and the private sector. As the nation’s most successful affordable rental housing production program, its inclusion in the tax credit code is essential to its long-term success.
  • The Housing Credit and Bond provisions in H.R. 1 would further strengthen and expand the Housing Credit and Housing Bond programs so that rural housing preservation and new construction can take place.
  • Increasing the Housing Credit authority by 50 percent and providing a 30% basis boost to properties in rural areas, would generate critical equity to support higher allocations, reducing reliance on other federal subsidies and helping offset rising construction costs.
  • According to Novogradac, it is estimated that 527,700 additional affordable rental homes could be financed over 2026-2035 following the enactment of these provisions. Changes to the Housing Credit and Bond programs could finance nearly 1.6 million affordable rental homes over a decade.

As with every piece of legislation, it is important to discuss specific transactions and how the aforementioned changes could positively impact those transactions.

CARH is urging our members to contact your Senators and urge them to support inclusion of the tax provisions outlined above in the final budget reconciliation bill.

For other news and information affecting the affordable rural housing industry, please visit the Newsroom on CARH’s website, www.carh.org.