The housing tax credit costs more every year. It builds fewer homes than it did in 2007.

The Low-Income Housing Tax Credit is the machine behind 55,345 projects and 3.9 million apartments built or preserved since 1987, per HUD's own database — the largest federal engine for affordable rental housing in the country.▸ In July 2025, Congress permanently made that machine bigger. It didn't ask the machine to build faster.

LIHTC doesn't write checks — it forgives federal tax.▸ Each state gets an annual "9%" competitive-credit ceiling based on population, which developers win through applications, then sell to investors for upfront equity; a separate uncapped "4%" credit attaches automatically to projects financed with enough tax-exempt private-activity bonds. Either way, the federal government's cost shows up as revenue it never collects, not a line item it appropriates.

The One Big Beautiful Bill Act (P.L. 119-21), signed July 4, 2025, permanently increased the 9% per-capita allocation by 12% and cut the bond-financing threshold that unlocks the 4% credit from 50% of project cost to 25%, letting far more projects qualify without competing for a state's limited 9% pool.▸ The effect showed up immediately in 2026's numbers: the per-capita multiplier that sets each state's competitive-credit ceiling jumped to $3.416 per resident, with a small-state floor of $3,953,600 — up from $3.00 and $3,455,000 in 2025, per IRS Revenue Procedure 2025-32.

Because the credit is booked as forgone revenue rather than an outlay, it never has to compete for room in an annual appropriations bill — the Joint Committee on Taxation puts this year's cost at $14.1 billion, climbing every year through the forecast window to $18.2 billion in FY2029.▸ That's a $4.1 billion, 29% increase in five years, almost entirely the arithmetic of OBBBA's permanent expansion working through the credit's 10-year claim period.

A bigger allocation ceiling is a bet that more dollars will produce more housing.▸ The program's own recent history argues otherwise.

Per NLIHC and PAHRC's "Picture of Preservation" (Dec. 2024), which analyzed HUD's own LIHTC Database, the program built or preserved an average of 118,857 affordable homes a year between 2003 and 2007.▸ After the 2008 financial crisis, production never recovered: across 2012-2020 — the most recent stretch for which the report had complete data — the average fell to 86,076 homes a year, a 28% drop that has held for the better part of a decade. The credit now costs more per dollar and delivers fewer homes per dollar than it did two decades ago.

Every LIHTC unit's affordability is time-limited by design — the statute requires a minimum 30-year restriction period, "Year 30."▸ What the statute doesn't fully control is how many units leave before their time is up.

On schedule, 538,418 LIHTC-assisted homes have affordability restrictions set to expire within the next 10 years, per the same NLIHC/PAHRC analysis of National Housing Preservation Database records.▸ But the statute also contains a release valve: the "Qualified Contract" provision lets an owner, after just 14 years in service, demand that the state housing finance agency find a buyer willing to keep the property affordable — and if no such buyer appears within a year, the restrictions phase out and the property can convert to market rate. NLIHC and PAHRC estimate that 192,755 LIHTC homes allocated since 1990 have already lost their affordability restrictions before reaching Year 30 this way, 155,555 of them after only 15 years — a loophole use that has grown since 2015, as rising property values gave owners more reason to cash out early.

Tax-expenditure figures cover fiscal years and reflect federal law enacted through Aug. 31, 2025; production and exit figures are drawn from NLIHC/PAHRC's most recent "Picture of Preservation" report and carry that report's own data-vintage limits (LIHTC production trends through 2020; NHPD exit data current to January 2024).