H.R. 2725: Affordable Housing Credit Improvement Act of 2025
Sponsor
Darin LaHood
Republican · IL-16
Bill Progress
Latest Action · Apr 8, 2025
Referred to the House Committee on Ways and Means.
Why it matters
The federal government's main tool for building affordable apartments hasn't kept up with rents — this bill would more than double its funding, from $1.75 to $4.25 per capita.
The Low-Income Housing Tax Credit is responsible for roughly 90% of all affordable rental housing built in the United States. But state housing agencies regularly run out of credits to allocate — meaning viable projects sit on the shelf because there simply isn't enough funding to go around.
H.R. 2725 would raise the per-capita credit allocation from $1.75 to $4.25 — a 2.4x increase starting in 2025, growing to roughly 3x by 2026 with a built-in multiplier and inflation adjustment. For small states, the minimum allocation would jump from $2 million to $4.876 million. That translates to roughly $840 million more per year flowing to state housing agencies nationwide.
Beyond the funding boost, the bill tackles eligibility problems that have kept people out of affordable housing. Tenants whose income rises slightly above the qualifying threshold could stay in their homes instead of facing displacement. Housing voucher holders would no longer have their federal assistance counted against them when applying. Students who are veterans, domestic violence survivors, former foster youth, or parents would be exempt from rules that currently block them.
The bill also protects domestic violence survivors by barring landlords from evicting victims based on crimes committed against them, and it opens the program to more rural communities and Native American areas by classifying them as difficult development areas eligible for enhanced credits.
On the developer side, the bill streamlines project qualification rules, caps how much flipped properties can claim in tax credits, and requires state agencies to scrutinize development costs — a response to criticism that some projects have gotten too expensive.
What does H.R. 2725 do?
Per-Capita Credits More Than Double
States would receive $4.25 per person in housing tax credits starting in 2025, up from $1.75. In 2026, a 1.25x multiplier kicks in plus inflation adjustments, pushing the rate above $5.31 per capita. Small states get a floor of $4.876 million, up from $2 million.
Tenants Can Stay When Income Rises
Renters who qualified at or below 60% of area median income can keep their affordable unit even if their earnings increase — as long as the unit stays rent-restricted. This ends a perverse incentive where getting a raise could cost you your home.
Voucher Holders No Longer Penalized
Federal housing vouchers would count as rent rather than being excluded from calculations, removing a barrier that has kept voucher holders out of tax-credit apartments in projects using the average income test.
Domestic Violence Survivors Protected
Landlords in tax-credit housing could not evict or refuse to lease to someone because of criminal activity committed against them by a household member. Leases can be split so survivors stay housed while abusers are removed.
Rural and Tribal Communities Get Priority
Rural areas and Native American lands would automatically qualify as difficult development areas, unlocking a 30% credit boost that helps make projects financially viable in places where construction costs are high relative to rents.
Student Housing Rules Loosened
Veterans, domestic violence survivors, parents, former foster youth, and people with disabilities who are full-time students would be exempt from rules that currently bar student-only households from affordable units.
Who benefits from H.R. 2725?
Low-income renters on waitlists
Roughly $840 million in additional annual credits means more projects get funded, more units get built, and waitlists that currently stretch years could start to shrink.
Tenants whose income improves
An estimated 7.8 million renter households earning below 60% of area median income would no longer face losing their affordable unit if they get a raise or a better job.
Domestic violence survivors
Survivors in tax-credit housing gain explicit legal protections against eviction for crimes committed against them, with the right to enforce those protections in state court.
Rural and tribal communities
Areas that have historically struggled to attract housing investment would qualify for enhanced credits, making projects financially feasible where they weren't before.
Who is affected by H.R. 2725?
Existing tenants in affordable projects
Benefit from stronger protections if their income goes up while they're living in subsidized housing.
Students seeking apartments
May now qualify for affordable units under relaxed student rules.
Taxpayers
Foot the bill for expanded credits, which could reduce federal tax revenue.
Affordable housing organizations
Can pursue more projects and help more clients, but must navigate updated rules.
H.R. 2725 Common Questions
How much more funding would states get for affordable housing under H.R. 2725?
States would receive $4.25 per person in tax credits starting in 2025, up from $1.75 — a 2.4x increase. In 2026, a 1.25x multiplier kicks in with inflation adjustments, pushing the rate above $5.31 per capita. Small states get a floor of $4.876 million, up from $2 million.
Can I keep my affordable apartment if my income goes up?
Yes. Under H.R. 2725, tenants who originally qualified at 60% or below of area median income can stay in their unit as long as it remains rent-restricted — even if their income rises above that threshold. Tenants who qualified between 60% and 80% under the average income test get an 80% threshold instead.
How does H.R. 2725 help housing voucher holders?
The bill stops counting federal housing vouchers against tenants when determining whether a unit meets rent restrictions in average-income projects. This removes a barrier that has kept voucher holders out of tax-credit apartments, since their federal assistance was previously excluded from rent calculations.
Can college students live in affordable housing under this bill?
Generally, units occupied solely by full-time students under 24 still don't qualify. But the bill creates broad exceptions: students who are veterans, married, have children, have disabilities, are domestic violence survivors, former foster youth, or victims of trafficking can all qualify. Buildings funded through federal housing programs are also exempt from the student restriction entirely.
What protections does H.R. 2725 add for domestic violence survivors?
Landlords in tax-credit housing could not refuse to lease to — or evict — someone because of domestic violence, dating violence, sexual assault, or stalking committed against them by a household member. Survivors can enforce this right in state court. Leases can also be split so the abuser is removed while the survivor keeps their home.
Does H.R. 2725 help rural areas and Native American communities?
Yes. The bill classifies rural areas and Native American lands as difficult development areas, which unlocks enhanced tax credits — up to 30% more — for housing projects in those locations. This makes construction financially viable in communities where building costs are high relative to what tenants can pay in rent.
Can affordable housing give preference to veterans under this bill?
Yes. H.R. 2725 clarifies that giving occupancy preference to veterans and similar groups does not violate the general public use requirement for tax-credit housing. This applies to both new and existing buildings, removing legal uncertainty that has discouraged veteran-focused housing projects.
How many cosponsors does H.R. 2725 have?
As of early 2026, H.R. 2725 has 164 cosponsors — split exactly 82 Republicans and 82 Democrats. It was introduced by Rep. Darin LaHood (R-IL) and Rep. Suzan DelBene (D-WA). A companion bill, S. 1515, has been introduced in the Senate.
Based on H.R. 2725 bill text
Visual Summary
H.R. 2725 at a Glance
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<img src="https://legisletter.org/images/bill-infographics/hr2725-affordable-housing-credit-improvement-act.jpeg" alt="HR2725 Visual Summary - Affordable Housing Credit Improvement Act of 2025" style="max-width:100%;height:auto;display:block;" />
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</div>HR2725 Legislative Journey
House: Committee Action
Apr 8, 2025
Referred to the House Committee on Ways and Means.
About the Sponsor
Darin LaHood
Republican, Illinois's 16th congressional district · 11 years in Congress
Committees: House Permanent Select Committee on Intelligence, House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, Ways and Means
View full profile →
Cosponsors (164)
This bill has 164 cosponsors: 82 Democrats, 82 Republicans, reflecting bipartisan support. Cosponsors represent 42 states: Alabama, California, Colorado, and 39 more.
Suzan DelBene
Democrat · WA
Claudia Tenney
Republican · NY
Donald Beyer
Democrat · VA
Randy Feenstra
Republican · IA
Jimmy Panetta
Democrat · CA
Vern Buchanan
Republican · FL
John Larson
Democrat · CT
Mike Kelly
Republican · PA
Danny Davis
Democrat · IL
Ron Estes
Republican · KS
Linda Sánchez
Democrat · CA
Carol Miller
Republican · WV
Cosponsor Coverage Map
Committee Sponsors
Ways and Means Committee
29 of 45 committee members cosponsored
11 Republicans across this committee haven't cosponsored yet. Mobilize their constituents
What laws does H.R. 2725 change?
15 changes
Sections Amended
Section 42(g) of such Code
adding at the end the following new subparagraph: ``(F) Treatment of bifurcation in cases of domestic violence
Section 42(g) of Internal Revenue Code of 1986
striking ``or'' at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting ``, or'', and by adding at the end the following new subparagraph: ``(D) who are victims or threatened victims of criminal activity directly relating to domestic violence, dating violence, sexual assault, or stalking
Section 142(d) of Internal Revenue Code of 1986
adding at the end the following new subparagraph: ``(F) Clarification of general public use requirement
Section 42(c) of Internal Revenue Code of 1986
adding at the end the following new subparagraph: ``(F) Qualified basis following casualty loss
Section 42(e) of Internal Revenue Code of 1986
adding at the end the following new subparagraph: ``(C) Certain relocation costs
Section 42(m) of Internal Revenue Code of 1986
adding at the end the following new subparagraph: ``(E) Criteria for determination relating to concerted community revitalization plan
H.R. 2725 Quick Facts
- Committee
- Ways and Means
- Chamber
- House
- Policy
- Taxation
- Introduced
- Apr 8, 2025
Referred to the House Committee on Ways and Means.
Apr 8, 2025
Official Sources
Official bill text, cosponsors, and legislative history
Senate version of the Affordable Housing Credit Improvement Act
HUD's database of 54,102 LIHTC projects and 3.7 million housing units placed in service since 1987
The IRS form building owners use to calculate their low-income housing credit
Instructions for the credit allocation and certification process covering the 10-year credit period
Treasury overview of housing initiatives including LIHTC, the largest federal source for affordable rental housing construction
H.R. 2725 Bill Text
“To amend the Internal Revenue Code of 1986 to reform the low-income housing credit, and for other purposes.”
Source: U.S. Government Publishing Office
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