Details of Public Law 119-21, section 70422 , One Big Beautiful Bill Act
The provision permanently increases a state’s housing credit ceiling for the low-income housing credit (LIHC) for calendar years beginning after December 31, 2025.
This provision modifies the special rule for a building financed with tax exempt bonds, to allow the LIHC without regard to the amount allocated for a building if:
50 percent or more the aggregate basis of such a building and the land on which the building is located is financed by 1 or more obligations where interest from a private activity bond (IRC section 146) or state or local bond (IRC section 103) is exempt from taxation, or
25 percent or more the aggregate basis of such building and the land on which the building is located is financed by 1 or more obligations where interest from a private activity bond (IRC section 146) or state or local bond (IRC section 103) is exempt from taxation, was issued after December 31, 2025 and provided the financing is not less than 5 percent of the aggregate basis of such building and land.
For purposes of applying the special rule for a building financed with tax exempt bonds, any rehabilitation expenditure of a building that is treated as a separate new building, both the existing building and the new building shall be treated as being placed in service on the close of the 24-month period under IRC section 42(e)(4).
Under the PITL and CTIL, California generally conforms by reference to the LIHC, with modifications, such as:
The LIHC is claimed over 4 years vs 10 years for federal,
Limited to projects in California,
Must be allocated and authorized by the California Tax Credit Allocation Committee (CTCAC),
Rents must be maintained at low-income levels for 30 years (15 years for federal), and
CTCAC must have authorized a federal credit to the taxpayer, or the taxpayer must qualify for the federal credit.
California law conforms by reference to the changes made by this provision.
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