Congress’ Inclusion of Housing Tax Credit a Win for Wood Products Industry
Jackson Morrill
President & CEO of the American Wood Council awc.org
This Summer, Congress passed the budget reconciliation package known as the “Big Beautiful Bill.” The 870-page bill focuses largely on tax policy, including most importantly for our industry, the permanent enhancement of the low-income housing tax credit (LIHTC). The inclusion of the LIHTC in the bill and choosing to make it a permanent program is a decisive win for U.S. wood products.
The permanence of the LIHTC is estimated to lead to 1.22 million new affordable homes every 10 years, according to Novogradac. Forest Economic Advisors estimates that the 1.22 million homes will equate to over 19 billion additional board feet needed every 10 years, or about 1.9 billion board feet each year.
LIHTC was originally enacted by Congress in 1986 to incentivize affordable housing projects for low-income families. Between its initial passage and 2023, the program has served over 9 million low-income households, contributing to developing or rehabilitating more than 4 million homes nationwide. The tax credit works through subsidizing the development of new rental housing or the rehabilitation of rental housing for low-income households. The federal government issues tax credits for the program, which are then managed at the state level, and distributed to developers. Once the housing project is completed, the tax credits can be claimed.
Despite the nearly 30 years of instrumental work through the program, the U.S. is still facing a shortage of affordable housing with the National Low Income Housing Coalition estimating that there is a shortage of more than 7 million affordable units. The 2025 expansion of the program makes the tax credits permanent and increases the 9 percent housing credit to 12 percent. The permanent and increased support for new affordable housing will be critical in helping jump start new housing and multi-family construction projects across the nation, with many of these projects looking to the U.S. wood products industry to supply construction materials.
The inclusion of these provisions in the budget reconciliation package was no small feat. Several members of Congress championed its inclusion on both the House and Senate versions of the bill. A national coalition, the ACTION Campaign, consisting of 2,400 organizations and businesses led education and advocacy to members of Congress on the LIHTC. As a member of the ACTION Campaign, AWC worked tirelessly with other organizations to demonstrate how the U.S. wood products industry has played and should continue to play a vital role in addressing the affordable housing crisis.
The passage of these provisions is an important success for our industry as it will drive demand for U.S. wood products. However, AWC is still actively working on more ways to support more home construction. Additional legislation like the Neighborhood Homes Investment Act (NHIA) would provide a critical next step towards boosting housing starts, supporting rural economies and mitigating the current housing crisis. The U.S. wood products industry brings a unique and credible voice to these housing coalition efforts, as we can speak to the importance of a strong housing market for domestic manufacturing and rural jobs. We look forward to continuing to work closely with the Neighborhood Homes Coalition and other partners to support additional policies and programs that address the affordable housing shortage in this country while increasing demand for wood products.
