By Lisa Lim, member, real estate & housing specialist, Rosenberg & Estis PC
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (BBB) into law. The legislation represents one of the nation’s most sweeping tax, spending and regulatory shakeups in decades, touching everything from border enforcement to energy. The passing of the bill also marked a significant step in addressing the nation’s worsening housing crisis, as well as the need for community reinvestment.
Policymakers have long debated the best ways to incentivize the construction of affordable housing, spur economic development and preserve historic buildings. The BBB was designed, in part, to meet those goals by expanding and permanently extending key federal tax credit programs, including the Low-Income Housing Tax Credit (LIHTC), the New Market Tax Credit (NMTC) and the Historic Tax Credit (HTC).
In this article, we address what each of the legislative impacts are for each of those programs and assess their ramifications on the broader U.S. housing market.
Low-Income Housing Tax Credits
At the most basic level, the BBB gives states more money to support affordable housing by permanently increasing the amount of Low-Income Housing Tax Credits (LIHTCs) they receive by 12 percent.
These credits are given to states based on their populations and are used to help developers offset the costs of building affordable housing, in which rents and revenue streams are subject to caps. There are two main types of LIHTCs: the competitive 9 percent credit, which can cover up to 75 to 80 percent of a project’s costs when sold to investors, and the 4 percent credit, which usually covers 30 to 35 percent of costs when paired with tax-exempt bond financing.
The law also makes it easier for projects to qualify for the 4 percent credit by lowering the requirement that at least 50 percent of a project’s costs be funded with tax-exempt bonds to 25 percent. This means states can stretch their bond money further and support more housing projects overall.
New Market Tax Credits
The BBB makes the New Markets Tax Credit Program, which was scheduled to expire at the end of 2025, a permanent fixture.
Launched in 2010 and administered by the Community Development Financial Institutions Fund (CDFI Fund) within the U.S. Department of the Treasury, this program encourages private investment in low-income communities by providing tax credits to investors through Community Development Entities (CDEs). These CDEs then make loans and equity investments in qualifying projects.
NMTCs can also be layered with LIHTCs, funding the commercial portions of mixed-use developments while LIHTCs finance the housing components.
Historic Tax Credits
The BBB leaves the Historic Tax Credit (HTC) program unchanged at the federal level.
This program has its roots in the National Historic Preservation Act of 1966, which created the National Register of Historic Places. There have been a few subsequent iterations of this program. The Tax Cuts and Jobs Act, which went into effect on January 1, 2018, represents the current law, allowing for a 20 percent federal credit of qualified rehabilitation expenses for income-producing historic buildings.
Today, 35 states offer their own historic tax credit programs, which can be combined with the federal program to enhance savings on adaptive reuse or redevelopment of historic buildings. For example, New York’s state program mirrors the federal program, but with the added benefit that credits can be realized as cash refunds.
While there were proposals to expand the federal HTC program, the BBB did not do so, nor did the law create any new credits focused on adaptive reuse, rehabilitation or commercial conversions. Still, the HTC remains an important tool for preserving and rehabilitating historically significant structures that are income-producing, including office buildings, retail spaces, rental housing and hotels.
Summary
Tax credits are one of the most important tools for affordable housing developers because they help turn projects that might not be financially possible into reality. Programs like the LIHTC allow developers to raise money from investors, reducing the amount they need to borrow and making rents more affordable.
However, receipt of these credits comes with strict rules and complicated requirements. A knowledgeable attorney can guide developers through the process, ensuring they get the full benefit of available credits while avoiding costly mistakes or delays.
Lisa Lim is a member of Rosenberg & Estis’ transactions department and New York development group. Her experience includes representing borrowers, lenders and government agencies in the structuring, negotiation and closing of transactions, with an emphasis on tax-exempt bonds, affordable housing and regulatory frameworks. Lisa works with city, state and federal agencies regularly and has been in-house counsel at HFA, ESD and NYCHA.