Today, President Trump announced a framework to overhaul the federal tax code. The blueprint for tax reform called, “Unified Framework For Fixing Our Broken Tax Code,” aims to reduce the corporate tax rate to 20%, simplifies filing for households by significantly increasing standard deductions and eliminates most itemized deductions while also consolidating the existing 7 income tax brackets into 3. While many details are left out of the framework and will still need to be negotiated, explicit support for the housing credit is included.
This is extremely reassuring that there is support from the Administration and the Republican controlled Congress to preserve the Low Income Housing Tax Credit. What is still unknown is the fate of private activity bonds, which generate 4% housing credits and are responsible for financing the majority affordable housing development and preservation projects in New York.
The framework published today includes the following language referencing the intention to preserve the housing credit:
“The framework explicitly preserves business credits in two areas where tax incentives have proven to be effective in promoting policy goals important in the American economy: research and development (R&D) and low-income housing. While the framework envisions repeal of other business credits, the committees may decide to retain some other business credits to the extent budgetary limitations allow.”
Other Housing Related Details
The framework retains tax incentives for home mortgage interest and charitable contributions. The state and local tax deduction is not included in the framework and recent news reports indicate it will not be preserved.