The bill, H.R. 1, known as the “One Big Beautiful Bill Act”, passed by a vote of 215 in favor, 214 opposed, with one member voting present this morning. LIHTC expansion is included in the bill, including reducing the 50% test which has been one of our top legislative priorities. While this is good news for building more affordable housing, there are many other policy changes that will hurt low-income renters in this bill.

The legislation is expected to add around $3.3 trillion to the deficit over the next 10 years. It also is expected to increase the number of people without health insurance by at least 7.6 million by 2034 and it is expected that 11 million people are in households that will lose some food assistance. Here are some highlights of the bill that will impact housing in New York along with harmful cuts to Medicaid and SNAP, impacting many low income households across the state.

LIHTC EXPANDED

There is some good news that the following provisions to expand the Low Income Housing Tax Credit are included in the bill which will help boost affordable housing supply in NY. The bill:

  • Lowers the 50% test to 25% for obligations made after December 31, 2025, and before January 1, 2030
  • Restores the 12.5% allocation increase for 2026 – 2029
  • Creates a 30% basis boost for rural and Native communities for buildings placed in service after December 31, 2025 and before January 1, 2030

Together these provisions amount to a $14.1 billion investment in the Housing Credit and will finance 527,700 affordable rental homes over the next decade, including 31,700 in NY State according to estimates from Novogradac.

GRRP RESCINDED

The bill rescinds unobligated funding from HUD’s Green and Resilient Retrofit Program, which provides funding for owners and operators of HUD-assisted multifamily housing to make energy efficient upgrades and needed repairs to increase disaster resiliency. GRRP awards to HUD-Assisted buildings in NY totaled $70M.

SALT CAP INCREASED

The limit on the federal deduction for state and local taxes (the SALT cap) is raised from $10,000 to $40,000 per household ($20,000 for married taxpayers filing separately) starting in 2025. The deduction would be phased out for taxpayers with modified adjusted gross income over $500,000 ($250,000 for married taxpayers filing separately). For tax years between 2026 and 2033, the $40,000 and $500,000 amounts would be increased by 1% per year. The SALT cap would remain at that 2033 level for subsequent tax years. SALT will cost $916 billion through 2034.

CFPB CUT

The Consumer Financial Protection Bureau was created in the “Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,” and charged with protecting consumers from unfair, deceptive, or abusive financial practices, including in the housing market and in tenant screenings. The bill slashes its budget by 70%. Since its founding, the CFPB has helped tens of millions of consumers resolve their complaints with financial firms and secured more than $21 billion in refunds and relief for an estimated 205 million consumers who were treated unfairly.

NMTC EXPIRES 

The bill does not renew the New Market Tax Credit which expires this year.

IRA ENERGY CREDITS REPEALED

Repeal of certain Inflation Reduction Act (IRA) energy credits, including the 45L new energy efficient home credit, and elimination of the transferability of select energy credits.

OPPORTUNITY ZONES

The bill creates a second round of OZs which will begin on January 1, 2027, and end on December 31, 2033.

The definition of “low-income community” is narrowed to census tracts that have a poverty rate of at least 20 percent or a median family income that does not exceed 70 percent of the area median income. Additionally, “low-income community” may not include any census tract where the median family income is 125 percent or greater of the area median family income. At least 33 percent of designated OZs must be comprised entirely of a rural area. In the case that there are fewer than 33 percent of rural qualified OZs, all eligible rural areas must be designated. A rural area is defined in the Consolidated Farm and Rural Development Act. Additionally, this provision makes contiguous tracts ineligible for OZ designation.

The bill also creates “rural qualified opportunity funds” (RQOFs). Investments made in a qualified opportunity funds (QOF) receive a single step-up in basis of 10 percent when held for at least five years. In rural areas, investments must be made into a RQOF and will receive a 30 percent step-up in basis when held for at least five years.

Up to $10,000 of post-tax ordinary income may be invested into a QOF or RQOF, and a special rule is created that lowers the “substantial improvement” threshold of existing structures from 100 percent to 50 percent in rural areas.

Reporting requirements are finally added to the OZ program.

MEDICAID

For the first time in Medicaid’s 60-year history, certain recipients ages 19 to 64 would be required to work at least 80 hours a month to retain their benefits. They could also meet the mandate by engaging in community service, attending school or participating in a work program. The requirement would not apply to parents, pregnant women, medically frail individuals and those with substance-abuse disorders, among others. It would take effect by the end of 2026. Earlier in the week, Governor Hochul estimated the 1.5 million New Yorkers would lose Medicaid coverage and the bill will result in a $13.5B loss for New Yorkers and the health care sector.

SNAP

The bill expands work requirements to qualify for benefits. Currently, adults ages 18 to 54 without dependent children can only receive food stamps for three months over a 36-month period unless they work 20 hours a week or are eligible for an exemption. The legislation would extend the work requirement to those ages 55 to 64, as well as to parents of children between the ages of 7 and 18. Plus it would curtail states’ ability to receive work requirement waivers in difficult economic times, limiting them only to counties with unemployment rates above 10%.

The bill would also require states to pay for a portion of the benefit costs – at least 5% – for the first time, starting in fiscal year 2028. States with higher payment error rates would have to shoulder more of the burden – as much as 25% of the costs for those with error rates of at least 10%. Plus, states would have to pick up 75% of the administrative costs, rather than 50%. In New York State, CBPP estimates that 670,000 people are at risk of losing some SNAP assistance with these expanded work requirements.

WHAT TO EXPECT NEXT

The Senate will move forward with their own budget reconciliation bill and then the two houses will reconcile any differences. It is not clear at this point if the Senate will also include expansion of LIHTC, although their Finance Committee Chair did make positive remarks on the topic.

In a parallel track but in a process separate from this budget reconciliation bill, the Trump Administration is expected to soon release a full budget proposal to address FY2026 appropriations for the federal fiscal year beginning on October 1. To date, we have only seen the top-level priorities in the “skinny budget” which slashes HUD funds, block grants programs to states and establishes 2-year term limits for assistance.

Looming over both of these legislative tracks is the national debt limit which expires this summer.