The Texas Affiliation of Affordable Housing Providers (TAAHP) has announced that the Internal Revenue Service (IRS) will increase the low-income housing tax credit (LIHTC) and private-activity bond (PAB) volume caps for the upcoming year.

According to an October 25 press release from TAAHP, the IRS confirmed that the per-capita multiplier for the federal 9% LIHTC will reach $3 for the first time, marking a ten-cent increase from the previous year. This change represents a significant milestone in efforts to enhance affordable housing financing nationwide.

LIHTC are one of the primary ways that the state and federal government incentivize the private sector to develop and preserve affordable housing for low-income households, says the Texas Department Housing and Community Affairs (TDHCA). 

According to a report in Affordable Housing Finance, in 2022 almost $80 million in these tax credits was directed to 61 properties in Texas leading to the development or rehabilitation of more than 4,000 units. 

The IRS also announced a $5 increase in the per-capita multiplier for private activity bonds. The PAB ceiling will be determined by either $130 multiplied by the state population or a minimum of $388,780,000. This adjustment provides additional flexibility and funding potential for affordable housing projects.

Texas' Private Activity Bond Program is managed by the Texas Bond Review Board receives about $2 billion. About $525 million of that is allocated to address multifamily housing needs in the state. 

Additionally, according to TAAHP, the LIHTC rehabilitation per-unit minimum will rise to $8,500. This increase is deemed essential for encouraging the rehabilitation of existing housing stock.