What's Happening?
The U.S. Treasury Department has announced the allocation of unused housing credit carryovers to various states for the calendar year 2025. This allocation is detailed in Rev. Proc. 2026-9, which will be published in the Internal Revenue Bulletin on January
20. The procedure provides guidance to state housing credit agencies on how to request an allocation of these unused credits under IRC Sec. 42(h)(3)(D). The carryovers are distributed from a national pool of unused credit authority, with amounts ranging from approximately $2.4 million for California to $44,851 for Alaska. The allocation is intended to support state housing credit agencies in managing their housing credit programs effectively.
Why It's Important?
The allocation of unused housing credit carryovers is significant as it supports state efforts to address housing shortages and affordability issues. By redistributing unused credits, the Treasury Department ensures that states can continue to fund housing projects that might otherwise lack financial support. This initiative is crucial for states with high housing demands, such as California and Texas, which received substantial allocations. The redistribution of these credits can help stimulate local economies by promoting construction and development, ultimately benefiting low-income families and individuals in need of affordable housing.
What's Next?
State housing credit agencies will need to follow the guidance provided in Rev. Proc. 2026-9 to request their allocations. It is crucial for these agencies to allocate the credits before the end of 2025, as any unallocated credits will not be considered for future allocations. This creates an urgency for states to efficiently manage and distribute their housing credits to maximize their impact. The publication of the revenue procedure in January will provide further clarity and direction for states to proceed with their allocations.
