It’s hard to find someone — even outside Washington, D.C. — who hasn’t heard about the One Big Beautiful Bill Act (OBBBA, H.R. 1(link is external)), which President Trump signed(link is external) into law on July 4. The sweeping legislation, one of the most consequential in decades, narrowly made its way through Congress and contains a wide range of tax changes and federal funding cuts. As advocates for affordable housing and community development, Enterprise is carefully analyzing the final provisions to assess their impact on the communities we serve.
Most of the public attention has focused on the bill’s steep cuts to Medicaid, but OBBBA also includes historic investments in key tax credits long championed by Enterprise and our partners — including the Low-Income Housing Tax Credit (Housing Credit), New Markets Tax Credit (NMTC), and Opportunity Zones (OZs). At the same time, the bill deals a significant blow to climate policy, sharply phasing out clean energy tax credits from the Inflation Reduction Act (IRA) and repealing the Greenhouse Gas Reduction Fund (GGRF), despite strong bipartisan support for their preservation.
While the legislation contains many provisions we oppose, there are meaningful wins that will support the development of affordable housing and direct critical investments to underserved communities. These include the largest expansion of the Housing Credit since 2000 and the permanent extension of the NMTC after years of short-term renewals and expirations.
The path to enactment was far from smooth. The House passed the initial version of OBBBA by a razor-thin margin of 215–214 just before Memorial Day. As expected, the Senate made substantial changes to secure enough Republican votes without losing the House majority’s support. The Senate ultimately passed its version 51–50, with Vice President J.D. Vance casting the tie-breaking vote after Republicans Susan Collins (Maine), Rand Paul (Ky.), and Thom Tillis (N.C.) joined all Democrats in opposition. Despite concerns among some House Republicans, the chamber approved the revised Senate bill 218–214 on July 3, with Reps. Thomas Massie (Ky.-4) and Brian Fitzpatrick (Pa.-1) voting no alongside all Democrats.
Below, we break down what the OBBBA means for several of Enterprise’s top policy priorities.
Low-Income Housing Tax Credit: A Historic Boost for Affordable Housing Production
The Housing Credit is the nation’s most important tool for building and preserving affordable rental homes. Since it was created in 1986, it has helped finance over 4 million homes for low-income families, seniors, and people with disabilities.
After years of bipartisan advocacy, two major provisions from the Affordable Housing Credit Improvement Act(link is external) were included in the final reconciliation package, delivering the most significant expansion of the Housing Credit in over two decades:
- A permanent 12% increase in Housing Credit allocations, which helps states finance more affordable rental housing projects every year
- A permanent reduction in the “50% test” to 25%, which will make it much easier to finance affordable homes using tax-exempt bonds, unlocking more projects that previously didn’t pencil out
According to estimates(link is external) from Novogradac, these changes could result in the financing of 1.22 million additional affordable rental homes over the next 10 years. That’s a game-changer for our field—and a huge win for communities nationwide.
While these victories are historic, the final law didn’t include several other key proposals from the House bill, like temporary boosts in support for affordable housing in rural and tribal communities. We will continue working to advance those provisions(link is external) and others from the AHCIA.
The legislation also includes indirect wins for affordable housing finance. For example, it makes 100% bonus depreciation permanent, which may improve investor interest in Housing Credit projects. Importantly, the final law does not include a proposed tax provision that would have disrupted international investment in affordable housing projects—a relief for many developers and investors.
New Markets Tax Credit: Permanently Supporting Community Development
Another major win: the reconciliation bill makes the NMTC permanent. For more than 20 years, this credit has fueled economic development in communities that have historically lacked investment—generating more than $143 billion in total investment and creating over 1.2 million jobs.
Until now, the NMTC has been reauthorized every few years—occasionally with lapses and retroactive legislative action—creating uncertainty for the communities and investors who rely on it. Permanency means we can plan for the long term. The NMTC Coalition projects that this change will lead to $100 billion in new investment and over 400,000 permanent full-time jobs in underserved communities.
While the bill locks in NMTC’s $5 billion annual authorization, it doesn’t include two long-sought improvements: indexing the credit to inflation and allowing investors to use it against alternative minimum tax (AMT) liability. These are priorities we’ll continue to push for as part of the New Markets Tax Credit Extension Act(link is external).
Opportunity Zones: Permanency and Rural Focus, But More Work Ahead
The Opportunity Zones (OZ) incentive, created in 2017 to spur investment in underserved areas, is now a permanent part of the tax code. The OBBBA also included provisions that deepen targeting and promote rural equity.
To help ensure the incentive reaches the communities that need it most, the bill tightens eligibility by lowering the income threshold for designation: now only neighborhoods with incomes at or below 70% of the area median will qualify (down from 80%). It also creates a new category of Rural Opportunity Zones and establishes Rural Qualified Opportunity Funds with enhanced benefits. For example:
- Investors in OZs still get a 10% step-up in tax basis if they hold their investments for five years.
- In rural OZs, the step-up is even greater—30% for those same five-year investments.
- Rural OZ projects also benefit from a lower “substantial improvement” requirement—50% rather than the previous 100%.
Another important advancement: the bill includes data collection, reporting, and transparency requirements for Opportunity Zones, along with $15 million for the IRS to implement them. This is a step toward more accountability and better targeting of investments.
However, we’re disappointed that many key proposals to better align OZs with affordable housing, NMTC, and community development financial institutions (CDFIs) were not included. Enterprise has long raised concerns that OZs have not effectively delivered for affordable housing, and most of our recommendations to fix that were left out. There are industry efforts to explore other regulatory and administrative actions that could improve the use of OZs in producing and preserving affordable housing.
Still, the transparency provisions and permanency are meaningful steps forward, and we will continue advocating for improvements in all communities.
Energy Efficiency and Renewables
In recent years, many LIHTC developers integrated IRA energy credits into their capital stacks. This allowed developers to invest in more comprehensive energy efficiency and renewable energy measures, leading to long term energy savings for both building owners and residents. Under the OBBBA, most of these credits will be phased out within a year.
Developers have already begun to revise scopes and seek gap funding for projects in their pipelines that relied on the New Energy Efficient Home (45L) or the Energy Efficient Commercial Buildings Deduction (179D) credits. In the case of 45L, buildings will have to be built, sold/leased, and Energy Star certified by July 2026. For 179D, projects would have to begin construction by July 2026.
While the Investment Tax Credit (48E) for solar and wind also faces a much earlier phaseout, the runway is a bit longer. To qualify for the credit, projects must begin construction by July 4, 2026 and placed-in-service by the end of 2027. Beginning in 2026, there are also additional requirements related to “Foreign Entity of Concern” (FEOC) restrictions. Currently, the definition of “commence construction” requires at least 5% of project costs to be expended, but a recent Executive Order(link is external) suggests that may be revised.
The repeal of the underlying statute and rescission of unobligated funds for the Greenhouse Gas Reduction Fund (GGRF) is another provision that concerns affordable housing developers. Many developers are primed to apply for and integrate this critical funding into projects to ensure energy affordability and healthy living for their residents. Enterprise is part of the Power Forward Communities(link is external) coalition which received a GGRF award. While 99%+ of GGRF funds are officially obligated, the program is currently tied up in litigation. We expect that the future of the program and access to funds will be determined by the courts.
Amendments Filed
Over 500 amendments to the bill were filed in the Senate. The vast majority of them were filed by Democrats, and either failed or were not even voted on. Sen. Jacky Rosen (D-Nev.), who is a close ally and frequent partner, offered an amendment to include the 30% rural basis boost, but it did not receive a vote. We worked with Senate Republicans, including Sen. Lisa Murkowski (R-Alaska), to broaden support for key clean energy tax credits(link is external), emphasizing the impact of 45L and the ICT on LIHTC deals. The same is true for the Greenhouse Gas Reduction Fund. While there was support, these efforts did not prevail.
Overall, this bill is a big step forward for low-income communities, but our work is not done. The bill is not related to FY26 appropriations, which funds and authorizes appropriated programs such as HOME, CDBG, and Section 4. According to the National Council of State Housing Agencies, an average of 16.9% of Housing Credit units receive HOME funding, and an average of 51% of HOME units receive Housing Credit funding.
Without robust funding of the HOME program, the Housing Credit provisions in the reconciliation bill will be inefficient at increasing the housing supply. Our advocacy team remains hard at work in the FY26 appropriations process. We look forward to seeing what legislative and regulatory opportunities can make the expansions of the Housing Credit and NMTC, as well as the expansion of OZs, strengthen affordable housing production and preservation.
Related Topics:Low-Income Housing Tax CreditNew Markets Tax CreditPolicy