On April 8, 2024, the Internal Revenue Service (IRS) released a note reserving more than $8 million in unused Low-Income Housing Tax Credit (LIHTC) to individual state affordable housing agencies (HFA).
This carryover allocation includes unused tax credits from fiscal year 2022. It adds to the pool of federal unused LIHTC the IRS reallocated in October 2023.
According to a bulletin dated October 10, 2023, the IRS released approximately $3.2 million in unused LIHTC to states, which this current reallocation adds to.
What Does it Mean?
These credits are carryovers from the previous calendar year. Carryover credits mean that the states could not allocate them to developers or that not enough credits were left over to develop a low-income property.
The IRS will allocate these amounts to HFA for the calendar year 2024. Here is the updated unused LIHTC carryover allocation by state.
| S. No. | Qualified State | Additional Amount Allocated | Initial Amount Allocated (October 2023) |
| 1 | Connecticut | 136,793 | 54,370 |
| 2 | Delaware | 38,417 | 15,269 |
| 3 | Florida | 839,149 | 333,529 |
| 4 | Georgia | 411,670 | 163,623 |
| 5 | Illinois | 474,636 | 188,649 |
| 6 | Maryland | 232,551 | 92,430 |
| 7 | Massachusetts | 263,383 | 104,684 |
| 8 | Michigan | 378,520 | 150,447 |
| 9 | Minnesota | 215,671 | 85,721 |
| 10 | Montana | 42,358 | 16,836 |
| 11 | Nebraska | 74,237 | 29,506 |
| 12 | Nevada | 119,876 | 47,646 |
| 13 | New Jersey | 349,382 | 138,866 |
| 14 | New Mexico | 79,722 | 31,686 |
| 15 | New York | 742,288 | 295,030 |
| 16 | North Carolina | 403,601 | 160,415 |
| 17 | Ohio | 443,478 | 176,265 |
| 18 | Oregon | 159,952 | 63,575 |
| 19 | Pennsylvania | 489,347 | 194,496 |
| 20 | Rhode Island | 41,259 | 16,399 |
| 21 | South Dakota | 34,322 | 13,641 |
| 22 | Texas | 1,132,815 | 450,249 |
| 23 | Utah | 127,535 | 50,690 |
| 24 | Vermont | 24,409 | 9,702 |
| 25 | Virginia | 327,575 | 130,198 |
| 26 | Washington | 293,706 | 116,736 |
| 27 | West Virginia | 66,965 | 26,616 |
| 28 | Wisconsin | 222,286 | 88,350 |
| Total | 8,165,903 | 3,245,624 | |
State of LIHTC
Looking at the share of the largest reallocation amounts for the top 10 states reveals some clear insights.
- The states receiving the most reallocation are generally the states that got the largest allocation of LIHTC from the federal pool for 2022 (the year of the carryover).
- This makes sense since these states have the largest populations, and LIHTC is allocated by a per capita multiplier.
- The percentage of unused LIHTC is at most under 1.5%.
The low rate of unused funds shows that LIHTC is a popular program that will continue to create and maintain affordable housing into 2023.
This is particularly significant given the shortage of affordable housing and the increasing rent burden on low-income households.
