The Rural Historic Tax Credit Improvement Act enhances federal tax credits for rehabilitating historic buildings in rural areas to encourage preservation and development. The bill increases the tax credit from the standard 20 percent to 30 percent for most rural projects and 40 percent for projects that include affordable housing, with a per-project spending cap of $5 million. A "rural area" is defined as any location outside cities with populations greater than 50,000 and their adjacent urbanized zones. The legislation also allows developers to transfer unused tax credits to other taxpayers, making the incentive more valuable for projects that cannot fully utilize the credits themselves. The changes apply to properties placed in service after December 31, 2025, and include safeguards requiring affordable housing projects to maintain affordability standards or face credit recapture.
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