The Workforce Housing Tax Credit Act creates a new federal tax credit to encourage development of rental housing affordable to middle-income households earning up to 100% of area median income. The bill establishes the "Middle-Income Housing Credit," which provides tax incentives ranging from 2% to 50% of a building's qualified basis depending on whether it receives federal subsidies and its location, with additional incentives for projects in high-cost areas and those involving nonprofit organizations. States receive annual allocations of tax credits (minimum $1.5 million per state) to distribute to qualifying housing projects, which must maintain affordability for at least 15 years after the credit period ends through recorded restrictive covenants limiting rent increases and protecting tenants from eviction without cause. The credit takes effect for buildings placed in service on January 1, 2026, and the bill requires participating developers to provide annual compliance certifications and reports to the IRS to ensure projects meet affordability requirements.
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