Modifications to low-income housing credit

(a) State housing credit ceiling increase for low-income housing credit (1) In general Section 42(h)(3)(I) is amended— (A) by striking and 2021, and inserting 2021, 2026, 2027, 2028, and 2029,, and (B) by striking 2018, 2019, 2020, and 2021 in the heading and inserting certain calendar years. (2) Effective date The amendments made by this subsection shall apply to calendar years after 2025. (b) Tax-exempt bond financing requirement (1) In general Section 42(h)(4) is amended by striking subparagraph (B) and inserting the following: (B) Special rule where minimum percent of buildings is financed with tax-exempt bonds subject to volume cap For purposes of subparagraph (A), paragraph (1) shall not apply to any portion of the credit allowable under subsection (a) with respect to a building if— (i) 50 percent or more of the aggregate basis of such building and the land on which the building is located is financed by 1 or more obligations described in subparagraph (A), or (ii) (I) 25 percent or more of the aggregate basis of such building and the land on which the building is located is financed by 1 or more qualified obligations, and (II) 1 or more of such qualified obligations— (aa) are part of an issue the issue date of which is after December 31, 2025, and (bb) provide the financing for not less than 5 percent of the aggregate basis of such building and the land on which the building is located. (C) Qualified obligation For purposes of subparagraph (B)(ii), the term qualified obligation means an obligation which is described in subparagraph (A) and which is part of an issue the issue date of which is before January 1, 2030.. (2) Effective date (A) In general The amendment made by this subsection shall apply to buildings placed in service in taxable years beginning after December 31, 2025. (B) Rehabilitation expenditures treated as separate new building In the case of any building with respect to which any expenditures are treated as a separate new building under section 42(e) of the Internal Revenue Code of 1986, for purposes of subparagraph (A), both the existing building and the separate new building shall be treated as having been placed in service on the date such expenditures are treated as placed in service under section 42(e)(4) of such Code. (c) Temporary inclusion of Indian areas and rural areas as difficult development areas for purposes of certain buildings (1) In general Section 42(d)(5)(B)(iii)(I) is amended by inserting before the period the following:, and, in the case of buildings placed in service after December 31, 2025 and before January 1, 2030, any Indian area or rural area. (2) Indian area; rural area Section 42(d)(5)(B)(iii) is amended by redesignating subclause (II) as subclause (IV) and by inserting after subclause (I) the following new subclauses: (II) Indian area For purposes of subclause (I), the term Indian area means any Indian area (as defined in section 4(11) of the Native American Housing Assistance and Self Determination Act of 1996 (25 U.S.C. 4103(11))) and any housing area (as defined in section 801(5) of such Act (25 U.S.C. 4221(5))). (III) Rural area For purposes of subclause (I), the term rural area means any non-metropolitan area, or any rural area as defined by section 520 of the Housing Act of 1949, which is identified by the qualified allocation plan under subsection (m)(1)(B).. (3) Eligible buildings Section 42(d)(5)(B)(iii), as amended by paragraph (2), is further amended by adding at the end the following new subclause: (V) Special rule for buildings in Indian areas In the case of an area which is a difficult development area solely because it is an Indian area, area under this section, a building shall not be treated as located in such area unless such building is assisted or financed under the Native American Housing Assistance and Self Determination Act of 1996 (25 U.S.C. 4101 et seq.) or the project sponsor is an Indian tribe (as defined in section 45A(c)(6)), a tribally designated housing entity (as defined in section 4(22) of such Act (25 U.S.C. 4103(22))), or wholly owned or controlled by such an Indian tribe or tribally designated housing entity.. (4) Effective date The amendments made by this subsection shall apply to buildings placed in service after December 31, 2025.