Affordable Housing Credit Carryback Act

119th Congress Introduced by Ruben Gallego and 1 co-sponsor

The bill allows a five-year carryback for the Low-Income Housing Tax Credit (LIHTC), enabling prior-year tax relief for LIHTC filers.

Introduced in Senate

Summary of Bill: Affordable Housing Credit Carryback Act (S. 5366, 118th Congress)

Note: This summary reflects the text and topics presented in the bill as introduced on August 7, 2026. It aims to explain the bill’s purpose, key provisions, who would be affected, and timing.

Purpose and intent

The bill seeks to provide a five-year carryback period for the low-income housing tax credit (LIHTC).

It is titled the “Affordable Housing Credit Carryback Act.”

Key provisions and changes

Amends Section 39(a)(3) of the Internal Revenue Code to broaden the set of credits eligible for a five-year carryback.

Scope expansion: The heading change from “Marginal Oil and Gas Well Production Credit” to “Certain Credits” is paired with incorporating the LIHTC (the LIHTC under section 42) into the same carryback framework.
Technical insertion: The LIHTC is explicitly added after the well production credit in relevant cross-references, so the LIHTC is treated similarly to other listed credits for purposes of any carryback provision created by this section.

Effective date: The amendments apply to taxable years beginning after the date of enactment of the Act. In practical terms, this means carryback applicability would begin with the first tax year following enactment.

Who/what would be affected

Low-Income Housing Tax Credit (LIHTC) beneficiaries: Developers and owners of LIHTC-assisted projects could utilize a five-year carryback to offset profits in prior tax years, subject to applicable passive activity and other LIHTC rules.

Taxpayers claiming LIHTC: Corporate, S-corporation, partnership, and individual filers claiming LIHTCs would be eligible to apply a five-year carryback period if the bill’s provisions are enacted.

Tax administration: Internal Revenue Code changes would require IRS guidance and potential form/application updates to implement five-year carrybacks for LIHTC against prior-year tax liabilities.

Procedural and timeline aspects

Introduction and sponsorship: Introduced in the Senate on August 7, 2026, by Senator Gallego with Senator Rounds as a co-sponsor.

Committee action: Referred to the Senate Committee on Finance for consideration.

Enactment timeline: The act’s amendments take effect for taxable years beginning after enactment (i.e., future tax years following the date the law is enacted).

Practical implications and considerations

Financial flexibility: A five-year carryback could provide LIHTC developers with additional liquidity during downturns or when federal tax liabilities are lower in prior years, potentially stabilizing financing for affordable housing projects.

Administrative considerations: Implementing a five-year carryback for LIHTC may require IRS administrative guidance, compliance checks, and potential interaction with existing LIHTC rules (e.g., recapture, eligibility, and project compliance).

Interaction with other credits: The bill explicitly reshapes cross-references to include LIHTC alongside other credits in the carryback framework, but does not, by itself, alter LIHTC credit amounts or allocation processes.

If you’d like, I can add a brief eligibility checklist or a potential example scenario illustrating how a five-year LIHTC carryback might work in practice.