DC Council Boosts Affordable Housing with New Tax Credit Incentives

The DC Council unanimously passed the District of Columbia Low-Income Housing Tax Credit Clarification Amendment Act of 2020 as part of the Fiscal Year 2021 Budget Support Act, making DC LIHTC available as a matter of right for qualifying projects starting in FY 2022. Qualifying projects eligible for 4% or 9% federal LIHTC after October 1, 2021, receive DC LIHTC equal to 25% of the federal credit value, applicable to acquisition, new construction, and rehabilitation of affordable housing in underserved areas like Wards 7 and 8. Credits can be claimed over 10 years against DC income, insurance premium, and franchise taxes, with options for certification and sale to investors at no less than 80% of federal LIHTC pricing.

This expansion joins DC with 18 states offering local LIHTCs to bridge gaps in federal funding, administered by the Department of Housing and Community Development (DHCD) under a Qualified Allocation Plan. Recent related legislation, including the LIHTC Rent Stabilization Exemption Clarification Emergency Amendment Act of 2025 (D.C. Act 26-167) and Temporary Amendment Act of 2025 (D.C. Law 26-72), exempts LIHTC units from rent stabilization, incentivizing developers in high-demand neighborhoods like Anacostia and Congress Heights. The FY 2025 budget underscores commitment with $1.1 billion in local funds for affordable housing, including $967.9 million for resident services and $536.8 million for homeless support.

Over five years, DC invested nearly $620 million via capital budgets to combat homelessness and boost supply, with tax incentives encouraging private investment amid a shortage of units for households earning below 60% of area median income. Councilmember Kenyan McDuffie, who championed earlier LIHTC efforts, highlighted the program's role in delivering over 1,000 units since 2014, now amplified for underserved wards. Developers must maintain affordability for 30 years, aligning with federal rules to ensure long-term stability for DC families.