Most new income-restricted apartments in Nevada rely on the Low-Income Housing Tax Credit, also called the Housing Credit. The 2025 federal tax law changed two parts of it starting this year, which affects how much affordable housing can be financed.
What changed
Section 70422 of Public Law 119-21 makes two changes:
- Larger state ceiling. For calendar years after 2025, the population-based part of each state's credit ceiling is increased by 12 percent on a permanent basis. Earlier increases had been temporary. The IRS says that for 2026, the amount used to calculate the ceiling is the greater of $3.416 times the state's population or $3,953,600 (Revenue Procedure 2025-32).
- Easier bond test. A bond-financed building has generally needed at least 50 percent of its building and land basis financed with tax-exempt bonds to avoid using up credit ceiling. The law adds a second route: at least 25 percent, as long as bonds issued after December 31, 2025 finance at least 5 percent of that basis. It applies to buildings placed in service in tax years beginning after December 31, 2025.
Who this affects
Developers, syndicators and owners of income-restricted communities, and market-rate owners who compete with them. In Nevada the state housing agency allocates the credits, and bond volume is limited separately. We did not review how much of the increase reaches the Reno-Sparks area, so do not assume a number of units.
Effective date
Calendar years beginning after December 31, 2025 for the ceiling, and buildings placed in service in tax years beginning after December 31, 2025 for the bond test.
What owners should do
- If you plan a new project or a recapitalization of an existing one, ask your tax credit advisor how the 25 percent test changes your bond sizing and credit allocation needs.
- Talk with the Nevada Housing Division about its allocation plan before you count on added capacity.
- If you operate market-rate apartments, watch which affordable projects in your submarket get financed, since they add competing supply.
This is a summary, not tax or legal advice. Your tax credit counsel can advise on a specific project.