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A new House bill would make Low-Income Housing Tax Credit eligibility depend on the immigration status of every household occupying a property's low-income units.
H.R. 10856, the LIHTC Security Act, was introduced October 22 by Rep. Jodey Arrington of Texas and referred to the House Ways and Means Committee.
The bill would deny the credit for any qualified low-income building unless all of its credit-counted units are free of occupants not covered by the immigration categories in Section 214 of the Housing and Community Development Act of 1980.
States could elect instead to take a 5 percent cut to their annual Housing Credit dollar amounts, and a transition rule would give existing deals a partial standard through 2030.
The bill is at the earliest stage of the legislative process, but owners, managers, and syndicators should understand what it would require if it advances.
The LIHTC Security Act (H.R. 10856) would amend Section 42 of the Internal Revenue Code to add a new occupancy requirement for the Housing Credit. Under the bill, no credit could be claimed for a qualified low-income building for any taxable year unless, during the preceding calendar year, every "relevant low-income unit" in the building met the requirement. Relevant units are the low-income units counted toward the building's applicable fraction, meaning the credit-generating units, not market-rate units in a mixed-income property.
A unit would meet the requirement only if no occupant is a person who falls outside the immigration-status categories listed in Section 214(a) of the Housing and Community Development Act of 1980. Those categories are the same ones that currently govern eligibility for several HUD-assisted housing programs, including public housing, Section 8, and project-based assistance.
Today, the Housing Credit program does not impose a federal immigration-status screen on tenancy. LIHTC compliance centers on income eligibility, rent limits, student rules, and habitability; immigration status is a HUD program requirement, not a tax credit requirement. Owners of bond and credit deals generally do not collect or verify tenant immigration documentation for tax credit purposes, though properties layered with HUD assistance apply HUD's proration and mixed-family rules to the assisted units.
H.R. 10856 would import the Section 214 framework into the tax code for the first time at the building level. Because the test attaches to every credit-counted unit in the building, a single non-qualifying household in one relevant unit could jeopardize the entire building's credit for the year, not just a portion of it. That all-or-nothing structure is the feature owners and investors will focus on first.
The bill gives states a way out of the occupancy requirement, at a price. A state could elect not to apply the new rule to buildings within its borders, but if no election is in effect, the state's annual Housing Credit dollar amounts would be reduced by 5 percent, calculated by multiplying the per-capita and small-state-minimum amounts by 0.95.
An election, once made, applies for the calendar year and each subsequent year unless revoked with the Treasury Secretary's consent. The design effectively asks each state to choose between administering the occupancy restriction and shrinking the credit authority it allocates. For allocating agencies, the election calculus would pit administrative burden and fair housing exposure against a direct cut to production capacity.
The bill does not reach existing deals immediately. For transition-eligible buildings, those that received credit allocations before 2027 or were financed with bonds issued before January 1, 2027, the requirement would apply on a 75 percent basis rather than an all-units basis, and only for taxable years beginning before January 1, 2031.
The occupancy requirement itself would apply to taxable years beginning after December 31, 2027, and the state election mechanism to calendar years beginning after December 31, 2027. That schedule would give the industry roughly two years of runway before any compliance obligation took hold, assuming the bill moved on a normal legislative timeline.
If enacted, the bill would create verification duties the tax credit world has never administered. Managers would need to determine, at the beginning of each lease term for every credit-counted unit, whether any occupant falls outside the Section 214(a) categories, and owners would need records sufficient to defend the building's credit on audit. Mixed-finance properties already applying HUD's proration rules to assisted units would face a second, building-wide overlay with different consequences.
Syndicators and lenders would likely respond in underwriting: representations, covenants, and possibly reserve requirements tied to occupancy verification. Properties serving immigrant-heavy communities would carry new compliance risk premiums, and investor appetite could shift toward markets where the verification burden looks manageable.
Screening occupants by immigration status raises Fair Housing Act considerations around national origin that owners would need counsel to navigate, particularly on what questions may be asked, what documents may be requested, and how consistent the process must be across applicants. The bill itself is a tax statute and does not answer the operational questions it would create; guidance from Treasury and the IRS would follow enactment, but state law and fair housing rules would apply from day one.
Owners should also note the household-composition wrinkle: under HUD's existing Section 214 framework, mixed-status families can receive prorated assistance. The bill's building-level test contains no proration concept; it asks whether any occupant of a relevant unit falls outside the listed categories, which is a stricter construct than the HUD program rule it borrows from.
H.R. 10856 was introduced October 22, 2026, and referred to the House Committee on Ways and Means. No hearings have been scheduled, no companion bill has been announced in the Senate, and Congress.gov lists no summary beyond the bill text. Most introduced bills never reach a floor vote, and this one would face substantial legislative and legal questions if it advanced.
At the same time, housing affordability and LIHTC have been active ground in this Congress, with the 21st Century ROAD to Housing Act enacted this year and the credit expanded in 2025. Bills that attach conditions to the Housing Credit now move in an environment where housing legislation is actually passing, so industry attention is warranted even at the introductory stage.
The LIHTC Security Act lands in the same week the industry has been marking the credit's 40th year and tracking bills that would expand or streamline it. Where measures like the affordable housing financing bills now in Congress aim to add resources or reduce friction, H.R. 10856 would attach a new eligibility condition to the program's core benefit. That contrast will shape how housing groups respond: expansion bills have drawn broad coalitions, while conditions on tenancy invite a more divided response.
It also interacts with the compliance architecture owners already run. LIHTC files are audited by state allocating agencies, not HUD, so a new federal occupancy condition would presumably be enforced through the same state monitoring channels that verify income and rent limits, adding a new layer to every annual certification cycle.
The introduced text leaves significant implementation questions for Treasury. How verification would be documented, whether existing Section 214 documentation standards would be borrowed, how corrections or unit turnovers mid-year would affect the preceding-calendar-year test, and how the 75 percent transition standard would be measured all remain unspecified. The bill directs timing and manner of the state election to be set by the Secretary, leaving the election mechanics entirely to future guidance.
Owners evaluating pipeline deals should note the allocation-date cutoff in the transition rule: buildings allocated before 2027 get the softer 75 percent standard through 2030, while deals allocated in 2027 or later would face the full all-units test if the bill were law by then. That cutoff could influence closing timelines if the bill gains momentum.
No action is required today; the bill changes nothing about current compliance. The practical steps are monitoring and scenario thinking. Owners with immigrant-serving portfolios should flag the bill for their compliance teams and syndicators. Allocating agencies should begin thinking through the election tradeoffs, since a 5 percent authority cut versus program-wide administration of an immigration screen is a genuine policy fork.
Industry associations are likely to engage early. Owners who want a voice in the process should route feedback through their state housing finance agency and national groups before committee consideration, not after a markup is announced.
One more practical note: because the test looks at occupants rather than leaseholders, households with mixed status would count against a unit even where the leaseholder qualifies. That distinguishes the proposal from HUD's mixed-family proration model and is the provision operators of family properties should study first when assessing exposure.
Committee referral to Ways and Means puts the bill in front of the panel that wrote the modern credit, where any markup would test whether the conference that expanded LIHTC in 2025 holds together for condition-laden proposals. Until then, the bill's function is signaling: it tells allocating agencies, syndicators, and managers where one faction of the House wants the program's eligibility perimeter drawn.
The bill also arrives while states are digesting the 2025 credit expansion and the ROAD Act's new programs, so any condition that redirects agency capacity toward immigration-status administration would compete with the implementation work already on agency plates. That institutional context, as much as the bill's text, will shape the reception it gets in committee.
A new House bill would make Low-Income Housing Tax Credit eligibility depend on the immigration status of every household occupying a property's low-income units.
H.R. 10856, the LIHTC Security Act, was introduced October 22 by Rep. Jodey Arrington of Texas and referred to the House Ways and Means Committee.
The bill would deny the credit for any qualified low-income building unless all of its credit-counted units are free of occupants not covered by the immigration categories in Section 214 of the Housing and Community Development Act of 1980.
States could elect instead to take a 5 percent cut to their annual Housing Credit dollar amounts, and a transition rule would give existing deals a partial standard through 2030.
The bill is at the earliest stage of the legislative process, but owners, managers, and syndicators should understand what it would require if it advances.
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