Building more housing is essential to address the affordable rental home crisis. The federal low-income housing tax credit (LIHTC) has been effective, but states are also creating their own tax incentives. Over 25 states have developed models alongside the LIHTC. Best practices include simplifying tax incentives and boosting investor interest. States might allow bifurcation of state tax credits from federal ones to enhance demand. Different credit structures, allocated versus certified, have distinct impacts on investors and state revenues, necessitating careful planning.
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