Episode 140: Affordable Housing Credit Carryback Act Hits the Senate

Senators Ruben Gallego (D-AZ) and Mike Rounds (R-SD) have introduced S. 5366, the Senate companion to the Affordable Housing Credit Carryback Act. The bill would create a five-year carryback for the Housing Credit, giving LIHTC investors the ability to apply unused credits against prior-year tax liability — a structural change that could meaningfully expand investor capacity and improve pricing on affordable housing deals. The measure has been referred to the Senate Committee on Finance. Key Takeaways: S. 5366 introduced by Senators Gallego (D-AZ) and Rounds (R-SD) — a companion to H.R. 9012, introduced in May by Reps. Carey (R-OH) and Panetta (D-CA). The bill creates a 5-year carryback for the Housing Credit, versus the current carry-forward-only structure. Carryback authority allows investors to recover credit value against prior-year tax liability, converting a deferred benefit into immediate cash — directly impacting investor pricing. Bipartisan co-sponsorship in both chambers is intentional, designed to strengthen the bill's chances of attachment to a broader tax package. The bill was introduced as a standalone measure specifically to better position it for inclusion in a viable tax vehicle moving through Congress. Expanded investor capacity through carryback could widen the buyer pool for LIHTC credits, particularly when corporate tax appetite is variable. Bill is now pending before the Senate Committee on Finance — committee calendar activity is the next signal to watch. With bipartisan support in both chambers and a strategic standalone posture, the Affordable Housing Credit Carryback Act is better positioned than most standalone tax measures. LIHTC developers, syndicators, and equity investors should track the Senate Finance Committee's legislative schedule and begin stress-testing deal structures against the possibility that carryback authority becomes law — because if a tax package moves, this provision has a credible path to inclusion. Subscribe to The Spring Street Brief for daily updates on affordable housing in America.