LIHTC Security Act
- Sponsor
- Rep. Arrington, Jodey C. [R-TX-19]
- Committees
- Ways and Means Committee (primary)
- Last action
- Oct 22, 2026
Bottom line
The bill restricts eligibility for federally subsidized low-income housing units to specific categories of alien individuals, with states having the option to forgo the restriction in exchange for a reduced housing credit allocation.
What it actually does
This bill amends the Internal Revenue Code of 1986 to prohibit certain alien individuals from occupying low-income units that receive federal Low-Income Housing Tax Credits (LIHTC). It mandates that all relevant low-income units in a qualified building must meet an occupancy requirement, meaning no occupant can be an alien individual not described in specific paragraphs of the Housing and Community Development Act of 1980. States are given an option to opt out of this requirement, but doing so would result in a 5% reduction in their annual LIHTC allocation.
Proponents argue
Proponents argue that this legislation ensures federal housing subsidies, funded by taxpayers, are directed exclusively towards U.S. citizens and legally authorized residents. They contend it prevents unauthorized immigrants from benefiting from programs intended for others, thereby upholding the integrity of federal benefit programs and potentially freeing up units for eligible individuals.
Opponents contend
Opponents contend that the bill creates significant new administrative burdens for affordable housing providers, potentially leading to increased operational costs and delays in housing placements. They argue it could exacerbate housing insecurity for vulnerable populations, lead to discrimination, and complicate the verification of immigration status, potentially violating fair housing principles.
The bill is concise and its core provisions are clearly stated, allowing for a quick and comprehensive understanding of its intended effects.
Section 2(a), amending IRC Section 42(c) by adding new paragraph (3)(A) and (B)
Restriction on Occupancy by Certain Alien Individuals in LIHTC Units
This provision mandates that for a building to qualify for the Low-Income Housing Tax Credit (LIHTC), all relevant low-income units must not be occupied by alien individuals who are not described in specific paragraphs of Section 214(a) of the Housing and Community Development Act of 1980. This requirement applies at the beginning of any new lease term for such units.
Supporters argue
Supporters argue this ensures federal housing subsidies are exclusively used for legal residents and citizens, aligning with the intent of taxpayer-funded programs and preventing benefits from going to those not legally authorized to reside in the U.S.
Critics contend
Critics contend this provision creates a new layer of bureaucracy and potential for discrimination against individuals who may be eligible but face difficulties proving status, and could exacerbate housing crises for vulnerable populations.
Tradeoffs
This provision balances the desire to restrict federal benefits to specific populations against concerns about administrative burden, potential for discrimination, and the broader goal of providing affordable housing.
Section 2(a), amending IRC Section 42(c) by adding new paragraph (3)(D), and Section 2(b), amending IRC Section 42(h)(3) by adding new subparagraph (J)
State Option to Opt-Out of Occupancy Requirement via Credit Reduction
This provision allows states to elect not to apply the new occupancy requirement to qualified low-income buildings within their borders. If a state makes this election, the annual housing credit dollar amounts allocated to that state are reduced by 5% (multiplied by 0.95). This election applies for the calendar year made and subsequent years unless revoked with the consent of the Secretary of the Treasury.
Section 2(a), amending IRC Section 42(c) by adding new paragraph (3)(E)
Phased-in Occupancy Requirement for Existing Buildings
For "transition-eligible buildings" (those allocated credit before 2027 or financed with obligations before 2027), the occupancy requirement is phased in. For taxable years beginning before January 1, 2031, only 75% of the units in such buildings must meet the new occupancy requirement, rather than 100%.
The bill defines eligible alien individuals by referencing paragraphs of Section 214(a) of the Housing and Community Development Act of 1980. This section of the HCDA generally restricts eligibility for certain housing assistance to U.S. citizens and specific categories of non-citizens (e.g., lawful permanent residents, refugees, asylees).
Section 2(a), new IRC Section 42(c)(3)(B)
Why it matters:This is standard legislative practice to avoid reprinting lengthy statutory text, but it makes the bill less self-contained and harder for a casual reader to fully grasp without looking up the referenced law.
Case for: Proponents would argue this method is efficient and leverages existing legal frameworks for defining immigration status in housing programs, ensuring consistency across federal initiatives.
Case against: Critics might argue that this legislative drafting technique obscures the full impact of the bill by requiring readers to consult external, potentially complex, statutes to understand who is actually affected.
Estimated impact: Determines the precise scope of individuals excluded from LIHTC units, potentially affecting thousands of households.