The Low-Income Housing Tax Credit, a federal program that has existed since the 1980s, is channeling billions into housing development while producing apartments that many low-income renters cannot afford, according to reporting by ProPublica and other outlets.

Portland, Oregon, like many cities across the country, has used the tax credit to increase its supply of affordable housing. The program provides up to $15 billion worth of tax credits annually nationally to help developers build apartments. Portland supplemented the federal construction money with local dollars, creating incentives that were hard for developers to turn down.

To meet the program's affordability requirements, developers in most cases needed only to set rents within reach of someone earning 60% of median income, an earnings threshold that equates to about $75,000 annually for a family of four. The result has been a glut of apartments costing renters approximately $1,400 per month for a one-bedroom unit.

That rent level is manageable for a family making $75,000 but represents nearly half the monthly income of someone who earns $35,000 at the local minimum wage. Nearly 2,000 of Portland's subsidized units sat vacant and unused at last count, as The Oregonian and Willamette Week have reported. Similar situations have repeated in Seattle, the San Francisco Bay Area, and Denver.

What the Left Is Saying

Progressive critics of the program agree that something must be done but disagree on the solution. Kirk McClure, an emeritus professor of urban planning at the University of Kansas who has studied the tax credit for decades, said the evidence shows the program is not fulfilling its original purpose.

"The evidence is telling us this program is lacking its reason to exist," McClure said. "We should reform the program to make it work better."

McClure and other researchers have brought their concerns to Congress, recommending diverting money into rental vouchers for tenants or changing the tax credit's rules to reward only developers who build units affordable to people at the very bottom of the income ladder. Studies since 1991 have concluded that many more people could benefit if the money were spent on rental vouchers, which let consumers rather than the government decide which landlords receive tax subsidies. Estimates from independent researchers suggest such an approach could produce twice the impact per dollar.

Housing advocates and some progressive policymakers argue the program should be reformed to serve those with the greatest need, targeting income levels well below 60% of median.

What the Right Is Saying

Defenders of the program include both parties in Congress and housing industry stakeholders who benefit from the tax credit structure. Former HUD Secretary Ben Carson told the House Committee on Oversight and Government Reform in 2025 that the program serves an important function.

"The program leverages housing market forces, entrepreneurial innovation and private accountability to increase housing supply," Carson said.

Among the program's prominent backers are two Northwest Democrats on the Senate Committee on Finance, Ron Wyden of Oregon and Maria Cantwell of Washington. Cantwell has introduced bills to increase funding for the existing tax credit structure. Wyden has defended the program while also proposing expanding its target to benefit not just low-income families but also middle-income households.

Both Wyden and Cantwell have said Congress should hold more hearings to ensure the program is run efficiently, but they defended it in written statements.

"There isn't any silver bullet to the housing crisis in Oregon and around the country," Wyden's statement said, "but the low-income housing tax credit has been the most successful federal housing construction program on the books for decades and is the only housing program Republicans haven't tried to gut."

What the Numbers Show

The Low-Income Housing Tax Credit currently supports nine out of every 10 subsidized housing units built in America, making it the dominant vehicle for federal affordable housing construction. Data from the U.S. Department of Housing and Urban Development and the U.S. Treasury shows that funding for the tax credit has grown at a much faster rate than rental assistance vouchers since 2000.

Researchers have found little evidence the program has expanded the overall housing supply beyond what the market would have produced without it. Studies have concluded the program is an expensive and ineffective way to house people who cannot afford market-rate rents, producing housing in markets and at income levels that already have a surplus rather than filling genuine shortages for extremely low-income renters.

The program's complexity has spawned an industry of affordable-housing-focused developers, investors, lawyers, and accounting specialists who profit from the tax credit structure.

The Bottom Line

The Low-Income Housing Tax Credit remains the linchpin of U.S. housing policy with broad bipartisan support in Congress and strong backing from industries that benefit from its structure. The debate over whether to reform or maintain the program as currently structured is likely to continue, with advocates pushing for deeper income targeting while defenders argue the current approach creates needed housing supply.

What happens next: Watch for congressional hearings on housing policy efficiency and any proposals to adjust income thresholds or redirect funds toward rental vouchers. The program's $15 billion annual price tag and its role in supporting nine out of 10 subsidized units mean even modest changes could affect hundreds of thousands of renters across the country.