State Tax Credit Roundup

As the Trump administration implements significant changes to the funding and oversight of Low Income Housing Tax Credits and other incentives, housing sector professionals are increasingly looking to state-level LIHTCs as stable incentives for encouraging growth and expanding affordability. State policymakers, development organizations, and housing providers have long advocated for the creation and expansion of these incentives. In the coming years, the ramifications of changes at the state level may be on par with those of changes on the federal level.

State-level LIHTCs are not universal, and many programs were conceived to complement the Federal LIHTC. Presently, the agencies that administer their state’s LIHTCs rely on big-tent coalitions of local advocates and stakeholders to advance the visibility of LIHTCs, and for legal reforms further encouraging affordable growth. In states without state-level LIHTC programs, the need for affordability continues to skyrocket, and legislators continue to champion the cause of new tax incentives at the state level.

Affordable housing advocates may be most accustomed to following the Washington conversation, but today, it is more important than ever to stay informed on state tax credits. This new column will bring you updates on the latest developments in State LIHTCs and related affordability initiatives, focusing on a few states in each edition. In this first installment, we examine developments in Ohio, Georgia, and Kentucky. 

Ohio
Ohio’s LIHTC (OLIHTC) program was established following the state’s 2023-2024 legislative session, allocating $100 million per year in tax credits over four years for a total of $400 million in state-level LIHTC. In fiscal year 2024, the Ohio Housing Finance Agency (OHFA) allocated $87.5 million of the allowable $100 million in tax credits, according to OHFA’s 2024 annual report, resulting in 859 new affordable rental units. OHFA received 21 applications for funding, awarding 11 in total, spread across the state’s urban, suburban, and rural areas with projects in Columbus, Cincinnati, Cleveland, Toledo, Lancaster, Lebanon, and Canton.

According to a May 2025 fact sheet, demand for OLIHTC is increasing, with a total of 36 applications submitted for FY 25. Thirteen applications received awards, which totaled $109 million and will create 987 units.

OHFA is a quasi-independent agency, which advocates say allows for efficient administration of financial resources, such as LIHTC and OLIHTC. However, a merger between OHFA and the Ohio Department of Development was proposed during the state legislature’s consideration of the 2025-2026 budget (Ohio’s legislature operates on a biennial cycle).

Ryan Gleason, executive director of the Columbus-based Ohio Housing Council, helped lead an effort to maintain OHFA’s independence, asserting that the proposed merger could halt the long-term growth of the state’s affordable housing stock. “The developer community and investment community rallied at that time to convince the legislature that they shouldn’t take that step,” he says, noting particularly the diverse coalition of advocacy. “Our membership is fairly broad, but it wasn’t just us that rallied to this cause,” he says, citing support by the Ohio Chamber of Commerce and the Ohio Business Roundtable.

As OLIHTC evolves, Gleason has also paid attention to the finer points of the state’s Qualified Allocation Plan (QAP), assembling feedback from across the housing sector as the newly updated QAP moves through draft stages. In the first round of edits, Gleason’s coalition identified four key recommendations from the housing industry; particularly, he says, stakeholders were concerned about the proposed Neighborhood Opportunity Index (NOI) threshold, which would have reduced the state’s eligible census tracts by 50 percent using new criteria that pulled from disparate datasets relating to accessibility, neighborhood amenities, crime, and more.

“As you might imagine, with a broad number of data sources, there’s going to be some that are better than others,” Gleason says. “It is helpful to understand, but using it as a threshold struck us as fairly draconian.”

“For what it’s worth, they’ve already told us that threshold will [be removed] in the next draft,” he adds.

Georgia
Georgia’s state-level LIHTC, known as the Georgia Housing Credit, targets need in the areas of workforce housing, senior housing, and affordable housing for households making between 20 and 80 percent of area median income (AMI). The state credits were first introduced in 2001 with the passage of Ga. Laws 348 § 2 and codified as Ga. Code § 48-7-29.6. The tax credits have been renewed in every legislative session since. By 2017, the Georgia Department of Community Affairs (DCA) reported that the Georgia credits led to the creation of over 1,000 affordable housing projects, with a total of over 100,000 affordable units becoming available in 132 of the state’s 159 counties.

Recent tort reforms in the state may help ease some of the burdens of affordable housing management. Ken Blankenship, president of the Georgia Affordable Housing Coalition (GAHC), is optimistic that fewer premises liability claims could lead to lower insurance premiums, further incentivizing new investment in the state’s affordable housing stock.

However, “it’s probably too soon to tell,” Blankenship says, reflecting on the potential impact made by the recent tort reforms. “We have our fall meeting of the GAHC coming up in September, and I expect that there will be discussions on how it has affected insurance renewals, or exclusions of coverage,” he adds, citing challenges surrounding liability coverage, particularly in urban areas. “Typically, most insurance companies were flatly excluding that from my coverage.”

In recent years, Georgia’s property tax regime has been a source of consternation for many in the state’s affordable housing sector, as some of the state’s densest and most populous counties classify the value of a tax credit as income, rather than equity. This leads to an outsized tax burden on owners whose LIHTC-eligible properties are lumped in with other income-generating property owners.

“Obviously, the tax credit is an equity investment, not an income stream,” says Blankenship. “Yet the local assessors have tried their best to construe the law in a manner that suits the local counties.” Blankenship says that a state constitutional amendment would be a “permanent fix” to the issue. He cites neighboring South Carolina, Mississippi, and Alabama as recent examples of positive reforms to clarify the obligations and exemptions. But until similar reforms can be made in Georgia, Blankenship says, any consensus will be fleeting and temporary.

“There is a pending case in front of the Georgia Supreme Court related to this issue,” Blankenship notes, referring to Gateway Pines Hahira, LP v. Lowndes County Board of Tax Assessors, in which the state’s high court heard oral arguments on June 12. At the time of the arguments, Bloomberg Tax reported that the high court’s justices expressed skepticism on upholding a prior ruling, which disqualified the income method, but were also skeptical of assessors’ arguments that the income method could be used in property tax assessments. A verdict is still pending.

Until a constitutional amendment is made, Blankenship says, the confusion will continue, and assessors and developers throughout the state will continue to tangle in the courts. “We think we’ll get a favorable ruling,” he says. “But that’s a band-aid fix.”

Kentucky
Despite setbacks in the current legislative session, affordable housing supporters throughout Kentucky are continuing to push for the establishment of the first state-level LIHTC program. The latest legislative effort was championed by Rep. Joshua Watkins (D-42^nd). Watkins is a licensed realtor currently serving his first term in Frankfort. A member of the legislature’s Affordable Housing Caucus, he represents urban and suburban constituents in metropolitan Louisville. But the affordable housing shortage impacts residents all across the commonwealth’s 120 counties, he says.

“The big picture is that Kentucky is short 200,000 affordable units,” he continues. “I think our legislation needs to show a systemic solution to this systemic problem. My legislation focused on funding for supply-side development.”

With its numerous counties stretching from Appalachia to the Midwest, Kentucky’s affordable housing needs are not only considerable in number but strikingly distinct and diffuse in character. They are not limited to the urban centers of Louisville, Lexington, Bowling Green, and Covington. The 2022 floods in eastern Kentucky have led to devastation and displacement in some of the commonwealth’s most remote, mountainous, and poor counties. And some factors come from outside of Kentucky: Watkins notes that the population boom in Nashville, TN, and nearby Clarksville, TN, has led to rising rents in his family’s hometown of Hopkinsville, KY, a rural county seat with a population of 30,000 situated just north of the Kentucky-Tennessee border.

Watkins contends that any new LIHTC initiative from Frankfort must grapple with all of these hardships in kind. His legislation proposed the creation of a $20 million state-level LIHTC to expand the program down the road. (HB 583 did not make it to committee for a vote.) Watkins adds that this is par for the course for Democrats in 2025’s Republican-controlled legislature. But he is optimistic that there is a place in Kentucky’s future for a State LIHTC program.

The 2025 legislative session ended in May. Watkins currently serves on the 2025 Kentucky Housing Tax Force, a bipartisan interim committee working to explore policy initiatives before the beginning of the 2026 session. Tapped to serve on the committee after just one session in the legislature, Watkins hopes it will present opportunities to show more leadership on creative solutions for affordable housing.

“What do I think the silver lining is? Housing is something that everybody needs,” he says. “When we think about building housing back in a way that is sustainable for generations to come, they care about that across the commonwealth…for a millennial like me, for seniors like my parents, they care about this everywhere.”