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With the United States, among other countries, facing an unprecedented housing affordability crisis, tax credit programs are a powerful policy tool for promoting the development and maintenance of housing units affordable to low-income households. While existing literature has focused on the federal Low-Income Housing Tax Credit (LIHTC), little research has been done regarding state-level affordable housing tax credits. I address this gap in the literature, using the Illinois Affordable Housing Tax Credit (IAHTC) as a case study to examine renter outcomes. Since the program’s inception in 2001, not-for-profit organizations have constructed and rehabilitated more than 23, 000 housing units in the state of Illinois with the help of nearly 630 million in IAHTC-related donations. Through my analysis, I find that the IAHTC program did not lower real rents, but rather increased the proportion of low-income households living in newer rental housing units. At the neighborhood level, rents actually increased, with observed effects strongest at the upper end of the rent distribution, indicating the program may remove existing disamenities. Thus, it may be more appropriate for states considering their own affordable housing tax credits to view this type of program as a neighborhood revitalization effort, instead of one that necessarily improves housing affordability.
Callan Whamond (Thu,) studied this question.