Federal Subsidy Expansion Scrambles Massachusetts Affordable Housing Market

The One Big Beautiful Bill Act (OBBBA) expands LIHTC subsidies, doubling affordable housing pipelines in Massachusetts while increasing competition for developers.

By: AXL Media

Published: Mar 26, 2026, 12:03 PM EDT

Source: Bisnow

The OBBBA Breakdown: How the Math Has Changed

The new law significantly alters the "capital stack" for affordable developments by lowering barriers to entry for federal tax credits:

9% LIHTC Expansion: The law enacted a permanent 12% increase in the per capita credit ceiling. Massachusetts expects an additional $3 million in allocations for 2026 alone.

4% LIHTC "50% Test" Reform: Previously, developers needed 50% of project costs funded by tax-exempt private activity bonds to qualify for 4% credits. The OBBBA cut this requirement to 25%.

Impact: This reform allows state agencies like MassHousing to "touch more deals," shifting 4% credits from purely preservation projects to a significant volume of new construction.

Market Trends: Bigger Deals, Broader Geography