PlainBillCongress, translated.Legislation. Context. Public interest.Referred to the House Committee on Ways and Means.
Congressional Research Service
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People & committees
Rep. Carey, Mike [R-OH-15] · R–OH
Legislative record
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Referred to the House Committee on Ways and Means.
Introduced in House
Introduced in House
Primary sources
Text links open the official source. We also preserved the text version used in the PlainBill explanation below.
Source last updated: Jan 21, 2026. Consult Congress.gov for the current record.
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PlainBill explanation
Based on the full Introduced in House · 2025-02-21 text. This explanation has not received human editorial review. This overview describes the proposal’s major provisions; it does not establish what its real-world effects would be.
The proposal would give taxpayers rehabilitating qualifying rural buildings a tax credit equal to 30% of eligible costs, or 40% for projects meeting affordable housing requirements. Only up to $5 million of costs per project could count. Taxpayers could transfer some or all of the credit to another taxpayer. Projects receiving the affordable housing credit could face recovery of previously allowed credits if they violate the housing requirements, with an opportunity to correct the violation.
(I) in the case of a project which is an affordable housing project, 40 percent of the qualified rehabilitation expenditures with respect to such project, or (II) in the case of a project which is not an affordable housing project, 30 percent of the qualified rehabilitation expenditures with respect to such project.
the term applicable rural project means a qualified rehabilitated building which is located in a rural area.
the total amount of qualified rehabilitation expenditures which may be taken into account under this section with respect to such project may not exceed $5,000,000.
the taxpayer may transfer all or a portion of the credit determined under paragraph (3) for an applicable rural project.
if such project violates the requirements under section 47(a)(3)(C) before the close of the recapture period (as described in paragraph (1)), then the tax under this chapter for the taxable year in which such violation occurs shall be increased by 100 percent of the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero any credit determined under section 46 which is attributable to the rehabilitation credit under section 47(a) with respect to such project.
Subparagraph (A) shall not apply if the taxpayer demonstrates to the satisfaction of the Secretary that the violation of the requirements under section 47(a)(3)(C) has been rectified within 45 days of a determination and notice by the Secretary.
Section 1 would name the legislation the Rural Historic Tax Credit Improvement Act.
This Act may be cited as the Rural Historic Tax Credit Improvement Act.
For qualifying rural projects, Section 2 would replace the existing paragraph (1) credit treatment with a 40% credit for qualifying affordable housing projects or a 30% credit for other projects. The credit would be determined for the tax year the project is placed in service, with eligible rehabilitation costs capped at $5 million per project.
In the case of any applicable rural project— (i) paragraph (1) shall not apply for any qualified rehabilitation expenditures with respect to such project, and (ii) for the taxable year in which such project is placed in service, the rehabilitation credit for such taxable year is an amount equal to— (I) in the case of a project which is an affordable housing project, 40 percent of the qualified rehabilitation expenditures with respect to such project, or (II) in the case of a project which is not an affordable housing project, 30 percent of the qualified rehabilitation expenditures with respect to such project.
In the case of any applicable rural project, the total amount of qualified rehabilitation expenditures which may be taken into account under this section with respect to such project may not exceed $5,000,000.
A qualifying rural project would have to be a qualified rehabilitated building in a rural area. The rural definition would exclude cities or towns with more than 50,000 residents and their contiguous, adjacent urbanized areas, as defined by the Census Bureau based on the latest decennial census.
the term applicable rural project means a qualified rehabilitated building which is located in a rural area.
the term rural area means any area other than— (I) a city or town that has a population of greater than 50,000 inhabitants, or (II) the urbanized area contiguous and adjacent to a city or town described in subclause (I), as defined by the Bureau of the Census based on the latest decennial census of the United States.
A project could qualify for the affordable housing rate in either of two ways: at least half its completed floor area is housing and at least half that housing area is new or continuing affordable housing; or at least 33% of the entire completed project's floor area is new or continuing affordable housing.
the term affordable housing project means a project— (I) in which— (aa) not less than 50 percent of the aggregate square feet of the completed project is housing, and (bb) with respect to the housing described in item (aa), not less than 50 percent of the aggregate square feet of such housing— (AA) is new affordable housing, or (BB) continues to provide affordable housing, or (II) in which not less than 33 percent of the aggregate square feet of the completed project— (aa) is new affordable housing, or (bb) continues to provide affordable housing.
Affordable housing would mean decent, safe and sanitary housing for a household with income no greater than 80% of the market area's median income, as defined by the Secretary of Housing and Urban Development under the cited housing law.
the term affordable housing means a decent, safe, and sanitary dwelling, apartment, or other living accommodation for a household whose income does not exceed 80 percent of the median income for the market area (as defined by the Secretary of Housing and Urban Development under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f)).
Taxpayers could transfer all or part of a qualifying rural project's credit, subject to certification and any applicable regulations or guidance. The associated certificate could be transferred to any other taxpayer.
Subject to subparagraph (B) and such regulations or other guidance as the Secretary may provide, the taxpayer may transfer all or a portion of the credit determined under paragraph (3) for an applicable rural project.
A certificate issued under this section to a taxpayer shall be transferable to any other taxpayer.
Each transfer would require a certificate containing the historic-structure certification, identifying information for both taxpayers, the project completion date, the amount transferred and any additional information the Secretary requires.
A transfer under subparagraph (A) shall be accompanied by a certificate which includes— (I) the certification for the certified historic structure referred to in subsection (c)(3), (II) the taxpayer’s name, address, tax identification number, date of project completion, and the amount of credit being transferred, (III) the transferee’s name, address, tax identification number, and the amount of credit being transferred, and (IV) such other information as may be required by the Secretary.
The taxpayer transferring a credit could not claim that transferred amount in any tax year. The recipient could claim it for the recipient's tax year in which the transfer occurs.
The amount of credit transferred under subparagraph (A)— (I) shall not be allowed to the transferor for any taxable year, and (II) shall be allowable to the transferee as a credit determined under this section for the taxable year of the transferee in which such credit is transferred.
The credit recipient could not deduct the amount paid or incurred for the transfer. Amounts received in connection with transferring the certificate would be excluded from gross income.
No deduction shall be allowed for the amount of consideration paid or incurred by the transferee.
Gross income shall not include any amount received in connection with the transfer of the certificate.
A taxpayer claiming a transferred rural-project credit would be treated as the taxpayer for that project under Section 50, which the bill references for credit recovery and other special rules. The full existing Section 50 is not supplied.
(D) Recapture and other special rules The taxpayer who claims a credit determined under this section by reason of a transfer of an amount of credit under subparagraph (A) with respect to an applicable rural project shall be treated as the taxpayer with respect to such project for purposes of section 50.
Both parties would have to report credit transfers as the Secretary requires. The Secretary would have to issue transfer regulations or guidance consistent with applicable requirements under Section 6418, whose full text is not supplied.
The transferor and the transferee shall each make such reports regarding the transfer of an amount of credit under paragraph (A) and containing such information as the Secretary may require. The reports required by this subsection shall be filed at such time and in such manner as may be required by the Secretary.
The Secretary shall prescribe regulations or other guidance to carry out this paragraph in a manner which is consistent with applicable requirements with respect to transfer of credits under section 6418.
If a qualifying affordable housing project violated the housing requirements before the referenced credit-recovery period ended, the proposal would increase tax in the violation year. The increase would equal 100% of the reduction in prior-year allowed credits calculated by eliminating the project's rehabilitation credit entirely, rather than only removing the higher affordable housing rate. The supplied text does not establish the length of that period.
In the case of any applicable rural project which is an affordable housing project (as such terms are defined in section 47(a)(3)) which is eligible for the rehabilitation credit under section 47(a), if such project violates the requirements under section 47(a)(3)(C) before the close of the recapture period (as described in paragraph (1)), then the tax under this chapter for the taxable year in which such violation occurs shall be increased by 100 percent of the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero any credit determined under section 46 which is attributable to the rehabilitation credit under section 47(a) with respect to such project.
That credit-recovery rule would not apply if the taxpayer satisfied the Secretary that the violation was corrected within 45 days of the Secretary's determination and notice. The Secretary would issue necessary or appropriate implementation regulations or guidance, including recordkeeping or reporting requirements.
Subparagraph (A) shall not apply if the taxpayer demonstrates to the satisfaction of the Secretary that the violation of the requirements under section 47(a)(3)(C) has been rectified within 45 days of a determination and notice by the Secretary.
The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this paragraph, including regulations or other guidance which provide for requirements for recordkeeping or information reporting for purposes of administering the requirements of this paragraph.
Section 2 would renumber existing Section 50(a) paragraphs (4) through (6) as (5) through (7), add references to the new affordable housing violation rule in the renumbered paragraphs (5) and (7)(C), and update Section 1371(d)(1)'s reference from Section 50(a)(5) to Section 50(a)(6). The existing provisions are not reproduced, so their complete operation cannot be established from these textual changes alone.
(A) by redesignating paragraphs (4) through (6) as paragraphs (5) through (7), respectively
(2) Conforming amendments (A) Section 50(a)(5) of such Code, as redesignated by paragraph (1), is amended— (i) by striking or any applicable transaction to which paragraph (3)(A) applies and inserting any applicable transaction to which paragraph (3)(A) applies, or any violation to which paragraph (4)(A) applies, and (ii) by striking cessation or applicable transaction and inserting cessation, applicable transaction, or violation. (B) Section 50(a)(7)(C) of such Code, as redesignated by paragraph (1), is amended by striking or (3) and inserting (3), or (4). (C) Section 1371(d)(1) of such Code is amended by striking section 50(a)(5) and inserting section 50(a)(6).
Section 3 would exempt qualifying rural rehabilitation credits from Section 50(c)(1), under a provision titled elimination of the rehabilitation credit basis adjustment. The existing adjustment rule is not reproduced, so its detailed operation cannot be established from this bundle.
3. Elimination of rehabilitation credit basis adjustment (a) In general Section 50(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (6) Exception for rehabilitation credit In the case of the rehabilitation credit with respect to any applicable rural project (as defined in section 47(a)(3)), paragraph (1) shall not apply.
Under its provision for credits allowed to a lessee, Section 3 would also make paragraph (5)(B) of the Section 48(d) referenced in Section 50(d)(5) inapplicable to qualifying rural rehabilitation credits. The bundle does not reproduce that existing rule, so its detailed effect cannot be established.
(b) Treatment in case of credit allowed to lessee Section 50(d) of such Code is amended by adding at the end the following: In the case of the rehabilitation credit with respect to any applicable rural project (as defined in section 47(a)(3)), paragraph (5)(B) of the section 48(d) referred to in paragraph (5) of this subsection shall not apply.
The changes in both Sections 2 and 3 would apply to property placed in service after December 31, 2025. These are proposed effective dates, not evidence that the changes became law.
The amendments made by this section shall apply to property placed in service after December 31, 2025.
The amendments made by this section shall apply to property placed in service after December 31, 2025.
The supplied official-actions snapshot, updated January 21, 2026, records introduction in the House and referral to the House Committee on Ways and Means on February 21, 2025. It does not establish subsequent legislative action or enactment.
Source snapshot updated 2026-01-21T06:44:27Z. 2025-02-21: Referred to the House Committee on Ways and Means. 2025-02-21: Introduced in House
A closer look
Reviewed version: Introduced in House · 2025-02-21. These findings describe provisions and who may benefit; they are not judgments of waste, corruption, or motive.
This review covers the supplied bill text. “None identified” does not rule out provisions in later versions or accompanying reports and disclosures.
Provisions outside the bill’s main subject, or policy changes attached to appropriations.
None identified in the reviewed text
No unrelated provision or policy change attached to appropriations was identified in the complete supplied introduced text. This conclusion is limited to that version and does not establish absence in other versions or accompanying materials.
Spending directed to particular recipients or places outside ordinary competitive or formula-based allocation.
None identified in the reviewed text
No congressionally directed spending for particular recipients or places was identified in the complete supplied introduced text. This conclusion is limited to that version and does not establish absence in other versions or accompanying materials. The supplied sources do not establish formal earmark status.
Narrow exceptions, exemptions, or preferential treatment that warrant a closer look.
Findings to examine
The finding concerns express exceptions to tax rules related to the bill's main policy. Classification as a targeted benefit does not imply improper purpose.
Section 3 would give taxpayers with qualifying rural rehabilitation credits special exemptions from Section 50(c)(1) and, under the provision for credits allowed to lessees, paragraph (5)(B) of the Section 48(d) referenced in Section 50(d)(5). These explicit exceptions to existing tax treatment are limited to applicable rural projects and directly support the bill's rural rehabilitation policy. Their detailed financial effect is uncertain because the existing rules are not reproduced.
3. Elimination of rehabilitation credit basis adjustment (a) In general Section 50(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (6) Exception for rehabilitation credit In the case of the rehabilitation credit with respect to any applicable rural project (as defined in section 47(a)(3)), paragraph (1) shall not apply.
(b) Treatment in case of credit allowed to lessee Section 50(d) of such Code is amended by adding at the end the following: In the case of the rehabilitation credit with respect to any applicable rural project (as defined in section 47(a)(3)), paragraph (5)(B) of the section 48(d) referred to in paragraph (5) of this subsection shall not apply.
the term applicable rural project means a qualified rehabilitated building which is located in a rural area.
Full text preserved for this analysis. Legislative record snapshot: Jan 21, 2026. How PlainBill uses AI