Note: These provisions were included in the House and Senate versions of the One Big, Beautiful Bill that passed out of the respective chambers. At the time of writing, the bill is still subject to change. GMA will provide updates on these provisions as HR 1 continues to advance through the legislative process.
This week, Congress is debating and amending HR 1, otherwise known as the “One Big Beautiful Bill.” It includes three key tax provisions in the bill of importance to Georgia cities: Opportunity Zones, the New Markets Tax Credit, and the Low-Income Housing Tax Credit.
Below are the key components of the tax provisions important to cities:
Sec. 70422 – Permanent and Enhanced Low-Income Housing Tax Credit (LIHTC)
- Makes the LIHTC program permanent, rather than subject to periodic reauthorization.
- Includes enhancements:
- Increasing allocation caps to states.
- Adjusting income averaging rules.
- Streamlining “basis boosts” for projects in difficult-to-develop areas.
Impact
Presently the LIHTC serves as the most effective tool for the development and maintenance of affordable rental housing in the U.S. The credit is responsible for creating or preserving over 3.6 million affordable units since 1986. The credit leverages $8 in private capital for every $1 of credit.
Sec. 70423 – Permanent Extension of the New Markets Tax Credit (NMTC)
- Makes the NMTC program permanent.
- Aims to spur investment in low-income communities through tax incentives to private investors.
Impact
The NMTC Program incentivizes community development and economic growth using tax credits that attract private investment to distressed communities.
The NMTC Program has supported a wide range of businesses including manufacturing, food, retail, housing, health, technology, energy, education, and childcare. Communities benefit from the jobs associated with these investments, as well as greater access to community facilities and commercial goods and services.
Since its inception through 2021, the NMTC Program has awarded $71 billion, resulting in the creation or retention of more than 938,000 jobs. It has also supported the construction of 76.9 million square feet of manufacturing space, 118.3 million square feet of office space, and 77.1 million square feet of retail space. As these communities develop, they can also become even more attractive to investors, catalyzing a ripple effect that spurs further investments and revitalization.
Sec. 70421 – Permanent Renewal and Enhancement of Opportunity Zones
- Makes Opportunity Zones (OZs) permanent.
- Likely includes reforms to enhance transparency and encourage mission-aligned investments (e.g., in affordable housing, small business, or community-serving projects).
Impact
Opportunity Zones are an economic development tool that allows people to invest in distressed areas in the United States. Their purpose is to spur economic growth and job creation in low-income communities while providing tax benefits to investors.
Created in 2017, through the passage of the TCJAs, the program was marked as a strong step for community development efforts. The amendments to the program contained within HR 1, make the Opportunity Zones (OZ) program permanent while adding critical safeguards.
The legislation broadens the types of eligible investments to include public infrastructure, affordable housing with income or rent restrictions, and small business equity—opening the door for more community-focused development. It also introduces enhanced transparency through mandatory reporting on outcomes like job creation and housing and requires community engagement for major projects.
A new federal oversight board will review and approve OZ projects, aiming to ensure investments align with local needs and discourage abuse.