Illinois Extends and Expands Affordable Housing Tax Credit in Major Housing Funding Win

SPRINGFIELD -- Illinois lawmakers and housing advocates are celebrating a significant affordable housing victory after Gov. JB Pritzker signed a Fiscal Year 2027 budget package that extends and expands one of the state's most successful housing financing tools.

Included in Senate Bill 3019 is a 10-year extension of the Illinois Affordable Housing Tax Credit (IAHTC), along with a substantial increase in the program's funding growth rate. Housing leaders say the action will help generate new affordable housing opportunities throughout Illinois while leveraging additional private-sector investment.

The Illinois Affordable Housing Tax Credit has been a cornerstone of affordable housing development in the state for more than 25 years. The program encourages donations of cash, land and buildings to nonprofit housing developers by providing tax incentives to donors, helping close financing gaps for affordable housing projects.

Under the newly approved budget, the annual growth rate for the tax credit allocation will increase from 5% to 10%, resulting in Fiscal Year 2027 funding of $41.8 million. The enhanced growth rate is projected to generate an additional $164.4 million in program funding over the next decade.

According to the Illinois Housing Council, the tax credit has already leveraged more than $510 million in private donations and helped create or preserve more than 26,000 affordable homes across Illinois.

“This is a tremendous victory for Illinois communities struggling with housing affordability challenges,” said Allison Clements, executive director of the Illinois Housing Council. “At a time when nearly 300,000 affordable rental homes are missing for Illinois’ lowest-income residents, lawmakers chose to strengthen a proven tool that leverages private investment, supports local development and creates housing opportunities in communities of every size.”

Housing advocates note that the expanded tax credit will support a wide range of projects, including affordable rental housing, workforce housing, senior housing, homeownership opportunities and community revitalization efforts in urban, suburban and rural communities.

The tax credit expansion was not the only housing-related victory included in the budget package.

While the governor's broader BUILD housing reform initiative did not advance during the spring legislative session, lawmakers approved $250 million in new housing investments through the Illinois Housing Development Authority and the Illinois Department of Commerce and Economic Opportunity.

The package includes $100 million for a new Missing Middle Housing Infrastructure Grant Program, $100 million for affordable and missing-middle housing initiatives, and $50 million for down payment assistance programs aimed at helping first-time homebuyers.

Housing leaders say those investments demonstrate bipartisan recognition that Illinois must address housing affordability through multiple approaches.

“These investments demonstrate that Illinois leaders recognize the importance of addressing housing affordability through multiple strategies,” Clements said. “While conversations about broader housing reforms will continue, this budget delivers meaningful resources that will help create housing opportunities, strengthen communities and support economic growth throughout Illinois.”

As policymakers continue debating longer-term housing reforms, advocates say the extension and expansion of the Affordable Housing Tax Credit provides an immediate and proven tool to help meet Illinois' growing housing needs.