Massachusetts Low-Income Housing Tax Credit (LIHTC)

Learn about the tax credit for taxpayers who invest in a low-income housing project or donate property to certain nonprofits for use in low-income housing projects.

Updated: October 25, 2024

Overview

The LIHTC is available to:

• Individual taxpayers
• Partnerships
• Corporations.

To qualify, a taxpayer must either invest in a qualified low-income housing project located in Massachusetts; or donate real or personal property to certified nonprofit community development or housing organizations for certain uses in the state.

The Executive Office of Housing and Livable Communities (EOHLC) allocates the credit based on an annual aggregate limit, which, for tax years beginning on or after 2023, is the sum of:

• $60,000,000, and
• unused or returned Massachusetts low-income housing tax credits, if any; and
• $5,000,000 for the preservation and improvement of existing state or federally-assisted housing.  

Additionally,  EOHLC determines which:

• Low-income housing projects will qualify for the credit
• Properties may generate a LIHTC for investors.

EOHLC also prepares an annual allocation plan and publishes a Notice of Funding Availability (NOFA) for use by a developer interested in applying for qualification.

Property Eligibility

To be eligible for the credit, the property must meet the federal law requirements for “qualified low-income housing projects" and

• Be located in Massachusetts
• Meet any additional requirements established by Massachusetts laws
• Be owned by an owner who enters into a regulatory agreement with EOHLC.

Minimum Excise, Carryover, Transfer & Recapture

Any unused credits may be carried forward for the next 5 tax years. Alternately, unused credits may be transferred.

If an event or circumstance occurs that results, or would have resulted, in the recapture of any portion of a federal Low Income Housing Credit, then the Massachusetts LIHTC may also be subject to recapture. 

A taxpayer subject to the corporate excise may not use LIHTCs to reduce their corporate excise due below the minimum excise, currently $456. 

Five Year Credit

Unlike most tax credits, a taxpayer awarded Low-Income Housing Tax Credits, other than credits for qualified donations, may claim the awarded amount equally for the succeeding five years. However, credits awarded to a taxpayer for making a qualified donation may only be claimed in the taxable year in which the donation is made.  

Additional Information

For more information, details on how amounts are calculated, and important definitions please see:

• Massachusetts General Laws Chapter 23B, Section 3
• Massachusetts General Laws Chapter 62, Section 6I (Personal income)
• Massachusetts General Laws Chapter 63, Section 31H (Corporate excise)
• 760 Code of Massachusetts Regulations 54
• TIR 99-19: Tax Changes in the Fiscal Year 2000 Budget, Other Than the Capital Gains and the repeal of the "Pay to Play" Provisions  
• TIR 10-15: Certain Local Property Tax, Personal Income Tax, Corporate Excise, and Tax Administration Changes in "An Act Relative to Economic Development Reorganization" 
• TIR 16-15: Tax Provisions Included in An Act Relative to Job Creation and Workforce Development
• TIR 22-5: Tax Provisions in Recent Massachusetts Legislation
• TIR 24-4: Provisions in the 2023 Tax Relief Legislation