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Applicable Federal Rate (AFR)

The Internal Revenue Service each month publishes the credit percentages that apply to low-income housing tax credit buildings that are placed in service that month. There are two separate rates — one for 70% present value credit (9% LIHTC) and one for the 30% present value credit (4% LIHTC). The maximum 70% rate is available for low-income new construction and substantial rehabilitation expenditures that aren’t federally subsidized (e.g.; funded with tax-exempt bond proceeds or with below market federal loans).

September, 20167.36%3.15%
August, 20167.35%3.15%
July, 20167.41%3.18%
June, 20167.42%3.18%
May, 20167.42%3.18%
April, 20167.42%3.18%
March, 20167.44%3.19%
February, 20167.51%3.22%
January, 20167.51%3.22%
December, 20157.49%3.21%
November, 20157.48%3.20%
October, 20157.49%3.21%
September, 20157.51%3.22%
August, 20157.53%3.23%
July, 20157.52%3.22%
June, 20157.47%3.20%
May, 20157.44%3.19%
April, 20157.48%3.21%
March, 20157.42%3.18%
February, 20157.47%3.20%
January, 20157.51%3.22%

As a result of the Housing and Economic Recovery Act of 2008, the AFR for 9% LIHTC placed into service between July 30, 2008 and December 31, 2013 was fixed at 9%.  The American Taxpayer Relief Act of 2012 extended the fixed 9% rate to low income housing tax credit allocations made prior to January 1, 2014.  The Tax Increase Prevention Act of 2014 extended the 9% fixed rate to allocations made prior to January 1, 2015.

In December 2015, the US Congress voted to permanent replace the variable AFR for the 9% development credit with a fixed rate of 9%.  This legislation, entitled the Protecting Americans From Tax Hikes (PATH) Act of 2015, was signed by President Obama.  The variable AFR for the 4% acquisition and tax-exempt bond credits will remain in place.