The Low Income Tax Credit Program (LIHTC) provides an effective vehicle for encouraging private investment in new affordable rental housing. Eligible projects receive federal income tax credits over a ten year period, commensurate with the percentage of the units set aside for eligible households. In order to be eligible, a minimum of 20% of the project must be targeted to households earning 50% or less of median area income or 40% of the project must be targeted to households earning 60% or less of median area income. Sponsors commit to the affordability levels for 99 years.

Typically, the tax credits provide a basis for the syndication of projects to investor limited partners, exchanging project equity for tax credits. The resulting equity leverages loan capital and greatly reduces the need for scarce, direct public subsidies. Tax credit equity has become the cornerstone of almost all affordable rental production in New Hampshire, generating on average, 65% of total project costs. Credits are allocated on a competitive basis two times each year. See the Qualified Allocation Plan for details.