State lawmakers limit tax credit for affordable housing

WICHITA, Kan. (KWCH) - Homeownership in Kansas has declined each year since 2020. While it is not approaching a record low, the trend shows a steady decrease, according to data from the Federal Reserve Bank.

Recently, state legislators voted to reduce the Kansas Affordable Housing Tax Credit. This program incentivizes developers to build affordable housing in the state. The affordable housing credit has been in place since 2022 and matches 1:1 the federal Low-Income Housing Tax Credit.

Terry Humphrey, the executive director of the American Institute of Architects Kansas Chapter, said, “There’s no area in Kansas where affordable housing isn’t needed.”

Since the program was created 2.5 years ago, it has encouraged developers to build 6,000 new affordable housing units in Kansas, according to Humphrey.

However, state lawmakers have raised concerns about the financial burden of the affordable housing tax credit, leading to a decision to cut funding for the program in the coming years.

Stilwell-area Republican Representative Sean Tarwater claims that the tax credit has cost the state over one billion dollars.

“This was a program that we were told has a $25 million fiscal note,” he remarked.

On Friday, legislators voted to modify the program. The 9% credit will remain, but with reduced funding. The tax credit will provide $25 million in 2025, but this allocation will decrease to $8.8 million in 2026.

The 4% credit program will be canceled.

The 9% credit program targets smaller developments that are best suited for rural communities. In comparison, the 4% credit program, which primarily supports larger construction projects in metropolitan areas, will end in 2025.

Tarwater acknowledged that the revised program will be smaller but believes it still demonstrates a commitment to addressing the issue of affordable housing.

Legislators passed the changes to the tax credit last week. However, these adjustments still require the signature of Governor Laura Kelly to take effect.

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