The Housing Tax Credit Carryover Numbers Are In and the Gaps Are Massive

The U.S. Department of the Treasury just released the latest housing tax credit carryover numbers for states. The takeaway is simple. Some states are sitting on millions in unused credits while others barely have enough to fund a single deal. That gap matters more than most people realize.

Which States Came Out Ahead

A handful of large states dominated the carryover list. California led with roughly 2.4 million dollars in unused housing credits. Texas followed close behind with about 1.9 million.

Those numbers represent real financing power. Carryover credits can be paired with new allocations to fund additional affordable housing projects without waiting for a new federal cycle. For developers in those states, this increases deal flow and flexibility.

Which States Were Left With Almost Nothing

At the other end of the spectrum, several states received extremely small carryover amounts. Alaska landed under 50 thousand dollars. Another state came in below 40 thousand.

At that level, the credits are not enough to meaningfully move a project forward. They may cover early planning or gap financing at best. For housing agencies in those states, the carryover does little to expand supply.

Why Carryover Credits Matter So Much

Housing tax credits are the backbone of affordable housing finance. When a state does not fully use its annual allocation, those unused credits roll forward as carryover.

That sounds harmless, but it signals deeper issues. States with strong development pipelines and experienced housing agencies tend to deploy credits efficiently year after year. States with weaker pipelines struggle to place credits, which limits future housing growth.

Over time this creates a feedback loop. Active states keep building and attracting developers. Slower states fall further behind.

The Compliance Risk Everyone Forgets

Carryover credits are not free money. They come with strict deadlines and compliance requirements. Projects must be placed in service on time and affordability rules must be followed for decades.

If a project misses key milestones or fails compliance tests, the credits are lost. They do not roll again. They revert back to the federal government.

For CPAs, developers, and housing authorities, this makes execution just as important as allocation. Poor project management can wipe out millions in potential financing.

What Happens Next at the State Level

States now decide how to deploy these carryovers. Some will fold them into competitive funding rounds. Others may reserve them for rural areas, specific income bands, or stalled projects that need a push.

The real test comes over the next two years. States with large carryovers will be judged on whether those credits actually turn into completed housing. States with tiny carryovers will face even more pressure to stretch limited resources.