(a) Permanent State housing credit ceiling increase for low-income housing credit.—
(1) IN GENERAL.—Section 42(h)(3)(I) is amended—
(A) by striking “2018, 2019, 2020, and 2021,” and inserting “beginning after December 31, 2025,”,
(B) by striking “1.125” and inserting “1.12”, and
(C) by striking “2018, 2019, 2020, and 2021” in the heading and inserting “calendar years after 2025”.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply to calendar years beginning after December 31, 2025.
(b) Tax-exempt bond financing requirement.—
(1) IN GENERAL.—Section 42(h)(4) is amended by striking subparagraph (B) and inserting the following:
“(B) SPECIAL RULE WHERE MINIMUM PERCENT OF BUILDINGS IS FINANCED WITH TAX-EXEMPT BONDS SUBJECT TO VOLUME CAP.—For purposes of subparagraph (A), paragraph (1) shall not apply to any portion of the credit allowable under subsection (a) with respect to a building if—
“(i) 50 percent or more of the aggregate basis of such building and the land on which the building is located is financed by 1 or more obligations described in subparagraph (A), or
“(ii) (I) 25 percent or more of the aggregate basis of such building and the land on which the building is located is financed by 1 or more obligations described in subparagraph (A), and
“(II) 1 or more of such obligations—
“(aa) are part of an issue the issue date of which is after December 31, 2025, and
“(bb) provide the financing for not less than 5 percent of the aggregate basis of such building and the land on which the building is located.”.
(2) EFFECTIVE DATE.—
(A) IN GENERAL.—The amendment made by this subsection shall apply to buildings placed in service in taxable years beginning after December 31, 2025.
(B) REHABILITATION EXPENDITURES TREATED AS SEPARATE NEW BUILDING.—In the case of any building with respect to which any expenditures are treated as a separate new building under section 42(e) of the Internal Revenue Code of 1986, for purposes of subparagraph (A), both the existing building and the separate new building shall be treated as having been placed in service on the date such expenditures are treated as placed in service under section 42(e)(4) of such Code.