The low income housing tax credit (LIHTC) is an indirect federal subsidy used to finance the development of affordable rental housing for low to moderate income households. The LIHTC program, enacted by Congress in 1986, is regulated by Section 42 of the Internal Revenue Code and administered by state agencies typically referred to as housing finance agencies (HFAs). Each year, the IRS allocates housing tax credits to designated HFAs based on $1.75 per capita. HFAs allocate credits to developers of qualified affordable housing developments through a competitive process outlined in the state’s Qualified Allocation Plan (QAP). Credits awarded to developers are then sold through syndicators to groups of investors to raise capital (equity) to subsidize eligible development costs, thus allowing units to rent at below market rates. The LIHTC provides a dollar-for-dollar reduction in federal tax liability in exchange for equity.