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Fairfax County officials say newly expanded federal tax credits could make it easier to finance affordable housing, even as proposed cuts threaten other federal housing programs.

The change came through the federal budget reconciliation act signed into law July 4. It permanently expands low-income housing tax credits, which affordable housing providers can sell to help cover construction costs.

Tom Fleetwood, director of the county’s Department of Housing and Community Development, told the Board of Supervisors’ housing committee Tuesday that the expansion could mark “a significant step forward” for affordable housing financing.

The accounting firm Novogradac estimates the credits will reduce federal tax revenue by $15.7 billion from 2026 through 2035 while helping finance an additional 1.22 million affordable rental homes nationwide during that period.

“It sounds like we’re going to hopefully get more dollars into projects,” Franconia District Supervisor Rodney Lusk said.

Dranesville District Supervisor Jimmy Bierman said the change would presumably make affordable housing easier to build.

However, the tax-credit expansion comes as the Trump administration seeks to cut overall federal housing spending by as much as 44%. Fairfax officials said fiscal 2026 budget proposals include major reductions to rental assistance and homelessness programs.

Unlike the reconciliation measure, the broader budget remains under congressional consideration, and Fleetwood said negotiations could continue for some time.

County staff members are still evaluating how the enacted tax changes and pending spending proposals could affect Fairfax programs. Callahan Seltzer, who leads the Fairfax County Redevelopment and Housing Authority’s real estate and community development finance division, described the situation as a “really moving target,” with potential gains on one side and uncertainty on the other.

Providence District Supervisor Dalia Palchik, chair of the housing committee, said elected officials want clearer guidance as soon as possible because they have numerous questions and concerns. She called affordable housing finance one of the most complicated subjects facing the county.

Fairfax is also advancing toward its goal of creating 10,000 affordable units countywide by 2034, a target adopted by the Board of Supervisors in 2022. Staff reported that approximately 13% of the goal has been delivered, another 15% is under construction and 10% is in pre-development.