Tax credit apartments (LIHTC): income limits and how to apply

Tax credit apartments are privately owned rentals where the owner gets a federal tax break for limiting the rent. Only households that earn under an income limit, the most a household can earn and still rent there, can rent those apartments. The limit is usually 50% or 60% of the area median income, the middle income in your area.

What is a tax credit apartment?

A tax credit apartment is in a building whose owner got the federal Low-Income Housing Tax Credit (LIHTC) to build or renovate it. In return, the owner limits the rent on some or all of its apartments. It rents those apartments only to households under the income limit. Under the federal tax credit law, the owner must keep these rules for at least 15 years, and its agreement with the state housing agency usually keeps them for at least 15 years more.

The rent has a ceiling, but it doesn't go down if you earn less. You pay the set rent yourself, unless you also have a Section 8 voucher, which pays part of your rent. If the set rent is more than you can pay, compare tax credit apartments with Section 8 buildings and public housing, where your rent is about 30% of your income. A building can mix tax credit apartments with apartments at the usual market rent, so ask which kind you are applying for.

What are the income limits for tax credit apartments?

The limit depends on your household size, your area and the apartment's level, which is 50% or 60% of the area median income in most buildings. The U.S. Department of Housing and Urban Development (HUD), the federal housing department, publishes these limits for tax credit buildings each year. HUD's 2026 limits for two example areas:

To find your own limit, open HUD's limits for tax credit buildings, choose your state and county, and read the row for your household size. Then ask the building which level your apartment uses. You can also run our qualify check.

The tax law doesn't require a lowest income. Because you pay the rent yourself, many buildings set their own minimum income, the least you must earn to show you can pay the rent. Ask the building's office what its minimum is before you apply.

How is the rent limited?

The highest rent a tax credit apartment can charge is 30% of the income limit for the apartment's level (50% or 60%), divided by 12. The federal tax credit law picks the household size by the number of bedrooms, not by who lives there. A studio counts as 1 person, and each bedroom counts as 1.5 people.

Example: a 2-bedroom at the 60% level. Two bedrooms count as 3 people.

1. In New York City, the 60% limit for 3 people is $91,620. 30% of that is $27,486 a year, so the rent can't be more than about $2,290 a month.
2. In Jackson, the 60% limit for 3 people is $49,380. 30% of that is $14,814 a year, so the rent can't be more than about $1,234 a month.

Three more rules shape the rent:

• It includes utilities. The rent limit covers rent plus a utility allowance, the building's estimate of your utility bills. If you pay your own electric or gas, your rent is the limit minus that allowance.
• It ignores voucher payments. If you have a Section 8 voucher, the part the voucher pays doesn't count toward the limit.
• It is a ceiling. Owners can charge less, and many do.

To see whether a rent like that fits your income, try our rent affordability calculator.

Can full-time students live in tax credit apartments?

Sometimes. A household where everyone is a full-time student can't rent a tax credit apartment unless an exception applies. The federal tax credit law and the Internal Revenue Service (IRS) guide for building owners list them:

The IRS counts you as a full-time student if you go to school full time, by the school's own definition, in at least 5 months of the year. The owner checks this when you move in and every year after.

How do you find tax credit apartments?

HUD's database of tax credit buildings lists them by address, and you can search it by city or county. It doesn't show which apartments are free, so call each building and ask whether its waitlist, the line of people waiting for the next free apartment, is open. Ads don't always say "tax credit," so ask the building's office. To see the lotteries, where names are drawn at random, and the waitlists open today, browse our listings or our list of open housing lotteries. Our guide to income-restricted apartments explains the other kinds of lower-rent apartments.

How do you apply for a tax credit apartment?

1. Contact the building's office. The owner or its management company runs the waitlist and takes applications. Ask whether the list is open and which income levels the building has.
2. Gather your income papers. The owner must check your income before you move in, and the IRS guide lets it do that up to 120 days before move-in, so keep your papers recent. Pay stubs, tax returns and benefit letters are typical, and each building lists what it needs.
3. Check the student rule if everyone in your household is a full-time student.
4. Say so if you have a voucher. A tax credit building's agreement with the state must bar it from turning you away because you have a voucher, under the federal tax credit law. The law added that rule on August 10, 1993, so an older building may not have it: ask the building's office. You still have to meet the building's income limit and its other rules.

Our guide to how to qualify for affordable housing covers income rules in general.

What happens when your income changes?

You can stay in your apartment if your income rises after you move in, and your rent stays limited. If your income goes above 140% of the income limit, the owner must rent the next free apartment of your size or smaller to a household under the limit. That rule is in the federal tax credit law.

If any apartments in your building rent at market price, the owner asks for your income papers every year. If every apartment is a tax credit apartment, it doesn't have to, says the IRS guide.

What should you do next?

Look up your area's limit on HUD's limits for tax credit buildings, then find buildings near you in HUD's database of tax credit buildings and call each one to ask whether its waitlist is open. To see which open listings fit your household, use our qualify check.