By Allison Clements, Executive Director, Illinois Housing Council

Illinois is in the grip of an affordable housing crisis that reaches every corner of the state. Nearly 300,000 affordable rental homes are missing for our lowest-income residents. Rents have climbed to unsustainable levels, and homeownership is increasingly out of reach. The consequences are clear: working families stretched thin, employers struggling to attract talent, and communities unable to grow. If Illinois is serious about affordability, housing must be at the center of the conversation.

This urgency comes at a pivotal moment. As Governor J.B. Pritzker and the General Assembly consider a major housing package, the focus is rightly on bold solutions. But lawmakers should not overlook a proven tool that has quietly delivered results for more than two decades: the Illinois Affordable Housing Tax Credit.

That tool is now at risk. The Illinois Affordable Housing Tax Credit is set to expire later this year. Without legislative action, a program that has delivered results across urban, suburban, and rural communities will disappear – cutting off a critical source of financing just as developments face growing challenges.

And the timing could not be worse.

Construction costs have risen sharply – up 44 percent in Chicago and 48 percent nationally since 2019, with roughly 28 percent of that increase driven by inflation alone. These increases have widened the gap between available funding and actual project costs, while financing has become more complex and less predictable.

Under current law, the program’s 5 percent annual growth rate cannot keep pace with these conditions. Extending the credit is critical to maintaining this proven tool, but without adjustment, Illinois will see fewer developments move forward.

At a time like this, Illinois cannot afford to lose tools that work.

The Illinois Affordable Housing Tax Credit offers a 50 percent tax credit on donations of cash, land, or buildings made to nonprofit developers. These contributions help close financing gaps that often determine whether a development moves forward or stalls.

This is a disciplined, market-driven approach that leverages private capital for public benefit. Every public dollar is paired with private investment, stretching limited resources and delivering tangible results: completed homes, construction activity, and stronger local economies.

You can see the impact across Illinois. In Chicago, the Reclaiming Chicago initiative has transformed vacant lots into homes for working families. In Rock Island, the program has helped nearly 500 workers become homeowners, strengthening workforce retention and stabilizing a community facing population loss. In Deerfield, a land donation helped create 25 homes for workers who serve the community but cannot afford to live there.

The scale is significant. The program has leveraged more than $510 million in private donations and supported tens of thousands of affordable homes. These homes stabilize neighborhoods, support employers, and strengthen local tax bases. But demand continues to outpace supply, and the program has not kept pace.

That is why this moment matters. Extending the credit is essential to avoid backsliding, but it is not enough. Illinois must also expand the program’s capacity so it can deliver more homes in more communities. A modest increase in annual allocation would unlock additional private investment, scaling a model that already works.

Illinois has both an opportunity and a deadline. By extending and strengthening the Illinois Affordable Housing Tax Credit before it expires, lawmakers can ensure this proven, bipartisan tool continues to deliver at the scale this moment demands.