California affordable housing developers are getting a clearer picture of the funding landscape for the year ahead. The California Tax Credit Allocation Committee (CTCAC) released its updated 2026 Credit Estimates on July 9, 2026, outlining how federal and state Low-Income Housing Tax Credits (LIHTC) are expected to be distributed across the state. For affordable housing developers, investors, and local governments, the estimates provide an important roadmap for understanding funding opportunities, regional allocations, and program set-asides that will shape housing production.
CTCAC estimates California will have approximately $136.4 million in annual federal housing tax credits available in 2026. This total is based on the state’s population of 39.4 million residents and includes returned or surplus credits carried into the new allocation year.
Before credits are distributed geographically, a portion is reserved through set-asides designed to support priority housing types and underserved communities. These set-asides total approximately $59 million, representing a substantial commitment to targeted affordable housing production. These allocations reflect California’s ongoing efforts to preserve existing affordable housing, address homelessness and special needs populations, and ensure rural communities continue to compete successfully for housing resources. Among the largest allocations are:
- Rural Set-Aside: 20% of the federal credit ceiling, or roughly $27.3 million.
- Nonprofit Set-Aside: 10%, or approximately $13.6 million.
- At-Risk Housing Set-Aside: 5%, or approximately $6.7 million.
- Special Needs Housing Set-Aside: 4%, or approximately $5.4 million.
- Native American, RHS/HOME/CDBG-DR, and supplemental set-asides also receive dedicated allocations.
After accounting for set-asides, approximately $77.3 million in federal credits will be distributed among California’s geographic regions. The largest estimated allocations include the City of Los Angeles with an allocation of $13.6 million (17.6%), the Balance of Los Angeles County with an allocation of $13.3 million (17.2%), the Central Valley Region with an allocation of $6.7 million (8.6%), San Diego County with an allocation of $6.7 million (8.6%),and finally the Inland Empire Region with an allocation of $6.4 million (8.3%).
Together, the City of Los Angeles and the balance of Los Angeles County account for more than one-third of the state’s available federal 9% credit authority, underscoring the region’s significant affordable housing demand.
CTCAC also estimates approximately $67.3 million in state housing tax credits will be available in 2026 after accounting for prior-year commitments. The state’s housing credit program continues to play a critical role in filling financing gaps and enhancing project feasibility, particularly as construction costs remain elevated statewide. Of those state credits, approximately 15% ($10.1 million) has been reserved for tax-exempt bond-financed 4% projects, leaving approximately $57.2 million available for 9% credit developments.
The 2026 credit estimates provide important opportunities for developers prepared to align their projects with CTCAC’s priorities and regional funding availability. We suggest that developers should carefully review geographic allocations, set-aside opportunities, and housing type goals as they prepare applications for upcoming funding rounds.