"IHDA runs the 9% competitive credit and the 4% bond credit through one QAP, Chicago runs its own separate allocation inside city limits as a home-rule agency, and there's a state donation tax credit that isn't a state LIHTC at all — so what am I actually electing between, and does it change if my site is in Chicago?"
Confirming the current document: a one-year QAP, then a new biennium
IHDA's QAPs have historically run on a two-year cycle — a 2020-2021 QAP, a 2022-2023 QAP, a 2024-2025 QAP. That pattern broke in the middle: IHDA issued a single-year 2026 QAP (dated July 1, 2025), then returned to a biennium with the 2027-2028 Qualified Allocation Plan, approved by the IHDA Board on July 24, 2026 and published to the Authority's website in August 2026. As of this research (September 2026), IHDA's own "Qualified Allocation Plan (QAP)" page identifies the 2027-2028 QAP as the current, governing document, describing it as approved "for the next two years," with the 2026 QAP, 2024-2025 QAP, 2022-2023 QAP, and 2020-2021 QAP all listed as prior versions. Every citation in this guide is to the 2027-2028 QAP unless stated otherwise.
This matters for more than dates: comparing the 2026 QAP against the 2027-2028 QAP directly shows IHDA rewriting substantive policy between plans rather than just extending the old one, most importantly on the federal bond test (see below). A tool or memo built against the 2026 QAP's numbers would already be citing a superseded document.
One QAP, two federal credit tracks, and very different review processes
The 2027-2028 QAP treats 9% and 4% as genuinely different review pipelines, not two flavors of the same competition. Both require a Preliminary Project Assessment (PPA) before a full Application, and both Applications are reviewed for "Mandatory" components. But only the 9% Application then goes through Authority-issued Application Clarifications and a formal scoring review — the QAP's own process table marks "Authority reviews Application for Scoring components" as "Not applicable" for 4% Tax Credit Applications. A 4% deal that clears the Mandatory Components and IHDA's underwriting is not competing against other 4% deals for a fixed dollar pool the way a 9% deal is; it is being tested against a threshold, not ranked.
| 9% Tax Credit | 4% Tax Credit | |
|---|---|---|
| Annual credit ceiling | Approximately $34,000,000 anticipated annually (Section III.C.i) | No separate dollar ceiling — sized by Eligible Basis and the amount of tax-exempt private activity bonds actually issued (Section III.B.i) |
| Maximum per-project request | Lesser of $1,700,000, the amount supported by Eligible Basis net of Boost, or the Equity Gap Method | Lesser of the amount supported by Eligible Basis or the Equity Gap Method — no flat dollar cap |
| Competitively scored? | Yes — maximum possible score is 100 points (80 general points plus up to 20 points from one selected policy track) | No — Mandatory Components review only; the QAP's own process table marks scoring "Not applicable" for 4% |
| Discretionary Basis Boost available? | Yes, at the Authority's sole discretion, to further policy priorities or project feasibility | No — "the Authority may not provide a discretionary Boost to 4% Tax Credit Projects" (Code-provided QCT/DDA boost only) |
| Timing | One annual round under the LIHTC Program Timeline | PPAs and Applications accepted on a rolling basis, "subject to change in the Authority's sole discretion" |
IHDA also reserves the right to "Score Applications for tax-exempt bonds and 4% Tax Credits" as a stated Authority Right (Section II.B) — a reserved power the QAP's own process table does not show being currently exercised for ordinary 4% Applications.
IHDA's own real 2026 9% round shows how competitive the scored side actually is. Applications received and awards made, both drawn from IHDA's own published round lists (PPA approvals dated September 17, 2025; awards published July 2026):
| Set-Aside | Applications received | Awards made | Award rate |
|---|---|---|---|
| City of Chicago | 13 | 3 | 23% |
| Chicago Metro | 12 | 9 | 75% |
| Other Metro | 13 | 4 | 31% |
| Non-Metro | 10 | 6 | 60% |
| Total | 48 | 22 | 46% |
Counted directly from IHDA's own 2026 LIHTC Round (Applications Received) and 2026 LIHTC Round Allocations (Approved Applications) lists, published on IHDA's website. Set-aside-level award rates vary sharply — a Chicago Metro application in this round was more than three times as likely to be funded as a City of Chicago application.
The OBBBA bond test: IHDA moved from 50% to 25%, then imposed its own tighter 30% floor
The One Big Beautiful Bill Act (Pub. L. 119-21, signed July 4, 2025) amended the federal bond-financing test for 4% credits under Section 42(h)(4)(B): the longstanding rule required at least 50% of a building's aggregate basis to be financed with tax-exempt private activity bonds, and the new law adds a lower 25% alternative, available where at least 5% of aggregate basis is financed with bonds issued after December 31, 2025. IHDA's own QAP language shows it adopting the new floor directly: the 2026 QAP (dated July 1, 2025, pre-OBBBA) states that the Authority reserves the right to "Limit the volume cap used to the amount needed to meet the 50% test"; the current 2027-2028 QAP states the identical clause with one word changed — "Limit the volume cap used to the amount needed to meet the 25% test." IHDA rewrote its own administrative test between plans to track the new federal floor, rather than leaving the old 50% language in place by inertia.
But IHDA did not simply pass the lower federal floor through to developers. Its Underwriting Standards Guide (a December 2025 update, separate from the QAP itself) sets its own internal floor above the statutory minimum: "The Authority requires that the Bond volume cap awarded to a Project be sized at time of Board approval as thirty percent (30%) of the Project's aggregate basis (the '30% Threshold'), above the Section 42 minimum requirement that the award be sized at twenty five percent (25%) of aggregate basis (the '25% Test'). Any request above the 30% Threshold will be reviewed by the Authority on a case-by-case basis." The Guide also generally requires that bonds not be prepaid earlier than 24 months after closing. IHDA's approach is structurally the same move Colorado made — a state HFA choosing a tighter administrative cap than the new federal floor allows — except IHDA landed at 30% rather than Colorado's 30%/40% exception structure, and unlike Texas, which declined to impose any state-specific ceiling at all.
One sourcing caveat on this specific figure: as of this research, the live URL for IHDA's December 2025 Underwriting Standards Guide returns a 404 on IHDA's own website — the document appears to have been removed, renamed, or superseded without the site's search index yet reflecting a replacement. The 30% Threshold language quoted above was retrieved from an Internet Archive Wayback Machine capture of that same ihda.org PDF, confirmed as a genuine 37-page PDF (not a blocked-page redirect) via a direct file-type check. Confirm IHDA's current-year Underwriting Standards Guide and its stated bond-financing percentage directly with the Authority before underwriting a live 2027-vintage deal to this number.
Chicago's own bond test adds a further wrinkle. As of this research, the City of Chicago's most recently published QAP (its 2025 QAP) and its own Underwriting Standards Guide still define and apply the pre-OBBBA "50% Test" — both documents state, verbatim, that at least fifty percent of a project's aggregate basis must be tax-exempt-bond-financed, with no reference to the new 25% alternative found anywhere in the text reviewed. Whether Chicago's Department of Housing has since updated its bond-financing percentage administratively (the way IHDA updated its own QAP language) without republishing the QAP itself was not confirmed in this research. A Chicago-sited bond deal should confirm DOH's current bond-financing percentage directly rather than assume either the old 50% figure or IHDA's own 25%/30% framework controls a City-administered deal.
Illinois's state tax credit isn't a state LIHTC — it's a 50-cent donor credit, and Chicago administers a slice of it too
Unlike Missouri's or Colorado's state credit, which pairs with the federal credit inside the same ownership structure to boost investor equity, Illinois's state credit runs on a completely different mechanism. The Illinois Affordable Housing Tax Credit — commonly called the Donations Tax Credit — is authorized under Section 7.28 of the Illinois Housing Development Act (20 ILCS 3805/7.28), enacted in 2001, and Section 214 of the Illinois Income Tax Act (35 ILCS 5/214), with implementing rules at 47 Ill. Admin. Code Part 355. It provides a one-time Illinois income tax credit equal to 50% of the value of a donation made by any individual or organization — cash, securities, real property, or personal property — to a qualified not-for-profit affordable housing sponsor (or an LLC whose sole member is a not-for-profit), for costs of purchasing, rehabilitating, constructing, financing, or providing technical assistance or operating support to an approved project. A single donation, or several aggregated donations to one development, must total at least $10,000. The credit does not go to the LIHTC investor or the developer directly — it goes to whoever makes the donation, as an inducement to bring outside cash or in-kind value into the deal's capital stack.
Both federal LIHTC and the state donation credit can apply to the same project, but "the applications would be made separately, as there are different assessment criteria for each" (IHDA's own IAHTC guidance). Any rental project receiving IAHTC must independently meet its own minimum set-aside — at least 25% of units affordable to and occupied by households at or below 60% of area median income, a materially shallower floor than either of federal LIHTC's own 20-50 or 40-60 tests — and its own 10-year compliance period, tracked separately from the LIHTC Extended Use Agreement.
| Feature | Detail |
|---|---|
| Credit rate | 50% of the value of the donation, against Illinois income tax |
| Minimum donation | $10,000 (may be aggregated across multiple donors to one project) |
| Administering agencies | IHDA: 75.5% of the annual statewide Credit Ceiling; City of Chicago Department of Housing: 24.5%, for projects within Chicago |
| Program set-asides | $1,000,000 earmarked annually for technical assistance/general operating support; $2,000,000 for Employer Assisted Housing |
| Minimum project set-aside | At least 25% of units affordable to, and occupied by, households at or below 60% AMI; owner may elect up to 100% |
| Time to secure the donation | 12 months from reservation (a 12-month extension is available for rental projects on written request) |
| Credit transferability | Transferable; if the transfer is under $100,000 the transferee must still donate 10% of the transfer amount; at $100,000 or more, a minimum $10,000 donation is required |
| Claiming period | Begins in the calendar year of reservation or of donation (holder's election); may be spread over up to 5 years if tax liability is insufficient in a single year |
The most recent statewide annual funding figure independently confirmed in this research is $21,648,762 for 2022 (National Low Income Housing Coalition, citing IHDA data). This research could not confirm the current-year (2026) dollar ceiling directly from a primary IHDA source — confirm the current Affordable Housing Tax Credit Ceiling with IHDA or Chicago DOH before modeling IAHTC-sourced donations as a capital-stack line item.
Chicago as its own credit-allocating agency, and the volume-cap math behind it
Chicago is a constitutional home-rule unit under the Illinois Constitution of 1970: "any municipality which has a population of more than 25,000" is automatically a home rule unit (Article VII, Section 6(a)) — Chicago has never needed to opt in. Under Internal Revenue Code Section 42(h)(3)(D), a "constitutional home rule city" receives its own independent, population-ratio share of the state's federal 9% per-capita housing credit ceiling, administered entirely apart from the state housing finance agency, and that carve-out reduces what is left for the rest of the state. Chicago's Department of Housing runs a complete, separate Qualified Allocation Plan on this basis — its own Preliminary Project Application process, its own Mandatory and Scoring components, and its own Underwriting Standards Guide — covering both 9% and 4% federal credits for projects sited within the city's municipal boundary.
The two agencies' numbers for the same 9% program genuinely differ. Chicago's 2025 QAP states: "In connection with the Credit Ceiling, the City of Chicago anticipates approximately $8,239,164 in 9% LIHTC available for allocation to the City" — a real, separate figure from IHDA's own ~$34,000,000 statewide anticipated ceiling. Chicago's own maximum per-project 9% request is $1,800,000 (net of Boost), a different number from IHDA's own $1,700,000 cap. Chicago's QAP also flatly forbids single-building combinations of 9% and 4% units — "the Department will not consider any Preliminary Project Application related to a twinning financing plan or Common Development Plan for a single physical building" — and separately bars "checkerboard twinning" (mixing 4% and 9% units within the same building across multiple buildings) outright.
What this research could not fully resolve is exactly how the two ceilings relate. IHDA's own 2027-2028 QAP separately maintains a "City of Chicago" geographic Set-Aside inside its own statewide pool, with a stated 10% allocation goal of IHDA's own ~$34,000,000 — and IHDA's real 2026 award data shows this is not just a theoretical bucket: 3 of the 13 City of Chicago Set-Aside applications in IHDA's own 2026 round won IHDA 9% awards, for Chicago-sited projects, run through IHDA's own process, in the same cycle Chicago's own Department of Housing was running its separate ~$8,239,164 competition. Whether IHDA's ~$34,000,000 figure is already net of the population share that Section 42(h)(3)(D) carves out for Chicago, or whether the two pools are simply two independently funded, independently run competitions that a Chicago-sited sponsor can choose between (or even pursue in parallel), was not confirmed anywhere in the QAP text, the Chicago QAP text, or IHDA's PPA/award documentation reviewed in this research. A Chicago-based sponsor should confirm directly with both IHDA and the Chicago Department of Housing which agency's process actually applies to a given site, and whether applying to one forecloses the other, before assuming either agency's ceiling is the only door available.
The bond-volume-cap side of the same home-rule status is more concretely documented. Under the Illinois Private Activity Bond Allocation Act (30 ILCS 345/), Illinois's total 2026 state ceiling on tax-exempt private activity bonds was $1,715,871,330 ($135 multiplied by Illinois's reported population of 12,710,158, per the federal per-capita formula under IRC Section 146 and Revenue Procedure 2008-66), split at the outset into three pools: $1,107,388,260 for Home Rule Units, $304,241,535 for Non-Home Rule Units, and $304,241,535 for State Agencies/Authorities. Each home-rule municipality — Chicago among them — receives its own automatic January 1 entitlement equal to $135 multiplied by its own population, and during January 2 through May 1 each year, home-rule units "may not apply to the State for an allocation" at all; they self-administer their own share directly. Using the Governor's Office's own 2026 population table (Chicago City: 2,721,308) and its own $135-per-capita formula, that works out to roughly $367.4 million in tax-exempt bond volume cap available to the City of Chicago alone for 2026 — a figure this research calculated from the state's own published inputs, not a dollar amount stated directly in the Guidelines themselves.
Chicago does not have to use that cap itself. Under the Illinois Allocation Act, a home-rule unit, a State Agency, or the State may voluntarily reallocate unused volume cap to any other Home Rule unit, Non-Home Rule unit, State Agency, or the State, with 14 days' notice to the Governor's Office — and Chicago's own Municipal Code (Section 2-44-160) specifically authorizes its Commissioner to reallocate the City's volume cap to the Chicago Housing Authority or to IHDA for developing affordable or mixed-income housing within the city. In practice, that means a Chicago-sited bond deal can be financed at least three different ways: bonds issued directly by the City using Chicago's own home-rule cap under Chicago's own QAP; bonds issued by IHDA using cap the City has voluntarily reallocated to it; or bonds issued by IHDA (or another eligible issuer) drawing on the State's own separate Non-Home-Rule or State-Agency pools under IHDA's statewide QAP — each a genuinely different application path with different forms, different underwriting guides, and (per the discussion above) potentially different current bond-test percentages.
The Illinois version of "hybrid": twinning, and the two agencies disagree on how it can be built
Illinois has no single blended 9%/4% award the way some states pair the two credits on one reservation. What both IHDA and Chicago's DOH offer instead is "twinning" — separate 9% and 4% Applications, filed together in support of one "Common Development Plan," each with its own credit reservation, evaluated together for financial feasibility. IHDA's own 2025 Twinning Application Guide requires a mandatory concept meeting 21 days before the 9% PPA deadline, separate PPA and full Application submissions for each credit type, a combined Common Application covering the whole plan, and states that within a twinning structure, 9% requests are "capped at 1,500,000 annual credits" — a lower ceiling than the QAP's own standalone $1,700,000 maximum. That $1,500,000 figure comes from a Guide dated January 30, 2025, before the 2027-2028 QAP raised the standalone cap; whether IHDA has updated the twinning-specific cap to match was not confirmed in this research.
The two agencies take opposite positions on whether a twinning plan can occupy a single building. IHDA's own FAQ states plainly: "Can the Common Development Plan be for a single building? A: Yes. However, IHDA discourages the use of 'checkerboarding' 9% and 4% units." Chicago's QAP forecloses the question entirely — a single-building twinning plan, or any plan that checkerboards 4% and 9% units within a building, is stated to be categorically ineligible for City Financial Assistance. A sponsor assembling a twinning deal that might straddle a Chicago site and an IHDA-administered site (or considering which agency to route it through) needs to know this is not a harmonized rule between the two QAPs.
Where this goes wrong
- Citing the 2026 QAP, the 2024-2025 QAP, or an even older plan as current. The 2027-2028 QAP, approved by the IHDA Board July 24, 2026, governs as of this research — and IHDA's cycle briefly broke from its usual two-year pattern with a one-year 2026 plan, so date-based assumptions about "the next QAP" can be wrong.
- Assuming 4% Applications are scored the way 9% Applications are. The QAP's own process table marks Application Clarifications and Scoring review as "Not applicable" for 4% — 4% is a Mandatory Components/underwriting review, not a ranked competition, even though IHDA reserves an unexercised right to score bond/4% deals in the future.
- Restating the federal bond-financing test as a flat, single number. IHDA's own QAP moved from "50% test" (2026 QAP) to "25% test" (2027-2028 QAP) to track the One Big Beautiful Bill Act — but IHDA's separate Underwriting Standards Guide (December 2025 update, now unreachable at its original URL and retrieved from an Internet Archive capture for this research) layers its own tighter 30% Threshold above that federal floor. Confirm the current-year figure directly with IHDA rather than trusting either number as permanent.
- Assuming Chicago's bond test matches IHDA's. As of this research, Chicago's own published 2025 QAP and Underwriting Standards Guide still state the pre-OBBBA "50% Test" with no reference to the new 25% alternative — confirm DOH's current administrative position directly rather than importing IHDA's 25%/30% framework onto a City-administered deal.
- Confusing the Illinois Affordable Housing Tax Credit (Donations Tax Credit) with a state LIHTC match. It is a 50-cents-on-the-dollar credit paid to third-party donors under 20 ILCS 3805/7.28 and 35 ILCS 5/214, not additional credit paid to the LIHTC investor, and it carries its own separate 25%-of-units-at-60%-AMI set-aside and its own separate application.
- Treating IHDA's ~$34,000,000 statewide 9% ceiling and Chicago's own ~$8,239,164 9% ceiling as either the same pool or two fully independent ones without confirming which. IHDA's own QAP still runs a 10%-of-pool "City of Chicago" Set-Aside that made real 2026 awards inside the city — this research could not resolve whether that duplicates, supplements, or is netted against Chicago DOH's own separate figure.
- Assuming a Chicago-sited bond deal must use IHDA-issued bonds. Chicago's own home-rule population-based volume cap allocation (roughly $367 million for 2026, calculated from the state's own per-capita formula) is available for the City to issue bonds directly, or to reallocate to IHDA or the Chicago Housing Authority under Chicago Municipal Code Section 2-44-160 — three genuinely different paths exist for the same site.
- Assuming IHDA's and Chicago's twinning rules are the same. IHDA's own FAQ affirmatively allows a single-building twinning plan (while discouraging checkerboarding); Chicago's QAP categorically bars both single-building twinning and checkerboard twinning for City Financial Assistance.
- Using the $1,500,000 twinning-specific 9% cap from IHDA's Twinning Application Guide without checking whether it has been updated. That figure is dated to a January 2025 guide, predating the 2027-2028 QAP's $1,700,000 standalone 9% cap.
- Assuming a Discretionary Basis Boost is available on a 4% deal the way it is on a 9% deal. The QAP states directly that "the Authority may not provide a discretionary Boost to 4% Tax Credit Projects" — only the Code-provided QCT/DDA boost applies on the 4% side.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies