This bill aims to enhance the existing rehabilitation credit for buildings located in rural areas, providing a significant incentive for their revitalization. It introduces a new category of "applicable rural projects," which are qualified rehabilitated buildings situated outside of larger cities and their contiguous urbanized areas. For these projects, the bill establishes higher credit rates: 40 percent for affordable housing projects and 30 percent for other rural rehabilitation projects, replacing the standard credit rates. An affordable housing project is defined as one where a significant portion of the completed project or its housing component meets specific affordable housing criteria for low-income households. However, the total qualified rehabilitation expenditures eligible for these enhanced credits are capped at $5,000,000 per project. A key provision allows for the transfer of all or a portion of the credit determined for applicable rural projects, providing flexibility for project financing. Furthermore, the bill eliminates the requirement for applicable rural projects to reduce the basis of the rehabilitated property by the amount of the credit claimed, which can improve financial viability. To ensure compliance, a new recapture provision is added, imposing a 100 percent recapture of the credit if an affordable housing project violates its requirements, though an exception exists if the violation is rectified promptly. These changes are set to apply to property placed in service after December 31, 2025.