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New Markets Tax Credit:
State Programs
Connecticut Proposed |
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| Enacting Legislation | Click here |
| CDE Application Process | Must submit an application to be registered and shall have its primary place of business in this state |
| Annual State CAP limits | 500,000,000 |
| Transaction CAP limits | Amount of investment shall not exceed the greater of: (a) the amount of state revenue that will be generated or (b) the total of state revenue and local revenue generated. The tax credits generated to a single investment can not exceed 100,000,000 |
| What is the credit | |
| How is the credit claimed | Years 1-3: 0%, Years 4-7: 10%, and Year 8-10: 20% |
| Credit period (compliance) | |
| QALICB requirements | Investment must be made into an eligible industrial site investment project or an urban reinvestment project, as defined |
| Recapture | Any taxpayer which has claimed credits allowed under this program to an investment where the commissioner has revoked the certificate of eligibility shall be required to recapture such taxpayer's prorate share of the recapture amount, as defined, and no subsequent credit shall be allowed |
| Other | 1) Must submit a report each year by March 1 to the state with transaction data 2) Tax credits can be transferred |
Florida |
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| Enacting Legislation | Click here |
| CDE Application Process | Needs to be a CDE for federal purposes and needs to be authorized to serve businesses in Florida. Need to submit an application to the office to approve a proposed investment as a qualified investment. The qualified community development entity must issue the qualified investment in exchange for cash within 60 days after it receives the order approving an investment as a qualified investment, otherwise the order is void. |
| Annual State CAP limits | 20,000,000 |
| Transaction CAP limits | A qualified active low income community business may not receive more than 10,000,000 in qualified low income community investments under this program |
| What is the credit | 39 percent of the purchase price of the qualified investment |
| How is the credit claimed | Years 1-2: 0%, Year 3: 7%, and Years 4-7: 8% |
| Credit period (compliance) | 7 years (same as federal) |
| QALICB requirements | Same as federal requirements plus the following: (1) Performs a substantial portion of its services through its employees in a low-income community for any taxable year; (2) does not derive or project to derive 15 percent or more of its annual revenue from the rental or sale of real estate; (3) Will create or retain jobs that pay an average wage of at least 115 percent of the federal poverty income guidelines for a family of four; (4) A qualified community development entity may not make a qualified low-income community investment in a business unless the principal activities of the business are within an eligible industry (The office, in consultation with Enterprise Florida, Inc., shall designate industries using the North American Industry Classification System which are eligible to receive low-income community investments) |
| Recapture | The following events cause recapture: 1) all the same events that cause a recapture at the federal level, 2) the Federal new market tax credits get recaptured, 3) the CDE fails to provide the office with information, reports, or documentation required by the New Markets Development Program Act, 4) the office determines that a taxpayer received tax credits to which the taxpayer was not entitled, 5) If the CDE fails to maintain 85% of the QLICIs in the State of Florida, 6) The qualified community development entity fails to invest at least 85 percent of the purchase price in qualified low-income community investments within 12 months after the issuance of a qualified investment or 7) The qualified community development entity fails to maintain 85 percent of the purchase price in qualified low-income community investments until the last credit allowance date for a qualified investment (note that the statute does not include a 6 month cure period for (6) or (7)) |
| Other | 1) Qualified investment into CDE can be an equity investment or a long-term debt security instrument (and in the case of a long-term debt security QI, “a qualified community development entity may not make cash interest payments on a long-term debt security that is a qualified investment in excess of the entity’s operating income for 6 years following the issuance of the security). 2) An insurance company that is subject to the insurance premium tax must apply the tax credit against the insurance premium tax |
Illinois |
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| Enacting Legislation | Click here |
| CDE Application Process | Needs to be a CDE for federal purposes that has entered into an allocation agreement with the CDFI Fund pursuant to which Illinois is included in the CDE's service area. Need to submit an application to the IL Department of Commerce and Economic Opportunity (DCEO) to approve a proposed investment as a qualified equity investment. Must issue QEI within 30 days of DCEO approval, and must provide evidence of DCEO of receipt of cash investment within 10 days of QEI issuance. |
| Annual State CAP limits | Approved QEIs are limited so that no more than $10,000,000 of credits may be claimed in any fiscal year. |
| Transaction CAP limits | A qualified active low income community business may not receive more than 10,000,000 in qualified low income community investments under this program |
| What is the credit | 39 percent of the purchase price of the qualified investment |
| How is the credit claimed | Years 1-2: 0%, Year 3: 7%, and Years 4-7: 8% |
| Credit period (compliance) | 7 years (same as federal) |
| QALICB requirements | Same as federal requirements, except as noted below |
| Recapture | The following events cause recapture: 1) the Federal new market tax credits associated with a QEI are recaptured (recapture amount proportionate to the federal recapture); 2) the CDE redeems or makes a principal payment with respect to a QEI prior to the 7th anniversary of a QEI (recapture amount proportionate to the amount of redemption or repayment); and 3) the CDE fails to invest 85% of a QEI within 12 months and maintain such level of investment until the last credit allowance date for such QEI (recapture amount equal to all credits claimed); 12 month reinvestment period permitted. 90 day cure period for recapture after notice from DCEO. |
| Other | 1) Qualified investment into CDE can be an equity investment or a long-term debt security instrument (minimum 7 year term, no acceleration, amortization, or prepayment features, but no limitation on acceleration for default on covenants designed to ensure compliance with IL NMTC Act or Section 45D). 2) An insurance company that is subject to the insurance premium tax and claims the credit against the insurance premium tax is not require to pay any additional retaliatory tax imposed pursuant to the Illinois Insurance Code. 3) Any business that derives or expects to derive 15% or more of its annual revenue from the rental or sale of real estate is not considered a QALICB, except this restriction does not apply to a business that is controlled by or under common control with another business if the second business (i) does not derive or expects to derive 15% or more of its annual revenue from the rental or sale of real estate, and (ii) is the primary tenant of the real estate leased from the initial business. 4) Can be used irrespective of use of Federal NMTCs in same transaction 5) Credit is not refundable or saleable on the open market; may be allocated through pass-through entities. 6) 5 year carry forward permitted if credit cannot be used in a taxable year. |
Iowa |
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| Enacting Legislation | Click here |
| CDE Application Process | |
| Annual State CAP limits | 3,000,000 |
| Transaction CAP limits | The maximum amount of a tax credit for an investment by an investor in any one qualifying business shall be 50,000 |
| What is the credit | 20 percent of the taxpayer's equity investment |
| How is the credit claimed | |
| Credit period (compliance) | |
| QALICB requirements | Investment must be made into a qualifying business or in a community-based seed capital fund |
| Recapture | |
| Other | |
Kentucky Proposed |
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| Enacting Legislation | Click here |
| Details Coming Soon | |
Louisiana |
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| Enacting Legislation | Click here |
| CDE Application Process | Needs to be a CDE for federal purposes and an application needs to be submitted to the state |
| Annual State CAP limits | 25,000,000 |
| Transaction CAP limits | The maximum amount that may be issued by a single business shall not exceed 7,500,000 |
| What is the credit | 25 percent of the purchase price of the qualified equity investment |
| How is the credit claimed | Year 1: 5% and Years 2-3: 10% |
| Credit period (compliance) | 7 years (same as federal) |
| QALICB requirements | Same as federal requirements |
| Recapture | The following events cause recapture: 1) all the same events that cause a recapture at the federal level and 2) the Federal new market tax credits get recaptured |
| Other | 1) The tax credit can be carried forward for 10 years 2) Tax credits can be transferred |
Mississippi |
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| Enacting Legislation | Click here |
| CDE Application Process | Needs to be a CDE for federal purposes and an application needs to be submitted to the state |
| Annual State CAP limits | 15,000,000 |
| Transaction CAP limits | The maximum amount that may be issued by a single business shall not exceed 10,000,000 |
| What is the credit | 24 percent of the purchase price of the qualified equity investment |
| How is the credit claimed | Years 1-3: 8% |
| Credit period (compliance) | 7 years (same as federal) |
| QALICB requirements | Same as federal requirements |
| Recapture | The following events cause recapture: 1) all the same events that cause a recapture at the federal level and 2) the Federal new market tax credits get recaptured |
| Other | 1) The tax credit can be carried forward for 7 years
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Missouri |
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| Enacting Legislation | Click here |
| CDE Application Process | Needs to be a CDE for federal purposes |
| Annual State CAP limits | |
| Transaction CAP limits | The maximum amount that may be issued by a single business shall not exceed 10,000,000 |
| What is the credit | 39 percent of the purchase price of the qualified investment |
| How is the credit claimed | Years 1-2: 0%, Year 3: 7%, and Years 4-7: 8% |
| Credit period (compliance) | 7 years (same as federal) |
| QALICB requirements | Same as federal requirements |
| Recapture | The following events cause recapture: 1) the issuer redeems or makes principal repayments with respect to a qualified equity investment prior to the seventh anniversary and 2) the Federal new market tax credits get recaptured |
| Other | 1) Any business that derives or expects to derive 15% or more of its annual revenue from the rental or sale of real estate is not considered a QALICB 2) Qualified investment into CDE can be an equity investment or a long-term debt security instrument |
Ohio |
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| Enacting Legislation | Click here |
| CDE Application Process | Needs to be a CDE for federal purposes with a service area including any portion of the State of Ohio. Needs to have entered into an allocation agreement with the CDFI Fund. |
| Annual State CAP limits | 10,000,000 |
| Transaction CAP limits | The maximum QLICI amount per QALICB group, determined on the basis of majority ownership or control, of $2,564,000 |
| What is the credit | 39 percent of the adjusted purchase price of the qualified investment |
| How is the credit claimed | Years 1-2: 0%, Year 3: 7%, and Years 4-7: 8% |
| Credit period (compliance) | 7 years (same as federal) |
| QALICB requirements | Similar to federal requirements. Excludes businesses that derives or expects to derive 15% or more of its annual revenue from rental or sale of real property, except SPE's principally owned by a principal user of the property which is formed solely for the purpose of renting or selling the real property back to such principal user if the principal user does not derive 15% or more of its gross annual revenue from the rental or sale of real property. |
| Recapture | The following events cause recapture: 1) all the same events that cause a recapture at the federal level; or 2) the Ohio Director of Development determines that an investment is not a QEI or that the proceeds of an investment for which a tax credit is claimed are used to make QLICIs other than in QALICBs. The Director of Development shall adopt rules to determin the amount to be recovered. |
| Other | 1) The tax credit can be carried forward for 4 years 2) Tax credits can be transferred as QEIs are transferred 3) Credit only applies against state franchise tax payable by domestic insurance companies and financial institutions, as well as certain taxes imposed on foreign insurance companies 4) A state QEI must be designated by a CDE as a federal QEI as well 5) Only applies to QEIs made after January 1, 2010 |
Oklahoma |
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| Enacting Legislation | Click here |
| CDE Application Process | Needs to be a CDE for federal purposes |
| Annual State CAP limits | |
| Transaction CAP limits | The minimum amount that may be issued by a single business shall not be less than 1,000,000 |
| What is the credit | Credit is 20% of the cash amount invested |
| How is the credit claimed | Credit is 20% of the cash amount invested |
| Credit period (compliance) | 5 years |
| QALICB requirements | Investments made by qualified small business capital companies investing funds in Oklahoma small business venture |
| Recapture | The following events cause recapture: 1) the small business venture fails to expend at least 50% of the proceeds of qualified investments within 18 months after the qualified investment was made and 2) the investment in the small business venture is transferred, withdrawn, or otherwise returned within 5 years; provided, a "recapture event" shall not include the transfer, withdrawal, or return of an investment as a result of a "market-based liquidity event" |
| Other | 1) The tax credit can be carried forward for 10 years |
Oregon Proposed |
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| Enacting Legislation | Click here |
| CDE Application Process | Needs to be a CDE for federal purposes with a service area including any portion of the State of Oregon. Needs to have entered into an allocation agreement with the CDFI Fund. An application also needs to be submitted to the state. |
| Annual State CAP limits | 78,000,000 |
| Transaction CAP limits | The maximum amount of QLICIs that may be made to a QALICB and all of its affiliates with the proceeds of a QEI shall be $10 million |
| What is the credit | 39 percent of the purchase price of the qualified investment |
| How is the credit claimed | Years 1-2: 0%, Year 3: 7%, Years 4-7: 8% |
| Credit period (compliance) | 7 years (same as federal) |
| QALICB requirements | Same as IRC 45D |
| Recapture | The following events cause recapture: 1) the CDE makes a principal repayment with respect to a QEI before the 7 year credit period, 2) the Federal new market tax credits get recaptured and 3) the CDE fails to invest 85% of the QEI into a QLICI within 12 months of the issuance of a QEI and maintain the same level of investment in QLICIs until the end of the 7 year credit period |
| Other | 1) Qualified investment into CDE can be an equity investment or a long-term debt security instrument (minimum 7 year term, no acceleration, amortization, or prepayment features, but no limitation on acceleration for default on covenants designed to ensure compliance with OR NMTC Act or Section 45D). 2) Tax credits can be carried forward |
Texas Proposed |
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| Enacting Legislation | Click here |
| CDE Application Process | Needs to be a CDE for federal purposes and an application needs to be submitted to the state |
| Annual State CAP limits | 40,000,000 |
| Transaction CAP limits | The maximum amount that may be issued by a single business shall not exceed 20,000,000 |
| What is the credit | 39 percent of the purchase price of the qualified investment |
| How is the credit claimed | Year 1: 0%, Years 2-4: 6%, Years 5-7: 7% |
| Credit period (compliance) | 7 years (same as federal) |
| QALICB requirements | Same as federal requirements |
| Recapture | The following events cause recapture: 1) the issuer redeems or makes principal repayments with respect to a qualified equity investment prior to the seventh anniversary and 2) the Federal new market tax credits get recaptured |
| Other | 1) Qualified investment into CDE can be an equity investment or a long-term debt security instrument |
Wisconsin Proposed |
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| Enacting Legislation | Click here |
| CDE Application Process | Needs to be a CDE for federal purposes with a service area including any portion of the State of Wisconsin. Needs to have entered into an allocation agreement with the CDFI Fund. An application also needs to be submitted to the state. |
| Annual State CAP limits | |
| Transaction CAP limits | |
| What is the credit | 39 percent of the purchase price of the qualified investment |
| How is the credit claimed | Years 1-3: 5%, Years 3-7: 6% |
| Credit period (compliance) | 7 years (same as federal) |
| QALICB requirements | |
| Recapture | |
| Other | 1) If a claimant transfers an interest in a partnership, limited liability company, or tax-option corporation after the first credit allowance date but before the final credit allowance date, the claimant shall be entitled to claim the credit for the remaining credit allowance dates by filing a written agreement with the return that specifies that the claimant, not the transferee, is the person entitled to claim the credit. 2) Tax credits can be carried forward for 15 years |