Low-income area investment incentives passed

Investors certified as community development entities can receive income, corporate and premium tax credits under a bill passed by the Legislature April 5.

LB1128, introduced by Columbus Sen. Paul Schumacher, provides tax credits to entities that invest in low-income rural and urban areas.

Under the bill, community development entities must be certified by the state tax commissioner to receive the tax credit. To achieve certification, the development entity must provide:
• evidence of its certification as a qualified community development entity;
• a copy of the allocation agreement executed by the entity;
• a description of the proposed amount, structure and purchaser of the equity investment or long-term debt security; and
• a nonrefundable application fee of $5,000.

The tax credit may be used against the financial institutions’ tax, insurance premium tax and income taxes. Credits may not be claimed for the first two years of investment, but may be claimed for the next five years.

Certified development entities will receive a 7 percent tax credit during the third year and an 8 percent tax credit for the next four years. The total amount of credits awarded by the state cannot exceed $15 million in any fiscal year.

Senators passed the bill on a 41-0 vote.