Credit for Government Owned Broadband
The proposal includes a 30% credit for state, local, and tribal governments for the operation and maintenance of government owned broadband systems. Requirements for the credit include a download speed of at least 25 Mbps and an upload speed of at least 3 Mbps. Expenses are capped at $400 per newly subscribed household living in a low-income community. The credit phases down to 26% in 2027, 24% in 2028, and expires at the beginning of 2029.
New Markets Tax Credit
The new markets tax credit would be permanent, if accepted in its current form. For the 2022 and 2023 allocation rounds, it provides an additional allocation amount of $2 billion (for a total of $7 billion in 2022) and $1 billion (for a total of $6 billion in 2023). It sets the allocation amounts at $5 billion for 2024 and all years thereafter. Beginning in 2024, it indexes the annual allocation amount to inflation. Finally, the provision provides AMT relief to taxpayers claiming the NMTC.
Low Income Housing Tax Credit
There are a number of proposed changes affecting the low-income housing tax credit. The 9% housing credit and the small state minimum would increase by 50% and phases in this increase over five years. This would be effective for buildings financed by the proceeds of certain tax-exempt bonds issued in calendar years 2022, 2023, 2024, 2025, 2026, 2027, or 2028 (and not financed by previous bonds issued in tax years 2019-2021) for buildings placed in service in taxable years after December 31, 2021.
For buildings designated to serve extremely low-income households, there would be a 50% basis boost for LIHTC buildings that designate at least 20% of their occupied units for extremely low-income tenants and limit rent to no more than 30% of the greater of: 30% of area median income or the federal poverty line. For more details, contact our office or your tax professional.
Victoria S. Byerly is an attorney in KAV’s Public Finance Group. A specialist in Section 103 of the Internal Revenue Code, her practice is exclusively dedicated to state and federal tax matters related to the issuance of tax-exempt debt obligations.