Incentives Watch: States Enact New Market Credits as U.S. Mulls Permanent Adoption

 Many states have been enacting new markets tax credits lately. This is particularly interesting in light of the fact that Congress is debating whether to make the federal new markets tax credit permanent, based on a bill introduced by Senator Roy Blunt (Mo.) and Senator Jay Rockefeller (W.Va.) on June 11.

The purpose of the new markets tax credit is to encourage the private sector to invest in the development of low-income, or otherwise distressed, areas. The credit is designed to encourage job creation in these areas, too.

A report issued by the New Markets Tax Credit Coalition in June reported on federal tax credit activity during the 2012 calendar year. Based on responses from 72 community development entities, it was noted that $2.3 billion went into qualified low-income community investments and 47, 821 jobs were created by projects that closed in 2012.

In addition to the availability of funding at the federal level, there are state tax credits as well.

For example, Louisiana recently enacted the New Markets Jobs Act, which creates a tax credit against insurance premium taxes for qualified equity investments in community development entities that invest in low-income community businesses. The new credit applies to tax returns due on or after Jan. 1, 2014.

In addition, Arkansas also enacted its own new markets tax credit a few months ago.

Alabama, Florida, Illinois, Kentucky, Maine, and Mississippi also offer a state version of the new markets tax credit.

For more information about the various new markets tax credits, check out Bloomberg BNA’s Credits and Incentives Portfolios.

In other developments . . .

Louisiana enacted legislation that prohibits the alternative fuel tax credit for certain flexible fuel vehicles, according to a Bloomberg BNA Weekly State Tax Reportarticle.