What This Bill Does
This bill makes the new markets tax credit permanent instead of letting it expire. The new markets tax credit is a tax break (a reduction in taxes owed) for people who invest money in businesses located in low-income communities. The bill also adjusts the credit amount each year to account for inflation (the rising cost of goods and services over time).
Who It Affects
People and businesses who make qualified equity investments (ownership stakes) in new markets entities in low-income communities. The Internal Revenue Service, which administers the tax code.
Key Provisions
• The new markets tax credit continues indefinitely for calendar year 2020 and every calendar year after that, instead of expiring after 2025. (Sec. 2(a)(1))
• Starting in calendar year 2024, the dollar amount of the credit increases each year based on the cost-of-living adjustment, with increases rounded to the nearest $1,000,000. (Sec. 2(b))
• The credit qualifies for alternative minimum tax relief (a special tax calculation that applies to high-income individuals) for qualified equity investments made after December 31, 2022. (Sec. 2(c))
What Changes
The new markets tax credit no longer expires. Investors who make qualifying investments after December 31, 2022 can claim this tax credit indefinitely. The credit amount increases automatically each year based on inflation starting in 2024.
Important Definitions
Qualified equity investments: ownership stakes made in new markets entities, as defined in the Internal Revenue Code.
Effective Date
The changes apply to taxable years beginning after December 31, 2022.
II
118TH CONGRESS
1ST SESSION
S. 234
To amend the Internal Revenue Code of 1986 to permanently extend the
new markets tax credit, and for other purposes.
IN THE SENATE OF THE UNITED STATES
FEBRUARY 2, 2023
Mr. CARDIN (for himself, Mr. DAINES, Ms. CANTWELL, Mr. SCOTT of South
Carolina, Mr. SCHUMER, Mr. CASSIDY, Mr. MENENDEZ, and Mrs.
BLACKBURN) introduced the following bill; which was read twice and re-
ferred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to permanently
extend the new markets tax credit, and for other purposes.
Be it enacted by the Senate and House of Representa-
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tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE.
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This Act may be cited as the ‘‘New Markets Tax
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Credit Extension Act of 2023’’.
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SEC. 2. PERMANENT EXTENSION OF NEW MARKETS TAX
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CREDIT.
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(a) EXTENSION.—
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(1) IN GENERAL.—Subparagraph (H) of section
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45D(f)(1) of the Internal Revenue Code of 1986 is
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amended by striking ‘‘for each of calendar years
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2020 through 2025’’ and inserting ‘‘calendar year
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2020 and each calendar year thereafter’’.
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(2)
CONFORMING
AMENDMENT.—Section
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45D(f)(3) of such Code is amended by striking the
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last sentence.
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(b) INFLATION ADJUSTMENT.—Subsection (f) of sec-
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tion 45D of the Internal Revenue Code of 1986 is amend-
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ed by adding at the end the following new paragraph:
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‘‘(4) INFLATION ADJUSTMENT.—
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‘‘(A) IN GENERAL.—In the case of any cal-
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endar year beginning after 2023, the dollar
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amount in paragraph (1)(H) shall be increased
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by an amount equal to—
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‘‘(i) such dollar amount, multiplied by
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‘‘(ii) the cost-of-living adjustment de-
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termined under section 1(f)(3) for the cal-
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endar year, determined by substituting
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‘calendar year 2000’ for ‘calendar year
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2016’ in subparagraph (A)(ii) thereof.
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‘‘(B) ROUNDING
RULE.—Any increase
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under subparagraph (A) which is not a multiple
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•S 234 IS
of $1,000,000 shall be rounded to the nearest
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multiple of $1,000,000.’’.
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(c) ALTERNATIVE MINIMUM TAX RELIEF.—Subpara-
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graph (B) of section 38(c)(4) of the Internal Revenue
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Code of 1986 is amended—
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(1) by redesignating clauses (vii) through (xii)
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as clauses (viii) through (xiii), respectively, and
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(2) by inserting after clause (vi) the following
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new clause:
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‘‘(vii) the credit determined under sec-
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tion 45D, but only with respect to credits
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determined with respect to qualified equity
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investments (as defined in section 45D(b))
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initially made after December 31, 2022,’’.
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(d) EFFECTIVE DATES.—
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(1) IN GENERAL.—Except as provided in para-
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graph (2), the amendments made by this section
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shall apply to taxable years beginning after Decem-
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ber 31, 2022.
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(2) ALTERNATIVE MINIMUM TAX RELIEF.—The
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amendments made by subsection (c) shall apply to
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credits determined with respect to qualified equity
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investments (as defined in section 45D(b) of the In-
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ternal Revenue Code of 1986) initially made after
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December 31, 2022.
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Æ
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