The proposed bill amends the Income Tax Act of 1967 by adding a new section, Sec. 282, which introduces a tax credit for taxpayers who construct or contract the construction of an accessory dwelling unit (ADU) on the same property as their principal residence. Starting from tax years beginning on January 1, 2026, taxpayers can claim a credit equal to 20% of the costs incurred for constructing the ADU. The bill also allows the Department of Treasury to require reasonable proof of the costs associated with the credit claim.

Additionally, the bill stipulates that if the credit exceeds the taxpayer's tax liability for the year, the excess amount cannot be refunded but can be carried forward to offset future tax liabilities until fully utilized. The bill defines "accessory dwelling unit" as a smaller secondary dwelling unit on the same property as a principal residence, which can include various types of structures such as detached buildings or converted spaces. The term "principal residence" is referenced as defined in existing property tax law.

Statutes affected:
House Introduced Bill: 206.1, 206.847