House Bill No. 4735 introduces Chapter 487A to the Government Code, which establishes a framework for rural development funds and associated insurance tax credits aimed at stimulating economic growth in rural areas. The bill defines key terms such as "rural area," "rural development fund," and "targeted small business," and outlines the application process for entities seeking approval as rural development funds. It mandates that the comptroller process applications in the order received and sets a cap of $300 million for investment authority, including a $150 million limit for tax credit allocations. The bill also allows applicants to submit additional information after a denial and details the responsibilities of approved rural development funds, including the collection of capital contributions and issuance of tax credit certificates.

Additionally, the bill introduces tax credits for entities investing in rural development funds, which can be claimed against state insurance tax liabilities, with specific percentages allocated for the first three years of eligibility. It includes provisions for the carryforward of unused credits and restrictions on their transfer, with exceptions for affiliates. The comptroller is required to submit a report on the economic impacts of growth investments before the 92nd Legislature and will begin accepting applications by October 1, 2025. The act will take effect immediately upon a two-thirds legislative vote or on September 1, 2025, if not.

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