Senate Bill No. 2814 introduces a new tax credit program aimed at promoting affordable housing developments in Texas by amending Chapter 171 of the Tax Code with the addition of Subchapter K. This subchapter defines key terms such as "allocation certificate," "credit," and "qualified development," and establishes eligibility criteria for taxable entities to claim an annual credit against franchise or insurance premium taxes. The Texas Department of Housing and Community Affairs is designated to issue allocation certificates for qualified developments that comply with federal tax credit regulations and affordability standards. The bill outlines the application process for these certificates, the determination of annual credit amounts, and the distribution of credits among development owners.

Additionally, the bill sets forth compliance monitoring and reporting requirements, with the authority to allocate credits expiring after December 31, 2029. It prioritizes certain qualified developments for allocation to ensure they receive necessary funding. The legislation also specifies that entities claiming the credit will be exempt from additional retaliatory taxes and must include the allocation certificate in their tax reports. The total credit claimed cannot exceed the entity's state premium tax liability, and provisions for the carryforward or backward of surplus credits are included. The new regulations will apply to tax reports due between January 1, 2026, and January 1, 2036, with the act taking effect on January 1, 2026.

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