Senate Bill No. 2814 introduces a new tax credit program in Texas aimed at promoting low-income housing developments. The bill amends Chapter 171 of the Tax Code by adding Subchapter K, which defines key terms such as "allocation certificate" and "qualified development," and outlines the eligibility criteria for claiming the tax credit. Taxable entities that own an interest in a qualified development can claim an annual credit against franchise or insurance premium taxes. The bill also details the application process for obtaining an allocation certificate, the method for determining credit amounts, and compliance monitoring requirements. Additionally, it establishes priority allocation for certain developments and sets a deadline for the authority to allocate credits, which will expire on December 31, 2029.

Furthermore, the bill specifies that entities claiming the credit are exempt from additional retaliatory taxes and must include necessary documentation in their tax reports. The Texas Department of Housing and Community Affairs will oversee the reservation of credit amounts and issuance of allocation certificates starting January 1, 2024. Limitations on the credit are established, ensuring that the total claimed does not exceed the entity's state premium tax liability after applying other credits. The bill also allows for the carryforward or carryback of surplus credits and mandates the adoption of implementation rules by the comptroller and the Texas Department of Housing and Community Affairs. 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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