HB 5435 Summary

• Creates state-level tax credits for taxpayers purchasing qualified equity investments in community development entities, mirroring federal New Markets Tax Credits under Internal Revenue Code Section 45D.

• Establishes a $5,000 application fee for qualified community development entities seeking certification from the Michigan Economic Development Corporation, with credits awarded on a first-come, first-served basis.

• Provides tax credits equal to 5% of the investment for each of the first 3 years, 6% for years 4-5, and 12% for the final year, with a maximum combined state and federal credit cap of $20,000,000 per tax year.

• Requires certified entities to invest at least 85% of proceeds in qualified low-income community businesses within Michigan within 12 months and maintain that level through the seventh anniversary of the investment.

• Allows unused credits to carry forward indefinitely but recaptures credits if federal credits are recaptured, investments are redeemed early, or investment requirements are not met; qualified equity investments must be issued between July 1, 2014 and December 31, 2016.