MN HF2862

Establishes a new markets tax credit program allowing taxpayers who make qualified equity investments in community development entities to claim tax credits against state income or insurance premium taxes.

Tax credit equals the applicable percentage (0% for first two years, 7% for third year, 8% for remaining four years) multiplied by the adjusted purchase price of the qualified equity investment.

Limits annual allocation authority to $25,000,000 per taxable year and requires the commissioner to allocate credits on a first-come, first-served basis, with geographic distribution restrictions until August 1 each year (maximum 60% to either metropolitan or greater Minnesota area).

Requires credit recapture if the federal tax credit is recaptured under Internal Revenue Code Section 45D or if the investment issuer redeems or repays principal before the seventh anniversary of issuance.

Commissioner of revenue must report to legislature by December 31, 2021, on program implementation and effectiveness; program expires seven taxable years after final enactment with credits continuing through 2028 at the earliest.