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SB 550 would amend the Tax Code to add that an entity that is rehabilitating a certified historic site or building to which all or part of a credit for up to 25% of the total eligible costs incurred is sold or assigned and that is subject to an insurance premium tax may claim all or part of the credit against that tax. An entity claiming all or part of a credit authorized would not be required to pay any additional retaliatory tax levied as a result of that credit.
To be clear, this legislation does not create a new tax incentive program; rather it expands an existing and very complex tax credit program designed to incentivize private business to take on historic restoration projects. The program allows for trading and selling of tax credits. The intent of this bill is to provide insurance companies with a tax incentive that they does not currently exist for them because of the way they are currently taxed. As the author's statement of intent says:
"An important feature of the preservation tax program is an entity’s ability to sell credits earned under the program to other entities for use against a franchise tax liability. This ability allows investors a way to monetize the credits, and that improves their return on investment."
Because insurance companies do not have a franchise tax liability, they have no way to participate in the Texas Historic Preservation Tax Credit System. This bill enables them to do so by allowing credits earned under the program to be used against the insurance premium tax.