INCOME TAX CREDIT
OKLAHOMA 2024 SESSION LAW SERVICE Fifty-Ninth Legislature, 2024 Second Regular Session
2024 Okla. Sess. Law Serv. Ch. 164 (S.B. 1401) (WEST)
OKLAHOMA 2024 SESSION LAW SERVICE
Fifty-Ninth Legislature, 2024 Second Regular Session
CHAPTER 164
S.B. No. 1401
INCOME TAX CREDIT
An Act relating to income tax; amending Section 1, Chapter 340, O.S.L. 2022 (68 O.S. Supp. 2023, Section 2357.105), which relates to credit for qualified economic development expenditures and qualified initial infrastructure expenditures; modifying definitions; eliminating certain credit limit; expanding authorization to assign certain unused credit; updating statutory reference; and providing an effective date.
SUBJECT: Income tax credit
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
<< OK ST T. 68 § 2357.105 >>
SECTION 1. AMENDATORY Section 1, Chapter 340, O.S.L. 2022 (68 O.S. Supp. 2023, Section 2357.105), is amended to read as follows:
Section 2357.105. A. As used in this section:
1. “Eligible entity” means a business an entity incorporated and located in the state with a qualifying project in a qualifying project location that receives an allocation of tax credits for qualified economic development and qualified initial infrastructure expenditures;
2. “Qualifying project” means the new construction or expansion of an eligible entity or the development of qualified initial infrastructure to serve an eligible entity in a qualifying project location;
3. “Qualifying project location” means a project located in an industrial park, economic development zone, or port located within a county in this state with a population of less than one hundred thousand (100,000) persons (“Qualified Area”), or a project located adjacent to a terminal, switching, or Class II or III railroad as defined by the federal Surface Transportation Board;
4. “Project sponsor” means a local economic development organization or authority, organized under Section 501(c)(3) of the Internal Revenue Code, 26 U.S.C., Section 501(c)(3), port authority, qualified industrial park, or a terminal, switching, or Class II or III railroad;
5. “Project application” means an application submitted by a project sponsor on behalf of a qualifying project for an allocation of qualifying strategic industrial development enhancement (SIDE) tax credits. Project applications must include a description of the qualifying project, project location, detailed project costs, and a summary of expected economic benefits and job creation;
6. “Qualified economic development expenditures” means expenditures for land improvements, building construction, building improvements and expansion, port terminal improvements, and the purchase of certain machinery and equipment;
7. “Qualified initial infrastructure expenditures” means expenditures for new rail infrastructure and improvements, which includes the acquisition of right-of-way, engineering, rehabilitation of existing inactive track to reinstate operation, construction of new track such as industrial leads, switches, spurs, and sidings, loading dock improvements, and transloading structures involved with providing rail service to a qualifying project; and
8. “Project tax credit amount” means the amount of tax credits allocated by Oklahoma Department of Commerce to a qualifying project for qualified economic development and initial infrastructure expenditures.
B. For tax years beginning after December 31, 2022, and ending not later than December 31, 2027, there shall be allowed a credit against the tax imposed pursuant to Section 2355 of Title 68 of the Oklahoma Statutes this title in an amount not to exceed ten percent (10%) of an eligible entity's qualified economic development expenditures, subject to limitations, determination, and allocation by the Oklahoma Department of Commerce.
C. The total project tax credit amount may not exceed ten percent (10%) of the qualified economic development expenditures, except for qualified initial infrastructure expenditures the project tax credit amount is earned at the rate of fifty percent (50%) of qualified initial infrastructure expenditures.
D. 1. The project tax credit amount for qualified economic development expenditures may not exceed Six Million Dollars ($6,000,000.00) per qualifying project.
2. The project tax credit amount for qualified initial infrastructure expenditures may not exceed Three Million Dollars ($3,000,000.00) per qualifying project.
Projects are eligible to combine qualified economic development and qualified initial infrastructure expenditures, but the total project tax credit amount may not exceed Six Million Dollars ($6,000,000.00) per qualifying project in aggregate.
E. The project tax credit amount that may be claimed or assigned to a qualifying project affiliate in any year may not exceed one-third (1/3) of the project tax credit amount awarded beginning in the year that construction is initiated.
2. The Oklahoma Department of Commerce shall promulgate rules to permit verification of the eligibility of a qualifying project for the purpose of claiming the credit. The rules shall provide for the approval of qualified economic development expenditures prior to commencement of a project and provide a certificate of verification upon completion of a project that uses qualified economic development expenditures. The certificate of verification shall satisfy all requirements of the Oklahoma Tax Commission pertaining to the eligibility of the eligible taxpayer claiming the credit.
SECTION 2. This act shall become effective January 1, 2025.
Approved April 26, 2024.
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