Just before its year-end recess, Congress approved its anticipated tax-extender package, which President Obama has since signed into law. The package makes permanent â€“ or extends authorization for â€“ a number of tax provisions affecting economic development in Indian Country.
The Indian Tax Extenders are designed to motivate both direct investment in projects on Indian lands and the hiring of Indian people. The provisions concerning Indian tribes include:
- Low-Income Housing Tax Credits, which permanently extend the minimum tax credit at a fixed 9% for new construction and rehabilitation of existing housing projects.
- New Markets Tax Credit (NMTC) extends this program through December 31, 2019 and authorizes a $3.5 million allocation. NMTC provides tax credits for private sector capital investments for job creation or eligible equity investments in low-income communities, including those of Native Americans.
- Indian Employment Tax Credit extends to December 31, 2016 and provides a 20% tax credit for the first $20,000 of wages for any tribal member or spouse employed by a private business operating on an Indian reservation. Several specific exclusions may limit its usefulness.
- Accelerated Depreciation for Business Property on Indian Reservations extends to December 31, 2016, and offers an incentive for private businesses to locate on Indian reservations. The provision affords qualifying property and infrastructure investments with a faster write-off than allowed with standard tax-code depreciation schedules.
- The Indian Coal Production Tax Credit extends to December 31, 2016 and provides a $2 per ton credit for coal produced on land owned by an Indian tribe.
These and other tax extenders cover 2015, and tribal governments, businesses and individuals can apply them to their tax returns.