A bill for an act relating to the maximum amount of workforce housing tax incentives available against the individual and corporate income taxes, the franchise tax, the insurance premiums tax, and the moneys and credits tax.

2025-2026 Regular Session

Raises the workforce housing tax incentives cap to $50 million (with $25 million reserved for small-city projects) while staying under the $170 million overall economic credits cap

Subcommittee recommends passage.

#communitydevelopment #corporatetaxes #franchisetaxes #housing #incometaxes #insurance #insurancecompaniestaxes #moneysandcreditstaxes #taxcredits #taxation

Overview

HSB 129 proposes to raise the cap on the workforce housing tax incentives program, which is administered under subchapter II, part 17, and can be claimed against several state taxes (individual and corporate income taxes, franchise tax, insurance premiums tax, and the moneys and credits tax). The bill was introduced February 5, 2025, and the subcommittee recommended passage on February 12, 2025.

Key Provisions

Increase the maximum amount allocated through the workforce housing tax incentives program:

From: $35,000,000
To: $50,000,000 per the paragraph governing allocations.

Increase the portion reserved for small-city projects:

From: $17,500,000
To: $25,000,000.

Allocation administration:

The authority administering the credits (under Code section 15.119, paragraph g) must allocate within the new $50 million cap, with $25 million reserved for small-city projects registered on or after July 1, 2017.

Contextual cap:

The bill operates within an overarching aggregate cap of $170 million per fiscal year for certain economic development tax credits (unchanged by the bill’s text, per the explanatory note).

Affected Parties

Qualified housing projects that receive workforce housing incentives (including developers serving small cities).

Small cities, particularly those defined and eligible under section 15.352.

The state authority responsible for allocating workforce housing tax credits (the administering body under subchapter II, part 17).

Taxpayers who claim incentives against the listed taxes (individuals, corporations, and entities paying franchise, insurance premiums, or moneys and credits taxes) indirectly benefit from expanded incentive availability.

Timeline and Procedural Details

Introduced: February 5, 2025

Subcommittee action: Recommends passage (February 12, 2025)

Subcommittee details: Meeting held February 12, 2025, with members Barker, Kniff, McCulla, and Scholten.

Current status: Subcommittee recommends passage; referred to the relevant committee (Economic Growth and Technology) for further consideration.

Potential Impact and Considerations

The increase in the overall cap to $50 million and the boosted small-city reservation may enhance the ability to fund workforce housing projects in more municipalities, particularly smaller communities.

Stakeholders may examine the distribution of credits between large and small cities, the rate of project approvals, and any resulting effects on housing availability and project timelines.

Fiscal implications depend on how the higher cap interacts with the state’s total annual use of development-related tax credits under the overall $170 million aggregate cap.

If you’d like, I can add a brief FAQ or a side-by-side comparison of current vs. proposed caps for quick reference.

Bill