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Congress Reaches a Deal on Tax Extenders - Includes Indian Tax Extenders

December 16, 2015

Congress reached a tentative deal Tuesday evening on important tax reductions and tax breaks that expired on December 31, 2014. The tax package is expected to pass the House and Senate this week before being signed by the President. Included in the tax package are the Indian Tax Extenders, which are designed to incentivize direct investment in projects on Indian lands and the hiring of Indian people. These tax credits provide crucial incentives to level the playing field for future development and protect the economic viability of existing projects.

Provisions Affecting Indian Tribes Include:

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Section 131 - Low Income Housing Tax Credits (LIHTC)
This provision permanently extends the minimum tax credit rate at a fixed 9 percent for new construction and rehabilitation of existing housing projects. The LIHTC program addresses one of Indian Country's greatest needs - to provide adequate housing to tribal citizens. The extension makes LIHTC projects more predictable and attractive. Without the locked extension, projects receive a floating tax credit rate based on a formula that uses the federal cost of borrowing. 

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Section 141 - New Markets Tax Credit (NMTC)
This provision extends the NMTC Program through December 31, 2019 and authorizes an allocation of $3.5 million. The NMTC Program was established by Congress in 2000 to spur investment of private sector capital by providing tax credits to individuals or corporations that invest in job creation or make qualified equity investments in low-income communities, including Native American communities. 

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Section 161 - Indian Employment Tax Credit
This provision extends to December 31, 2016 and provides a 20-percent 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. The provision is not applicable to tribal government jobs, high-wage jobs (defined as jobs paying more than $45,000 per year), or gaming jobs, which limits its value.

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Section 167 - Accelerated Depreciation for Business Property on Indian Reservations 
This provision expires December 31, 2016 and provides an incentive for private businesses to locate on Indian reservations. It provides qualifying property and infrastructure investments with a faster write-off than such property would otherwise receive under the regular tax code depreciation schedules. Accelerated Depreciation is a critical component of attracting capital-intensive projects to reservations and can bring higher-skilled jobs to Indian communities. 

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Section 186 - The Indian Coal Production Tax Credit
This provision extends to December 31, 2016 and provides a production tax credit of $2.00 per ton of coal produced on land owned by an Indian tribe. The provision removes the placed-in-service date limitation, which was previously 2009, and removes the nine-year limitation.

These tax extenders and others go back to cover 2015 and going forward to the specified expiry date so tribal governments, businesses, and individuals can apply on their tax returns.

For questions or comments, please contact Jennifer Parisien at Jennifer@nafoa.org or (202) 558-8040.