H.R.2941 - Historic Tax Credit Growth and Opportunity Act of 2025 (119th Congress)
Summary
H.R.2941, the Historic Tax Credit Growth and Opportunity Act of 2025, aims to improve the historic rehabilitation tax credit by amending the Internal Revenue Code of 1986. The bill introduces several key changes, including allowing the full credit in the year the building is placed in service and increasing the credit for certain small projects, especially those in rural areas. It also modifies eligibility criteria and eliminates the rehabilitation credit basis adjustment.
Expected Effects
The bill is likely to stimulate investment in the rehabilitation of historic buildings, particularly in smaller communities and rural areas. This could lead to increased economic activity, job creation, and preservation of cultural heritage. The changes aim to make the tax credit more accessible and attractive to developers and investors.
Potential Benefits
- Increased Investment in Historic Buildings: The enhanced tax credit will incentivize developers to undertake more rehabilitation projects.
- Job Creation: Rehabilitation projects create construction jobs and can lead to new businesses occupying the revitalized spaces.
- Preservation of Cultural Heritage: By making it more financially viable to restore historic buildings, the bill helps preserve important aspects of American history and culture.
- Economic Development in Rural Areas: The increased credit for small projects in rural areas can spur economic growth in these communities.
- Simplified Tax Credit Process: Eliminating the basis adjustment and allowing the full credit upfront simplifies the process and reduces administrative burdens.
Potential Disadvantages
- Potential for Increased Tax Expenditures: Expanding the tax credit could increase government spending and potentially contribute to budget deficits.
- Complexity in Implementation: The special rules for small projects and rural areas could create complexity in administering the tax credit.
- Risk of Abuse: The transferability of credits for small projects could create opportunities for fraud or abuse.
- Limited Impact on Large-Scale Projects: The focus on small projects may limit the impact on larger, more transformative rehabilitation efforts.
- Potential for Uneven Geographic Distribution: The benefits may be concentrated in areas with a high concentration of historic buildings.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble). By incentivizing the preservation of historic buildings and promoting economic development, it could be argued that the bill promotes the general welfare. Additionally, Congress has the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States, as outlined in Article I, Section 8, Clause 1. The bill falls under this power as it amends the Internal Revenue Code regarding tax credits.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).