Creating a tax credit for insurers for certain investments in community development entities, the official text

2025 - 2026 LEGISLATURE
LRB-5060/1
KP:amn&klm

2025 ASSEMBLY BILL 676
November 19, 2025 - Introduced by Representatives Zimmerman, Armstrong, Behnke, Kreibich and Murphy, cosponsored by Senators Marklein and James. Referred to Committee on Ways and Means.

An Act to amend 76.67 (2); to create 76.633 of the statutes; relating to: creating a tax credit for insurers for certain investments in community development entities.

Analysis by the Legislative Reference Bureau
Under this bill, an insurer that makes a qualified equity investment in a qualified community development entity may receive a credit against the state taxes imposed on insurers. In order for the insurer to claim the credit, a qualified community development entity must use the capital raised from the insurer’s qualified equity investment to make investments in or loans to qualified active low-income community businesses that have their principal business operations in this state. The credit is equal to zero percent of the insurer’s qualified equity investment for the first and second year after the issuance of the investment, and 10 percent of the qualified equity investment for the next five years. The bill defines “qualified community development entity” as generally an entity that has the primary mission of serving or providing investment capital for low-income communities or low-income persons and that has low-income persons represented on a governing or advisory board of the entity. The bill defines a “qualified active low-income community business” as generally an entity that 1) receives at least 50 percent of its gross income from certain business conducted within a low-income community; 2) uses a substantial portion of its tangible property within a low-income community; 3) performs a substantial portion of its services within a low-income community; 4) has less than 5 percent of its property attributable to debt collection; and 5) receives less than 15 percent of its revenue from the rental or sale of real estate.
Under the bill, qualified community development entities must apply to the Department of Revenue for authority to issue qualified equity investments to insurers. DOR may approve up to a total of $125,000,000 in qualified equity investment authority for investment in qualified active low-income community businesses in rural counties and up to a total of $125,000,000 in such authority for investments in such businesses in metro counties. Also, DOR may approve an amount of qualified equity investment that generates no more than $25,000,000 in total credits per tax year. Under the bill, DOR may recapture credits from insurers if 1) the qualified community development entity receiving capital from qualified equity investments fails to use all of the capital to make investments in or loans to qualified active low-income community businesses; 2) if the qualified community development entity redeems or makes principal payment with respect to the qualified equity investment before the seventh anniversary of issuance of the investment; or 3) if any amount of the federal new markets tax credit that is available for a qualified equity investment is rescinded. Each qualified community development entity that is authorized to issue qualified equity investments under the bill must submit an annual report to DOR containing various information regarding the qualified low-income community investments made, including employment information for the qualified active low-income community businesses invested in the entity.
For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

Section 1. 76.633 of the statutes is created to read:
76.633 Community development entity investment credit. (1) Definitions. In this section:
(a) “Applicable percentage” means 0 percent for the first 2 credit allowance dates and 10 percent for the next 5 credit allowance dates.
(b) “CDFI fund” means the community development financial institutions fund of the U.S. treasury department.

(c) “Credit allowance date” means, with respect to any qualified equity investment, any of the following dates:
1. The date on which the investment is initially made.
2. Each of the 6 anniversary dates of that date thereafter.
(d) “Metro county” means Columbia, Dane, Green, Iowa, Milwaukee, Ozaukee, Washington, and Waukesha Counties.
(e) 1. “Principal business operations” means the place or places where at least 60 percent of a qualified active low-income community business’s employees work or where employees that are paid at least 60 percent of the business’s payroll work.
2. “Principal business operations” includes places where an out-of-state business agrees to relocate employees or an in-state business agrees to hire employees using the proceeds of a qualified low-income community investment when the business satisfies the definition under subd. 1. within 180 days, or by a later date agreed by the department, after receiving the qualified low-income community investment.
(f) “Purchase price” means the amount paid to a qualified community development entity for a qualified equity investment.
(g) 1. “Qualified active low-income community business” has the meaning given in section 45D (d) (2) of the Internal Revenue Code except as provided in subd. 2. “Qualified active low-income community business” includes a business for the duration that it receives a qualified low-income community investment if the qualified community development entity reasonably expects at the time that it makes the qualified low-income community investment in the business that the business will continue to continue to be considered a qualified active low-income
community business under section 45D (d) (2) of the Internal Revenue Code throughout the entire period that it receives the qualified low-income community investment.
2. “Qualified active low-income community business” does not include a business that derives or projects to derive 15 percent or more of its annual income from the rental or sale of real estate. This subdivision does not apply to a business that is controlled by or under common control with another business if the 2nd business does not derive or project to derive 15 percent or more of its annual income from the rental or sale of real estate and is the primary tenant of the real estate leased from the initial business.
(h) “Qualified community development entity” has the meaning given in section 45D (c) of the Internal Revenue Code but includes only entities that have entered into, or that are controlled by an entity that has entered into, an allocation agreement with the CDFI fund with respect to tax credits authorized under section 45D of the Internal Revenue Code that includes this state within the service area set forth in that allocation agreement.
(i) “Qualified equity investment” means any equity investment in a qualified community development entity to which all of the following apply:
1. Either of the following applies:
a. The equity investment is acquired after December 31, 2024, at its original issuance solely in exchange for cash.
b. The equity investment is acquired by an insurer and a prior holder of the equity investment acquired it after December 31, 2024, at its original issuance solely in exchange for cash.

2. The qualified community development entity uses at least 100 percent of the purchase price of the equity investment to make qualified low-income community investments in qualified active low-income community businesses that have their principal business operations in this state.
3. The equity investment is designated by the community development entity as a qualified equity investment under sub. (5).
4. If the qualified community development entity is not domiciled in this state and the entity’s controlling entity, if any, is not domiciled in this state, the qualified community development entity has designated at least 50 percent of the equity investment as a qualified equity investment under section 45D of the Internal Revenue Code.
5. The equity investment is certified by the department as not exceeding the limit under sub. (4) (a).
(j) “Qualified low-income community investment” means any capital or equity investment in, or loan to, a qualified active low-income community business.
(k) “Rural county” means any county in this state that is not a metro county.
(2) Filing claims. For taxable years beginning after December 31, 2024, an insurer may claim as a credit against the fees due under s. 76.60, 76.63, 76.65, 76.66, or 76.67, for a taxable year in which the insurer holds a qualified equity investment on its the allowance date, an amount equal to the applicable percentage for that allowance date multiplied by the purchase price paid to the qualified community development entity for the qualified equity investment.
(3) Carry-forward. If the credit under sub. (2) is not entirely offset against the fees under s. 76.60, 76.63, 76.65, 76.66, or 76.67 otherwise due, the unused
balance may be carried forward and credited against those fees for following years to the extent that it is not offset by those fees otherwise due in all the years between the year in which the qualified entity investment was held on its allowance date and the year in which the carry-forward credit is claimed.
(4) Allocations; applications. (a) 1. The department shall allocate $125,000,000 in qualified equity investment authority for the credit under this section for investment in qualified active low-income community businesses having principal business operations in a rural county.
2. The department shall allocate $125,000,000 in qualified equity investment authority for the credit under this section for investment in qualified active low- income community businesses having principal business operations in a metro county.
(b) 1. A qualified community development entity that seeks to have an equity investment designated as a qualified equity investment that is eligible for the credit under this section shall apply to the department for the rural allocation under par. (a) 1. or the metro allocation under par. (a) 2. or both on a form provided by the department and shall include all of the following:
a. The name, address, and tax identification number of the applicant and evidence of the applicant’s certification as a qualified community development entity by the CDFI fund.
b. A copy of the allocation agreement executed by the applicant or its controlling entity and the CDFI fund.
c. A certificate executed by an executive officer of the applicant attesting that
the allocation agreement with the CDFI fund remains in effect and has not been revoked or cancelled.
d. A description of the proposed amount, structure, and purchaser of the equity investment.
e. The amount of qualified equity investment authority applied for from the rural allocation or the metro allocation, or both, as applicable. If the applicant is not domiciled in this state, the amount applied for under this paragraph may not exceed an amount equal to twice the amount of qualified equity investment authority under section 45D of the Internal Revenue Code available to the applicant or its controlling entity.
f. If the applicant is not domiciled in this state, evidence of the amount of qualified equity investment authority under section 45D of the Internal Revenue Code available to the applicant or its controlling entity.
g. A nonrefundable application fee of $5,000 paid to the department.
2. A qualified community development entity may apply for a portion of both the rural allocation under par. (a) 1. and the metro allocation under par. (a) 2. of qualified equity investment authority.
3. The department shall establish a date for beginning to accept applications under this paragraph that is not less than 30 days but no more than 45 days after the U.S. treasury department announces allocation awards for the CDFI fund for the round of funding set forth in 89 Fed. Reg. 99283 to 99292 (November 21, 2024).
(5) Certification of qualified equity investments. (a) No later than 30 days after receiving an application under sub. (4) (b), the department shall approve or deny the application in full or in part. If the department denies any part of the
application, the department shall inform the applicant of the grounds for the denial. If the applicant provides any additional information required by the department or otherwise amends its application within 15 days of the notice of denial, the department shall consider the application complete as of the original date of submission. If the applicant fails to provide the information or complete its application within 15 days of the notice of denial, the application remains denied and if the applicant submits an additional application, the department may not consider the additional application complete as of the date of submission of the original application.
(b) 1. If the department determines that an application is complete, the department shall certify the equity investment proposed by the application as a qualified equity investment that is eligible for the credit under this section, subject to the limitations under this subsection.
2. The department shall provide written notice of a certification under subd. 1. to the applicant.
3. When a qualified community development entity certified under subd. 1. knows the names of the persons who are allocated a credit under this section and the respective credit amounts for each person, the qualified community development entity shall provide to the department a notice containing the names and credit amounts.
4. The department shall provide a certification containing the credit amounts and utilization schedule to each person and qualified community development entity described in subd. 3.
5. If the person eligible to claim a credit under this section changes because of
a transfer of a qualified equity investment, the qualified community development entity shall notify the department of the change.