Employer Assistance For Home Purchase Tax Credit

The act creates a state income tax credit for income tax years commencing on or after January 1, 2024, but before January 1, 2027, for employers who make a monetary contribution to an employee for use by the employee in purchasing a primary residence. The amount of the credit allowed is 5% of an employer's contribution to an employee, but the credit is capped at $5,000 per employee per year and an employer cannot receive a credit of more than $500,000 for all contributions made in a year to employees. The employee must use the money contributed for eligible expenses which include a down payment and closing costs, including fees for appraisals, mortgage origination, and inspections. An employee may authorize their employer to withhold a specified amount of the employee's earnings as an employee contribution into the savings account established by the employer that holds the employer contribution. If an employee ends their employment with the employer or if the employee intends to use the employee contribution in a manner that is not consistent with an eligible expense, the employee forfeits any unexpended amount of the employer contribution and the amount of the credit allowed to the employer for the employer contribution is subject to recapture. In such an occurrence, the employee is entitled to the employee contribution, plus any interest earned. The credit is not refundable but may be carried forward by the employer for a period of not more than 5 years. The executive director of the department of revenue may promulgate rules related to the implementation of the credit.

For income tax years commencing on or after January 1, 2024, but before January 1, 2027, the amount contributed by the employer may be subtracted by the employee from the employee's federal taxable income for the purpose of determining their state taxable income; except that, if an employee forfeits the employer contribution, then the amount that the employee had subtracted from their federal taxable income is added back to their federal taxable income for the purpose of determining their state taxable income for the subsequent tax year.

APPROVED by Governor June 7, 2023

EFFECTIVE August 7, 2023

NOTE: This act was passed without a safety clause and takes effect 90 days after sine die.
(Note: This summary applies to this bill as enacted.)