I 

118TH CONGRESS 

1ST SESSION H. R. 6650 

To amend the Internal Revenue Code of 1986 to provide a credit for 

investment in Community Development Financial Institutions. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 6, 2023 

Mr. THANEDAR introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, 

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a credit for investment in Community Development Financial Institutions. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Community Develop5 ment Investment Tax Credit Act of 2023’’. 


ssavage on DSKBC07HB2PROD with BILLS
2 

•HR 6650 IH

1 SEC. 2. COMMUNITY DEVELOPMENT FINANCIAL INSTITU2 TION INVESTMENT TAX CREDIT. 

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of 

5 1986 is amended by adding at the end the following new 

6 section: 

7 ‘‘SEC. 45BB. COMMUNITY DEVELOPMENT FINANCIAL INSTI8 TUTION INVESTMENT TAX CREDIT. 

9 ‘‘(a) ALLOWANCE OF CREDIT.— 

10 ‘‘(1) IN GENERAL.—For purposes of section 38, 

11 in the case of a taxpayer who holds a qualified 

12 CDFI investment on a credit allowance date of such 

13 investment which occurs during the taxable year, the 

14 CDFI investment credit determined under this sec15 tion for such taxable year is an amount equal to the 

16 applicable percentage of the amount paid to the 

17 qualified community development financial institu18 tion for such investment at its original issue. 

19 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

20 of paragraph (1)— 

21 ‘‘(A) IN GENERAL.—The applicable per22 centage is— 

23 ‘‘(i) 3 percent with respect to the first 

24 10 credit allowance dates, and 

25 ‘‘(ii) 4 percent with respect to the 10 

26 credit allowance dates following the last 


ssavage on DSKBC07HB2PROD with BILLS
3 

•HR 6650 IH

1 credit allowance date to which clause (i) 

2 applies. 

3 ‘‘(B) INCREASED AMOUNT FOR CERTAIN

4 INVESTMENTS.—In the case of a qualified 

5 CDFI investment which does not have a fixed 

6 term or duration, the applicable percentage for 

7 any credit allowance date shall be increased by 

8 one percentage point. 

9 ‘‘(3) CREDIT ALLOWANCE DATE.— 

10 ‘‘(A) IN GENERAL.—For purposes of para11 graph (1), the term ‘credit allowance date’ 

12 means, with respect to any qualified CDFI in13 vestment— 

14 ‘‘(i) the date which is one year after 

15 the date on which such investment is ini16 tially made, and 

17 ‘‘(ii) each of the 19 anniversary dates 

18 of such date thereafter. 

19 ‘‘(B) LIMITATION.—Notwithstanding sub20 paragraph (A), a date shall not be treated as a 

21 credit allowance date with respect to any quali22 fied CDFI investment if such date occurs after 

23 any date on which— 

24 ‘‘(i) the financial institution in which 

25 such CDFI investment is made ceases to 


ssavage on DSKBC07HB2PROD with BILLS
4 

•HR 6650 IH

1 be a qualified community development fi2 nancial institution, or 

3 ‘‘(ii) such investment is redeemed, re4 purchased, or otherwise repaid by the 

5 qualified community development financial 

6 institution which issued such investment. 

7 ‘‘(b) QUALIFIED CDFI INVESTMENT.—For purposes 

8 of this section— 

9 ‘‘(1) IN GENERAL.—The term ‘qualified CDFI 

10 investment’ means any investment in a qualified 

11 community development financial institution if— 

12 ‘‘(A) such investment is acquired by the 

13 taxpayer at its original issue (directly or 

14 through an underwriter) solely in exchange for 

15 cash, 

16 ‘‘(B) such investment is in the form of— 

17 ‘‘(i) non-voting stock or an equity 

18 equivalent investment, 

19 ‘‘(ii) an interest in an entity which is 

20 a partnership, or 

21 ‘‘(iii) an obligation described in sec22 tion 279(b)(2) which has a term of 10 

23 years or longer, 


ssavage on DSKBC07HB2PROD with BILLS
5 

•HR 6650 IH

1 ‘‘(C) such investment has not been des2 ignated as a qualified equity investment for 

3 purposes of section 45D, and 

4 ‘‘(D) such investment is designated for 

5 purposes of this section by the qualified com6 munity development financial institution. 

7 Such term shall not include any investment issued 

8 by a qualified community development financial in9 stitution more than 5 years after the date that such 

10 financial institution receives an allocation under sub11 section (d)(3). Any allocation not used within such 

12 5-year period may be reallocated by the Secretary 

13 under subsection (d). 

14 ‘‘(2) LIMITATION.—The maximum amount of 

15 investments issued by a qualified community devel16 opment financial institution which may be des17 ignated under paragraph (1)(D) by such financial 

18 institution shall not exceed the portion of the limita19 tion amount allocated under subsection (d) to such 

20 financial institution. 

21 ‘‘(3) TREATMENT OF SUBSEQUENT PUR22 CHASERS.—The term ‘qualified CDFI investment’ 

23 includes any investment which would (but for para24 graph (1)(A)) be a qualified CDFI investment in the 

25 hands of the taxpayer if such investment was a 


ssavage on DSKBC07HB2PROD with BILLS
6 

•HR 6650 IH

1 qualified CDFI investment in the hands of a prior 

2 holder. 

3 ‘‘(4) REDEMPTIONS.—A rule similar to the rule 

4 of section 1202(c)(3) shall apply for purposes of this 

5 subsection. 

6 ‘‘(5) EQUITY EQUIVALENT INVESTMENT.—For 

7 purposes of this paragraph, the term ‘equity equiva8 lent investment’ means an obligation of a qualified 

9 community development financial institution 

10 which— 

11 ‘‘(A) is carried as an investment on the in12 vestor’s balance sheet in accordance with Gen13 erally Accepted Accounting Principles, 

14 ‘‘(B) is not secured by any of the assets of 

15 the qualified community development financial 

16 institution, 

17 ‘‘(C) is fully subordinated to the right of 

18 repayment of all of the other creditors of the 

19 qualified community development financial in20 stitution, 

21 ‘‘(D) does not give the investor the right to 

22 accelerate payment unless the qualified commu23 nity development financial institution ceases its 

24 normal operations, 


ssavage on DSKBC07HB2PROD with BILLS
7 

•HR 6650 IH

1 ‘‘(E) carries an interest rate or dividend 

2 that is not tied to any income received by the 

3 qualified community development financial in4 stitution, and 

5 ‘‘(F) has an indeterminate maturity. 

6 ‘‘(c) QUALIFIED COMMUNITY DEVELOPMENT FINAN7 CIAL INSTITUTION.—For purposes of this section, the 

8 term ‘qualified community development financial institu9 tion’ means— 

10 ‘‘(1) any community development financial in11 stitution (as defined in section 103 of the Commu12 nity Development Banking and Financial Institu13 tions Act of 1994 (12 U.S.C. 4702)), or 

14 ‘‘(2) any partnership that is controlled, for pur15 poses of section 482, or any investment vehicle the 

16 investment activities of which are otherwise substan17 tially entirely managed and directed, by one or more 

18 community development financial institutions (as so 

19 defined). 

20 ‘‘(d) NATIONAL LIMITATION ON AMOUNT OF INVEST21 MENTS DESIGNATED.— 

22 ‘‘(1) IN GENERAL.—There is an investment tax 

23 credit limitation for each calendar year. Such a limi24 tation is— 

25 ‘‘(A) $1,000,000,000 for 2023, 


ssavage on DSKBC07HB2PROD with BILLS
8 

•HR 6650 IH

1 ‘‘(B) $1,500,000,000 for 2024, and 

2 ‘‘(C) $2,000,000,000 for each year there3 after. 

4 ‘‘(2) INFLATION ADJUSTMENT.— 

5 ‘‘(A) IN GENERAL.—In the case of any cal6 endar year after 2025, the $2,000,000,000 in 

7 paragraph (1)(C) shall be increased by an 

8 amount equal to— 

9 ‘‘(i) such dollar amount, multiplied by 

10 ‘‘(ii) the cost-of-living adjustment de11 termined under section 1(f)(3) for the cal12 endar year in which the taxable year be13 gins, determined by substituting ‘calendar 

14 year 2024’ for ‘calendar year 2016’ in sub15 paragraph (A)(ii) thereof. 

16 ‘‘(B) ROUNDING.—If any increase deter17 mined under subparagraph (A) is not a multiple 

18 of $1,000,000, such increase shall be rounded 

19 to the nearest multiple of $1,000,000. 

20 ‘‘(3) ALLOCATION OF LIMITATION.— 

21 ‘‘(A) IN GENERAL.—The limitation under 

22 paragraph (1) shall be allocated by the Sec23 retary among qualified community development 

24 financial institutions selected by the Secretary 

25 based on the following criteria: 


ssavage on DSKBC07HB2PROD with BILLS
9 

•HR 6650 IH

1 ‘‘(i) Financial and compliance per2 formance. 

3 ‘‘(ii) Demonstrated ability to attract 

4 private capital. 

5 ‘‘(iii) The diversity of business model 

6 types. 

7 ‘‘(iv) The diversity of population den8 sity served. 

9 ‘‘(v) Impact generation capacity. 

10 ‘‘(vi) The information contained in the 

11 investment plan described in subparagraph 

12 (B). 

13 ‘‘(vii) Whether the investment term 

14 will exceed 10 years. 

15 ‘‘(viii) Such other criteria as deter16 mined appropriate by the Secretary. 

17 ‘‘(B) REQUIREMENT TO PROVIDE AN IN18 VESTMENT PLAN.—An application submitted to 

19 the Secretary under subparagraph (A) shall in20 clude a plan that— 

21 ‘‘(i) describes how the qualified com22 munity development financial institution 

23 will expand or maintain its lending and in24 vesting activity in its target market as a 

25 result of qualified CDFI investments, and 


ssavage on DSKBC07HB2PROD with BILLS
10 

•HR 6650 IH

1 ‘‘(ii) includes such other information 

2 as required by the Secretary. 

3 ‘‘(4) CARRYOVER OF UNUSED LIMITATION.—If 

4 the new investment tax credit limitation for any cal5 endar year exceeds the aggregate amount allocated 

6 under paragraph (2) for such year, such limitation 

7 for the succeeding calendar year shall be increased 

8 by the amount of such excess. 

9 ‘‘(5) AUTHORIZATION OF USER FEES.— 

10 ‘‘(A) IN GENERAL.—The Secretary may 

11 charge a user fee for a request for an allocation 

12 of the limitation under paragraph (3). 

13 ‘‘(B) USE OF FEES.—Any fees collected by 

14 the Secretary pursuant to subparagraph (A) 

15 may be used to contract with third parties to 

16 verify information relating to the qualification 

17 of an entity as a qualified community develop18 ment financial institution. 

19 ‘‘(C) LIMITATION.—The fee charged under 

20 subparagraph (A) shall not exceed 0.05 percent 

21 of the amount of the allocation requested. 

22 ‘‘(e) REGULATIONS.—The Secretary shall prescribe 

23 such regulations as may be appropriate to carry out this 

24 section, including regulations— 


ssavage on DSKBC07HB2PROD with BILLS
11 

•HR 6650 IH

1 ‘‘(1) which limit the credit under this section 

2 for investments which directly or indirectly receive a 

3 Federal tax benefit (including a credit under section 

4 42 or an exclusion from gross income under section 

5 103), 

6 ‘‘(2) which prevent the abuse of the purposes of 

7 this section, 

8 ‘‘(3) which impose appropriate reporting re9 quirements, and 

10 ‘‘(4) which provide rules for allocations under 

11 subsection (d)(3) to persons that have been certified 

12 as emerging community development financial insti13 tutions under section 105 of the Community Devel14 opment Banking and Financial Institutions Act of 

15 1994.’’. 

16 (b) PART OF GENERAL BUSINESS CREDIT.—Section 

17 38(b) of such Code is amended by striking ‘‘plus’’ at the 

18 end of paragraph (40), by striking the period at the end 

19 of paragraph (41) and inserting ‘‘, plus’’, and by adding 

20 at the end the following new paragraph: 

21 ‘‘(42) the CDFI investment credit determined 

22 under section 45BB(a).’’. 

23 (c) CONFORMING AMENDMENTS.— 

24 (1) Section 45D(b)(1) of the Internal Revenue 

25 Code of 1986 is amended by striking ‘‘and’’ at the 


ssavage on DSKBC07HB2PROD with BILLS
12 

•HR 6650 IH

1 end of subparagraph (B), by striking the period at 

2 the end of subparagraph (C) and inserting ‘‘, and’’, 

3 and by adding at the end the following new subpara4 graph: 

5 ‘‘(D) such investment has not been des6 ignated as a qualified CDFI investment for 

7 purposes of section 45BB.’’. 

8 (2) The table of sections for subpart D of part 

9 IV of subchapter A of chapter 1 of such Code is 

10 amended by adding at the end the following new 

11 item: 

‘‘45BB. Community development financial institution investment tax credit.’’. 

12 (d) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to investments made after the date 

14 of the enactment of this Act. 

15 SEC. 3. COMMUNITY DEVELOPMENT EQUITY FUNDS. 

16 Section 105 of the Community Development Banking 

17 and Financial Institutions Act of 1994 (12 U.S.C. 4704) 

18 is amended by adding at the end the following: 

19 ‘‘(d) COMMUNITY DEVELOPMENT EQUITY FUNDS.— 

20 ‘‘(1) DEFINITION.—In this subsection, the term 

21 ‘community development equity fund’ means a com22 munity development financial institution with a 

23 management entity that manages 1 or more invest24 ment funds where a majority of both the number 

25 and dollar volume of financial products are equity or 


ssavage on DSKBC07HB2PROD with BILLS
13 

•HR 6650 IH

1 near equity investments in small businesses located 

2 in an investment area or small businesses majority 

3 owned by a targeted population. 

4 ‘‘(2) QUALIFICATIONS.—In an application for 

5 assistance under this subtitle, an applicant that is a 

6 community development equity fund shall dem7 onstrate, to the satisfaction of the Secretary, that 

8 the current or proposed management team of the 

9 fund is qualified and has the knowledge, experience, 

10 and capability necessary for investing in the types of 

11 businesses contemplated by this Act, regulations im12 plementing this Act, and the business plan of the 

13 fund. 

14 ‘‘(3) TREATMENT.—The management entity of 

15 the community development equity fund and all of 

16 its current and future managed investment funds 

17 shall be treated as one community development fi18 nancial institution, regardless of the separation of 

19 the corporate structures, if the management entity 

20 maintains control over the investment decisions of 

21 the managed funds and has not made changes to its 

22 management team without approval of the Sec23 retary.’’. 


ssavage on DSKBC07HB2PROD with BILLS
14 

•HR 6650 IH

1 SEC. 4. EMERGING CDFIS. 

2 Section 105 of the Community Development Banking 

3 and Financial Institutions Act of 1994 (12 U.S.C. 4704), 

4 as amended by section 3 of this Act, is amended by adding 

5 at the end the following: 

6 ‘‘(e) EMERGING COMMUNITY DEVELOPMENT FINAN7 CIAL INSTITUTIONS.— 

8 ‘‘(1) IN GENERAL.—An entity may submit to 

9 the Fund an application to be certified as an emerg10 ing community development financial institution. 

11 ‘‘(2) BUSINESS PLAN.—The application de12 scribed in paragraph (1) shall include a business 

13 plan that demonstrates that, during the 18-month 

14 period beginning on the date on which the business 

15 plan is approved, the entity will meet the require16 ments of subparagraph (A) of section 103(5) or sub17 section (d) of this section.’’. 

Æ 


ssavage on DSKBC07HB2PROD with BILLS