[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9781 Introduced in House (IH)]
<DOC>
118th CONGRESS
2d Session
H. R. 9781
To amend the Internal Revenue Code of 1986 to provide a tax credit for
investors in start-up businesses, to provide a credit for wages paid by
start-up businesses to their first employees, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 24, 2024
Ms. Chu (for herself, Mr. Davis of Illinois, and Mr. Blumenauer)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide a tax credit for
investors in start-up businesses, to provide a credit for wages paid by
start-up businesses to their first employees, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Providing Real Opportunities for
Growth to Rising Entrepreneurs for Sustained Success (PROGRESS) Act''.
SEC. 2. SMALL BUSINESS INVESTOR TAX CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 45BB. SMALL BUSINESS INVESTOR TAX CREDIT.
``(a) General Rule.--For purposes of section 38, the small business
investor credit determined under this section for any taxable year is
an amount equal to the sum of the credit amounts determined for the
taxable year for all qualified investments of the taxpayer.
``(b) Credit Amount.--For purposes of this section--
``(1) In general.--The term `credit amount' means, with
respect to any qualified investment in a qualifying business
entity, the lesser of--
``(A) 10 percent of the amount of the qualified
investment determined under subsection (c)(3) for the
taxable year, or
``(B) an amount equal to--
``(i) 50 percent of such qualified
investment, reduced (but not below zero) by
``(ii) the amount of the credit determined
under this section with respect to such
qualified investment of the taxpayer for all
preceding taxable years.
``(2) Overall dollar limitation.--
``(A) In general.--The credit amount determined
under paragraph (1) with respect to any qualified
investment of a taxpayer in a qualifying business
entity for any taxable year shall not exceed the lesser
of--
``(i) $10,000 (as increased for the taxable
year by the cost-of-living adjustment under
subsection (e)(2)), or
``(ii) an amount equal to--
``(I) an amount equal to 5 times
the amount under clause (i) for the
taxable year, reduced (but not below
zero) by
``(II) the amount of the credit
determined under this section with
respect to such qualified investment of
the taxpayer for all preceding taxable
years.
``(B) No credit amount by reason of cost-of-living
adjustment after overall limit first reached.--No
credit amount shall be determined under this section
with respect to any qualified investment of a taxpayer
in a qualifying business entity for any taxable year
after the first taxable year for which the amount
determined under subclause (II) of subparagraph (A)(ii)
equals or exceeds the amount determined under subclause
(I) of such subparagraph.
``(3) Reduction in credit amount where loan rate exceeds
prime rate.--
``(A) In general.--If--
``(i) the rate of interest (expressed as an
annual percentage rate) on a qualified
investment which is a qualifying loan, exceeds
``(ii) the bank prime rate as of the first
day of the month in which the loan is entered
into (or such other time as the Secretary may
specify),
then each of the amounts determined under subparagraphs
(A) and (B)(i) of paragraph (1) shall be reduced (but
not below zero) by the amount which bears the same
ratio to such amount as the number of full percentage
points by which such rate of interest exceeds such bank
prime rate bears to 25.
``(B) Special rules where qualifying loans treated
as part of single investment.--If 1 or more qualifying
loans to which subparagraph (A) applies are treated as
part of a single qualified investment under subsection
(c)(1), then, for purposes of this subsection--
``(i) the credit amount under paragraph (1)
for such single qualified investment shall be
the sum of such credit amounts computed
separately for each such qualifying loan and
such credit amount computed for all other
qualified investments treated as part of such
single qualified investment, and
``(ii) the limitation under paragraph (2)
shall be applied to such sum.
``(C) Rules relating to interest rates.--
``(i) Annual percentage rate.--The
Secretary shall prescribe guidance or
regulations for the calculation of the annual
percentage rate of interest on a loan for
purposes of subparagraph (A)(i), including
rules which provide for--
``(I) the calculation of the annual
percentage rate in cases where there is
a variable rate of interest,
``(II) the recalculation of the
annual percentage rate where the terms
of the loan are modified after the loan
is entered into, and
``(III) the proper taking into
account of lump sum payments,
orientation and application fees,
closing fees, invoice discounting fees
and any other loan fees.
``(ii) Bank prime rate.--For purposes of
subparagraph (A)(ii), the term `bank prime
rate' means the average predominant prime rate
quoted by commercial banks to large businesses,
as determined by the Board of Governors of the
Federal Reserve System.
``(4) Special rules for pass-thru entities.--For purposes
of this subsection, if a qualified investment in a qualifying
business entity is made by a partnership, trust, S corporation,
or other pass-thru entity, the limitations under this
subsection shall apply at the entity level.
``(c) Qualified Investment.--For purposes of this section--
``(1) In general.--The term `qualified investment' means,
with respect to any qualifying business entity, either of the
following of the taxpayer:
``(A) The direct or indirect acquisition of stock,
or a capital interest, in the entity at its original
issue solely in exchange for cash.
``(B) A qualifying loan made to the entity.
If a taxpayer has or had more than 1 qualified investment in
any qualifying business entity for the taxable year or any
prior taxable year, all such investments shall be treated as a
single qualified investment for purposes of applying this
section.
``(2) Exception for investments made by qualified active
investors and related persons.--Such term shall not include any
acquisition or loan made by a taxpayer who, immediately before
the acquisition or loan, is a qualified active investor in the
qualifying business entity or is related to any qualified
active investor.
``(3) Amount of qualified investment.--The amount of a
taxpayer's qualified investment with respect to any qualifying
business entity for any taxable year shall be the monthly
average for months ending within the taxable year of--
``(A) the taxpayer's aggregate unadjusted bases in
all stock or interests described in paragraph (1)(A) as
of the close of each such month, and
``(B) the aggregate outstanding principal amount of
all qualified loans described in paragraph (1)(B) as of
the close of each such month.
``(4) Special rules for transfers of qualifying loans.--
``(A) In general.--If a taxpayer sells, exchanges,
or otherwise transfers all or any portion of a
qualifying loan which is a qualified investment in a
qualifying business entity, such investment shall be
treated as a qualified investment in the hands of the
transferee (and not of the transferor) for periods
after the transfer. This paragraph shall also apply to
any subsequent transfer of such interest.
``(B) Coordination of limits.--In applying
subsection (b) to any qualifying loan treated as a
qualified investment of a transferee under this
paragraph--
``(i) all credits determined under this
section for any periods before the transfer
with respect to the qualified investment of any
prior holder of such investment shall be taken
into account under paragraphs (1)(B)(ii) and
(2)(A)(ii)(II) of such subsection in the same
manner as if such credits were determined for
the transferee for prior taxable years, and
``(ii) if only a portion of the qualified
investment was transferred, the amount taken
into account under such paragraphs by reason of
clause (i) shall be ratably reduced to reflect
only the portion so transferred.
``(d) Qualifying Business Entity.--For purposes of this section--
``(1) Definition.--
``(A) In general.--The term `qualifying business
entity' means, with respect to any qualified
investment, any entity which is engaged in 1 or more
trades or businesses and with respect to which--
``(i) the qualified active investor
ownership requirements of paragraph (2) are met
immediately before and after the qualified
investment,
``(ii) the wage requirements of paragraph
(3) are met, and
``(iii) the certification requirements of
paragraph (4) are met.
``(B) Entities under common control.--For purposes
of this section, all qualifying business entities
treated as a single employer under subsection (a) or
(b) of section 52 or subsection (m) or (o) of section
414 shall be treated as a single qualifying business
entity.
``(2) Qualified active investor ownership requirements.--
The requirements of this paragraph are met with respect to any
entity if qualified active investors own directly or
indirectly--
``(A) in the case of a corporation, more than 50
percent (by vote and value) of the stock in the
corporation, and
``(B) in the case of any other entity, more than 50
percent of the capital or profits interests in the
entity.
``(3) Wage requirements.--
``(A) In general.--The requirements of this
paragraph are met with respect to any entity if the
entity, during the taxable year of the entity preceding
the taxable year in which the qualified investment is
made--
``(i) employed at least 1 full-time
employee, or employees constituting a full-time
equivalent employee, in 1 or more trades or
businesses of the entity, and
``(ii) paid W-2 wages to such employee or
employees with respect to such employment.
``(B) Certain wages not taken into account.--W-2
wages shall not be taken into account under
subparagraph (A) if paid by an entity to an employee,
and such employee shall not be taken into account under
subparagraph (A)(i), during any period the employee
is--
``(i) a qualified active investor, or
``(ii) an employee other than a qualified
active investor who is a 5-percent owner (as
defined in section 416(i)(1)(B)(i)) of the
entity.
``(C) W-2 wages.--The term `W-2 wages' means, with
respect to any entity, the amounts described in
paragraphs (3) and (8) of section 6051(a) paid by the
entity with respect to employment of employees by the
entity.
``(D) Full-time employees and equivalents.--For
purposes of this paragraph--
``(i) the term `full-time employee' has the
meaning given to such term by section
4980H(c)(4), and
``(ii) the determination of the number of
employees constituting a full-time equivalent
shall be made in the same manner as under
section 4980H(c)(2)(E).
``(4) Certification requirements.--
``(A) In general.--The requirements of this
paragraph are met with respect to any entity if the
entity certifies, in such form and manner and at such
time as the Secretary may prescribe, that, at the time
of the qualified investment, the entity--
``(i) is engaged in 1 or more trades or
businesses, and
``(ii) meets the requirements of paragraphs
(2) and (3) to be treated as a qualifying
business entity.
``(B) Certification provided to investors and
secretary.--An entity shall--
``(i) provide the certification under
subparagraph (A) to the person making the
qualified investment at the time such
investment is made, and
``(ii) include such certification, and the
names, addresses, and taxpayer identification
numbers of the entity's qualified active
investors and the persons making the qualified
investment, with its return of tax for the
taxable year which includes the date of the
qualified investment.
``(C) Certification included with return claiming
credit.--No credit shall be determined under subsection
(a) with respect to any taxpayer making a qualified
investment in a qualifying business entity unless the
taxpayer includes the certification under subparagraph
(A) with respect to the investment with its return of
tax for any taxable year for which such credit is being
claimed.
``(D) Timely filed return required.--The
requirements of subparagraph (B)(ii) or (C) shall be
treated as met only if the return described in such
subparagraph is filed on or before its due date
(including extensions).
``(5) Qualified active investor.--
``(A) In general.--The term `qualified active
investor' means, with respect to any entity, an
individual who--
``(i) is a citizen or resident of the
United States,
``(ii) materially participates (within the
meaning of section 469(h)) in 1 or more trades
or businesses of the entity,
``(iii) holds stock, or a capital or
profits interest, in the entity, and
``(iv) meets the income requirements of
subparagraph (B).
``(B) Income requirements.--The requirements of
this subparagraph are met with respect to an individual
if the average annual adjusted taxable income of the
individual for the 3 taxable years of the individual
immediately preceding the taxable year in which the
qualified investment is made does not exceed the
applicable amount.
``(C) Applicable amount.--For purposes of this
paragraph, the term `applicable amount' means, with
respect to any taxable year in which a qualified
investment is made--
``(i) in the case of an individual not
described in clause (ii), $100,000 (as
increased for the taxable year by the cost-of-
living adjustment under subsection (e)(2)), and
``(ii) in the case of an individual who is
a married individual filing a joint return or
who is a head of household (as defined in
section 2(b)) for the taxable year, an amount
equal to 2 times the amount in effect under
clause (i) for the taxable year.
``(D) Rules for determining average taxable
income.--For purposes of this paragraph--
``(i) a married individual filing a
separate return of tax for any taxable year
shall include the adjusted taxable income of
their spouse in computing the individual's
average adjusted taxable income for any period
unless the Secretary determines that the
spouse's information is not available to the
individual, and
``(ii) the Secretary shall prescribe rules
for the determination of average adjusted
taxable income in cases where the individual
had different filing statuses for the 3 taxable
years described in subparagraph (B).
``(E) Adjusted taxable income.--The term `adjusted
taxable income' means taxable income computed without
regard to the deductions under sections 172 and 199A.
``(e) Definitions and Special Rules.--For purposes of this
section--
``(1) Related persons.--A person shall be treated as
related to another person if the person bears a relationship to
such other person described in section 267(b), except that
section 267(b) shall be applied by substituting `5 percent' for
`50 percent' each place it appears.
``(2) Cost-of-living adjustments.--In the case of any
taxable year beginning after 2025, the $10,000 amount under
subsection (b)(2)(A)(i) and the $100,000 amount under
subsection (d)(5)(C)(i) shall each be increased by an amount
equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment under section
1(f)(3) for the calendar year in which the taxable year
begins, determined by substituting `2024' for `2016' in
subparagraph (A)(ii) thereof.
If any increase in such $10,000 amount is not a multiple of
$100, such increase shall be rounded to the next lowest
multiple of $100 and if any increase in such $100,000 amount is
not a multiple of $1,000, such increase shall be rounded to the
next lowest multiple of $1,000.
``(3) Rules relating to entities.--
``(A) Sole proprietorships.--If a taxpayer carries
on 1 or more trades or businesses as sole
proprietorships, all such trades or businesses shall be
treated as a single entity for purposes of applying
this section.
``(B) Application to disregarded entities.--In the
case of any entity with a single owner which is
disregarded as an entity separate from its owner for
purposes of this title, this section shall be applied
in the same manner as if such entity were a
corporation.
``(f) Regulations.--The Secretary shall prescribe such regulations
or other guidance as may be necessary to carry out the provisions of
this section.''.
(b) Credit To Be Part of General Business Credit.--Section 38(b) of
such Code is amended by striking ``plus'' at the end of paragraph (40),
by striking the period at the end of paragraph (41) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(42) the small business investor credit determined under
section 45BB(a).''.
(c) Credit Allowed Against Alternative Minimum Tax.--Section
38(c)(4)(B) of such Code is amended by redesignating clauses (x), (xi),
and (xii) as clauses (xi), (xii), and (xiii), respectively, and by
inserting after clause (ix) the following new clause:
``(x) the credit determined under section
45BB,''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by adding
at the end the following new item:
``Sec. 45BB. Small business investor tax credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to qualified investments made in taxable years beginning after
December 31, 2024.
SEC. 3. FIRST EMPLOYEE BUSINESS WAGE CREDIT.
(a) Allowance of Credit.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986, as amended by
section 2, is amended by adding at the end the following new
section:
``SEC. 45CC. FIRST EMPLOYEE BUSINESS WAGE CREDIT.
``(a) General Rule.--For purposes of section 38, in the case of a
qualifying business entity, the first employee business wage credit
determined under this section for any taxable year is an amount equal
to 25 percent of the qualified wages of the entity for the taxable
year.
``(b) Dollar Limitations.--
``(1) In general.--The amount of the credit determined
under subsection (a) with respect to any qualifying business
entity for any taxable year shall not exceed the lesser of--
``(A) $10,000 (as increased for the taxable year by
the cost-of-living adjustment under subsection (f)), or
``(B) the excess (if any) of--
``(i) an amount equal to 4 times the amount
under subparagraph (A) for the taxable year,
over
``(ii) the amount of the credit determined
under this section with respect to such entity
for all preceding taxable years.
``(2) No credit by reason of cost-of-living adjustment
after overall limit first reached.--No credit shall be
determined under this section with respect to any qualifying
business entity for any taxable year after the first taxable
year for which the amount determined under clause (ii) of
paragraph (1)(B) equals or exceeds the amount determined under
clause (i) of such paragraph.
``(3) Pass-thru entities.--If a qualifying business entity
is a partnership, trust, S corporation, or other pass-thru
entity, the limitations under this subsection shall apply at
the entity level.
``(c) Qualified Wages.--For purposes of this section--
``(1) In general.--The term `qualified wages' means, with
respect to any qualifying business entity, the amount of W-2
wages paid or incurred during any eligible taxable year to
employees for services performed in connection with a trade or
business of the entity.
``(2) Exception for qualified active investors and 5-
percent owner-employees.--W-2 wages shall not be taken into
account under paragraph (1) if paid by an entity to an
employee, and such employee shall not be taken into account
under paragraph (3)(A), during any period the employee is--
``(A) a qualified active investor, or
``(B) an employee other than a qualified active
investor who is a 5-percent owner (as defined in
section 416(i)(1)(B)(i)) of the entity.
``(3) Eligible taxable year.--
``(A) In general.--The term `eligible taxable year'
means any taxable year of a qualifying business
entity--
``(i) which occurs during the period--
``(I) beginning with the first
taxable year of the entity in which the
entity employed at least 1 full-time
employee (or employees constituting a
full-time equivalent employee) in 1 or
more trades or businesses of the entity
during the taxable year and paid W-2
wages to such employee or employees
with respect to such employment, and
``(II) ending with the last taxable
year for which a credit may be
determined for the entity under this
section by reason of the limitation
under subsection (b)(2), and
``(ii) in the case of a taxable year other
than the first taxable year described in clause
(i)(I), with respect to which the entity meets
the employment and wage requirements of such
clause.
Such term shall not include any taxable year during
such a period if the first taxable year described in
clause (i)(I) of the entity (or any predecessor) begins
before January 1, 2024.
``(B) W-2 wages; full-time employees.--For purposes
of this subsection, W-2 wages, full-time employees, and
full-time employee equivalents shall be determined in
the same manner as under section 45BB.
``(d) Qualifying Business Entity.--For purposes of this section--
``(1) Qualifying business entity defined.--
``(A) In general.--The term `qualifying business
entity' means, with respect to any taxable year for
which a credit under this section is being determined,
any entity--
``(i) which is engaged in 1 or more trades
or businesses,
``(ii) with respect to which the qualified
active investor ownership requirements of
paragraph (2) of section 45BB(d) are met as of
the close of such taxable year (rather than
immediately before and after the qualified
investment), and
``(iii) with respect to which the
certification requirements of paragraph (2) are
met.
``(B) Entities under common control.--For purposes
of this section--
``(i) In general.--All qualifying business
entities treated as a single employer under
subsection (a) or (b) of section 52 or
subsection (m) or (o) of section 414 shall be
treated as a single qualifying business entity.
``(ii) Allocation of credit.--Except as
provided in regulations, the credit under this
section shall be allocated among the entities
comprising the single entity described in
clause (i) in proportion to the qualified wages
of each such entity taken into account under
subsection (a).
``(2) Certification requirements.--
``(A) In general.--The requirements of this
paragraph are met with respect to any entity for any
taxable year described in paragraph (1) if the entity
certifies, in such form and manner and at such time as
the Secretary may prescribe, that the entity meets the
requirements described in clauses (i) and (ii) of
paragraph (1)(A).
``(B) Certification provided to secretary.--An
entity shall include the certification under
subparagraph (A), and the names, addresses, and
taxpayer identification numbers of the entity's
qualified active investors (and employees who are 5-
percent owners described in subsection (c)(2)(B)), with
its return of tax for the taxable year to which the
certification relates. The requirement of this
subparagraph is met only if such return is filed before
its due date (including extensions).
``(3) Qualified active investor.--For purposes of this
section (including applying the requirements of paragraph (2)
of section 45BB(d) for purposes of paragraph (1)(A)(ii)), the
term `qualified active investor' has the same meaning given
such term by section 45BB(d)(5), except that such section shall
be applied separately for each taxable year described in
paragraph (1) (rather than the taxable year of the qualified
investment).
``(e) Election To Apply Credit Against Payroll Taxes.--
``(1) In general.--At the election of a qualifying business
entity, section 3111(g) shall apply to the payroll tax credit
portion of the credit otherwise determined under subsection (a)
for the taxable year and such portion shall not be treated
(other than for purposes of section 280C) as a credit
determined under subsection (a).
``(2) Payroll tax credit portion.--For purposes of this
subsection, the payroll tax credit portion of the credit
determined under subsection (a) with respect to any qualifying
business entity for any taxable year is the least of--
``(A) the amount specified in the election made
under this subsection,
``(B) the credit determined under subsection (a)
for the taxable year (determined before the application
of this subsection), or
``(C) in the case of a qualifying business entity
other than a partnership, estate, S corporation or
other pass-thru entity, the amount of the business
credit carryforward under section 39 carried from the
taxable year (determined before the application of this
subsection to the taxable year).
``(3) Election.--
``(A) In general.--Any election under this
subsection for any taxable year--
``(i) shall specify the amount of the
credit to which such election applies,
``(ii) shall be made on or before the due
date (including extensions) of the return for
the taxable year, and
``(iii) may be revoked only with the
consent of the Secretary.
``(B) Special rule for pass-thru entities.--In the
case of a partnership, estate, S corporation, or other
pass-thru entity, the election made under this
subsection shall be made at the entity level.
``(f) Cost-of-Living Adjustments.--In the case of any taxable year
beginning after 2025, the $10,000 amount under subsection (b)(1)(A)
shall be increased by an amount equal to--
``(1) such dollar amount, multiplied by
``(2) the cost-of-living adjustment under section 1(f)(3)
for the calendar year in which the taxable year begins,
determined by substituting `2024' for `2016' in subparagraph
(A)(ii) thereof.
If any increase in such amount is not a multiple of $100, such increase
shall be rounded to the next lowest multiple of $100.
``(g) Other Rules.--For purposes of this section--
``(1) Rules relating to entities.--Rules similar to the
rules of section 45BB(e)(3) shall apply.
``(2) Election not to have credit apply.--
``(A) In general.--A taxpayer may elect not to have
this section apply for any taxable year.
``(B) Other rules.--Rules similar to the rules of
paragraphs (2) and (3) of section 51(j) shall apply for
purposes of this paragraph.
``(3) Certain other rules made applicable.--Rules similar
to the rules of subsections (c), (d), and (e) of section 52
shall apply.
``(h) Regulations.--The Secretary shall prescribe such regulations
or other guidance as may be necessary to carrying out the provisions of
this section, including regulations--
``(1) preventing the avoidance of the limitations under
this section in cases in which there is a successor or new
qualified business entity with respect to the same trade or
business for which a predecessor qualified business entity
already claimed the credit under this section,
``(2) to minimize compliance and recordkeeping burdens
under the provisions of this section, and
``(3) for recapturing the benefit of credits determined
under section 3111(g) in cases where there is a recapture or a
subsequent adjustment to the payroll tax credit portion of the
credit determined under subsection (a), including requiring
amended income tax returns in the cases where there is such an
adjustment.''.
(2) Credit to be part of general business credit.--Section
38(b) of such Code, as amended by section 2, is amended by
striking ``plus'' at the end of paragraph (41), by striking the
period at the end of paragraph (42) and inserting ``, plus'',
and by adding at the end the following new paragraph:
``(43) the first employee business wage credit determined
under section 45CC(a).''.
(3) Credit allowed against alternative minimum tax.--
Section 38(c)(4)(B) of such Code, as amended by section 2, is
amended by redesignating clauses (xi), (xii), and (xiii) as
clauses (xii), (xiii), and (xiv), respectively, and by
inserting after clause (x) the following new clause:
``(xi) the credit determined under section
45CC,''.
(4) Clerical amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1 of such Code, as
amended by section 2, is amended by adding at the end the
following new item:
``Sec. 45CC. First employee business wage credit.''.
(b) Payroll Tax Credit.--Section 3111 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new subsection:
``(g) Credit for First Employee Business Wage Expenses.--
``(1) In general.--In the case of a taxpayer who has made
an election under section 45CC(e) for a taxable year, there
shall be allowed as a credit against the tax imposed by
subsection (a) for the first calendar quarter which begins
after the date on which the taxpayer files the return for the
taxable year an amount equal to the payroll tax credit portion
determined under section 45CC(e)(2).
``(2) Limitation.--The credit allowed by paragraph (1)
shall not exceed the tax imposed by subsection (a) for any
calendar quarter on the wages paid with respect to the
employment of all individuals in the employ of the employer.
``(3) Carryover of unused credit.--If the amount of the
credit under paragraph (1) exceeds the limitation of paragraph
(2) for any calendar quarter, such excess shall be carried to
the succeeding calendar quarter and allowed as a credit under
paragraph (1) for such quarter.
``(4) Deduction allowed for credited amounts.--
Notwithstanding section 280C(a), the credit allowed under
paragraph (1) shall not be taken into account for purposes of
determining the amount of any deduction allowed under chapter 1
for taxes imposed under subsection (a).''.
(c) Coordination With Deductions and Other Credits.--
(1) Deductions.--Section 280C(a) of the Internal Revenue
Code of 1986 is amended by inserting ``45CC(a),'' after
``45S(a),''.
(2) Other credits.--
(A) Section 41(b)(2)(D) of such Code is amended by
adding at the end the following:
``(iv) Exclusion for wages to which first
employee wage credit applies.--The term `wages'
shall not include any amount taken into account
in determining the credit under section
45CC.''.
(B) Section 45A(b)(1) of such Code is amended by
adding at the end the following:
``(C) Coordination with first employee wage
credit.--The term `qualified wages' shall not include
wages if any portion of such wages is taken into
account in determining the credit under section
45CC.''.
(C) Section 1396(c)(3) of such Code is amended--
(i) by striking ``section 51'' each place
it appears and inserting ``section 45CC or
51'', and
(ii) by inserting ``and first employee
wage'' after ``opportunity'' in the heading
thereof.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2024.
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