H.R. 701 — REDUCE Food Prices Act

This section increases the rehabilitation tax credit to 25% (from 20%) for qualified rehabilitated buildings placed in service after enactment by qualified small food retail businesses. (As background, the rehabilitation tax credit under IRC §47 provides a tax credit for qualified rehabilitation expenditures on certified historic structures.) A qualified small food retail business is one that (1) satisfies the eligible small business gross receipts test of IRC §38(c)(5) using a $200 million threshold (instead of $50 million), (2) derives at least 70% of annual average gross receipts from retail sales of food or produce, and (3) is located in a low-competition area (i.e., a county with a Herfindahl-Hirschman Index of 1,400 or higher for the retail food sector, as measured by USDA's Economic Research Service).

This section increases, for wages paid by qualified small food retail businesses (as defined in section 47(e)(2)(A)), the maximum amounts of qualified wages eligible for the work opportunity tax credit—generally available to employers hiring from targeted groups facing employment barriers (e.g., veterans, SNAP recipients)—to $8,000 (from $6,000), $14,000 (from $12,000), $16,000 (from $14,000), and $26,000 (from $24,000).

This section increases the bonus depreciation percentages under IRC §168(k) for qualified small food retail businesses (i.e., small grocery stores or specialty food retailers in low-income or underserved areas, as defined in §47(e)(2)(A)) by substituting 70% for 60%, 50% for 40%, and 30% for 20%—(1) in the phase-down table applicable to property placed in service by such businesses and (2) in the phase-down table applicable to plants bearing fruits and nuts planted or grafted by such businesses. The changes apply to property placed in service or plants planted or grafted after the date of enactment.

This section increases the qualified business income deduction under Section 199A to 25% (from 20%) for qualified small food retail businesses (as defined in Section 47(e)(2)(A)). The change applies to taxable years beginning after the date of enactment.

This section establishes a new general business tax credit equal to 15% of qualified investment amounts paid or incurred during the taxable year for a new small food retail business (i.e., a qualified small food retail business as defined in IRC §47(e)(2)(A) that began operations during the previous three taxable years). Qualified investment amounts are amounts paid for capital investments in property, facilities, or equipment of business premises used for retail sales by such businesses. The credit applies to taxable years beginning after enactment.