Tax incentives for establishment of grocery stores in certain underserved areas

(a)

In general

Chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after subchapter V the following new subchapter:

Tax incentives for grocery stores in underserved areas

Sec. 1400. Increased work opportunity tax credit.

Sec. 1400A. Credit for sales of fresh fruits, vegetables, meat, and dairy.

Sec. 1400B. Definitions.

1400.

Increased work opportunity tax credit

(a)

In general

In the case of an individual employed in the trade or business of operating a new underserved area grocery store (as certified by the designated local agency (as defined in section 51(d)(12)), the limitation otherwise in effect under section 51(b)(3) with respect to such individual shall be increased by $1,000.(b)

Alternative certification

The Secretary may provide for alternative methods for certification of an individual described in subsection (a) in such manner as the Secretary (in coordination with the head of any relevant Federal agency) determines appropriate.(c)

Termination

Subsection (a) shall only apply to wages paid in taxable years beginning after December 31, 2024, and before January 1, 2031.

1400A.

Credit for sales of fresh fruits, vegetables, meat, and dairy

(a)

In general

For purposes of section 38, the underserved area grocery store fruits, vegetables, meat, and dairy credit determined under this section for the taxable year is an amount equal to the applicable percentage of the cost of goods sold by the taxpayer with respect to the retail sale of fresh fruits, vegetables, meat, and dairy in the trade or business of operating a new underserved area grocery store.(b)

Cost of goods sold

For purposes of subsection (a), the cost of goods sold with respect to any taxable year is the total amount (as determined under the method of accounting of the taxpayer) of purchases made by the taxpayer for goods acquired for resale and sold during such taxable year.(c)

Applicable percentage

(1)

In general

For purposes of subsection (a), the applicable percentage shall be—(A)in the case of any new underserved area grocery store which is placed in service during a taxable year which includes the date on which the Secretary determines (pursuant to section 1400B(3)(C)) that the area in which such grocery store is located qualifies as an underserved area, or which is placed in service during a taxable year beginning after such date—(i)with respect to the taxable year in which such grocery store is placed in service, 30 percent,(ii)with respect to the taxable year subsequent to the taxable year described in clause (i), 30 percent,(iii)with respect to the taxable year subsequent to the taxable year described in clause (ii), 28 percent,(iv)with respect to the taxable year subsequent to the taxable year described in clause (iii), 26 percent, and(v)with respect to any taxable year subsequent to the taxable year described in clause (iv), 0 percent, or(B)in the case of any new underserved area grocery store which was placed in service during a taxable year which ended prior to the date on which the Secretary determines (pursuant to section 1400B(3)(C)) that the area in which such grocery store is located qualifies as an underserved area—(i)with respect to the taxable year which includes such date, 30 percent,(ii)with respect to the taxable year subsequent to the taxable year described in clause (i), 28 percent,(iii)with respect to the taxable year subsequent to the taxable year described in clause (ii), 26 percent, and(iv)with respect to any taxable year subsequent to the taxable year described in clause (iii), 0 percent.(2)

Bonus for locally sourced fruits, vegetables, meat, and dairy

For purposes of subsection (a), in the case of any taxable year described in paragraph (1) (with the exception of any taxable year described in subparagraph (A)(v) or (B)(iv) of such paragraph), the applicable percentage for such taxable year shall be increased by 5 percentage points with respect to any fresh fruits, vegetables, meat, and dairy which are sourced—(A)from any location within the same State in which the new underserved area grocery store is located, or(B)from any location which is within a 100-mile radius of the new underserved area grocery store.(d)

Termination

Subsection (a) shall only apply to taxable years beginning after December 31, 2024, and before January 1, 2031.

1400B.

Definitions

For purposes of this subchapter—(1)

Fresh fruits, vegetables, meat, and dairy

(A)

In general

Subject to subparagraph (B), the term fresh fruits, vegetables, meat, and dairy means any product of agriculture (as defined in section 3 of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(f))) which is suitable for human consumption.(B)

Exclusion of canned or frozen foods

The term fresh fruits, vegetables, meat, and dairy shall not include any product described in subparagraph (A) which is canned or frozen.(2)

New underserved area grocery store

(A)

In general

The term new underserved area grocery store means any building of the taxpayer if— (i)not more than 80,000 square feet of such building is used for selling items at retail,(ii)at least 25 percent of the square feet of such building which is used for selling items at retail is used for selling fresh fruits, vegetables, meat, and dairy,(iii)at least 25 percent of the gross sales of items sold at retail from such building are attributable to sales of fresh fruits, vegetables, meat, and dairy, and(iv)such building is located in—(I)an underserved area (as determined by the Secretary under paragraph (3)(C) after December 31, 2024), or(II)a rural area (as defined in section 343(a)(13)(A) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1991(a)(13)(A)).(B)

Malls and shopping centers

(i)

In general

For purposes of subparagraph (A), the term building includes any portion of a larger building or structure (such as a mall or shopping center)—(I)which is owned, leased, or occupied by the taxpayer, and(II)in which the taxpayer, as part of its trade or business, makes retail sales of fresh fruits, vegetables, meat, and dairy.(ii)

Application of requirements

In the case of any portion of a larger building or structure described in clause (i), the requirements under clauses (i) through (iii) of subparagraph (A) shall be applied solely with respect to such portion and not with respect to the larger building or structure described in such clause. (C)

Duration of status

(i)

Underserved area

In the case of any building which is described in clauses (i) through (iii) of subparagraph (A) and is in operation during a period in which the Secretary has determined (pursuant to paragraph (3)(C)) that the area in which such building is located qualifies as an underserved area, such building shall not fail to satisfy the requirement described in subparagraph (A)(iv)(I) solely by reason of the area in which such building is located subsequently ceasing to be an underserved area.(ii)

Rural area

In the case of any building which is described in clauses (i) through (iii) of subparagraph (A) and is in operation during a period in which a determination is made after December 31, 2024, that the area in which such building is located qualifies as a rural area, such building shall not fail to satisfy the requirement described in subparagraph (A)(iv)(II) solely by reason of the area in which such building is located subsequently ceasing to be a rural area.(3)

Underserved area

(A)

In general

The term underserved area means any population census tract in which—(i)not less than 500 people, or 33 percent of the population of such tract, reside—(I)in the case of a tract located within a metropolitan area, more than 1 mile from a building which satisfies the requirements in clauses (i) through (iii) of paragraph (2)(A), or(II)in the case of a tract not located within a metropolitan area, more than 10 miles from a building which satisfies the requirements in clauses (i) through (iii) of paragraph (2)(A),(ii)the poverty rate for such tract is at least 20 percent, and(iii)(I)in the case of a tract not located within a metropolitan area, the median family income for such tract does not exceed 80 percent of statewide median family income, or(II)in the case of a tract located within a metropolitan area, the median family income for such tract does not exceed 80 percent of the greater of statewide median family income or the metropolitan area median family income.(B)

Areas not within census tracts

In the case of an area which is not tracted for population census tracts, the equivalent county divisions (as defined by the Bureau of the Census) shall be used for purposes of determinations of underserved areas under this paragraph.(C)

Determination of underserved area

For purposes of determining whether a population census tract qualifies as an underserved area for purposes of this paragraph, the Secretary shall make such determinations in coordination with the Secretary of Agriculture in such manner as is determined appropriate, including use of the Food Access Research Atlas established by the Department of Agriculture.(D)

Metropolitan area

The term metropolitan area has the same meaning given the term metropolitan statistical area under section 143(k)(2)(B).(E)

Regulations and guidance

Not later than 6 months after the date of enactment of the Fresh Food Act, the Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this paragraph.

(b)

Credit To be part of general business credit

(1)

In general

Section 38(b) of the Internal Revenue Code of 1986 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 underserved area grocery store fruits, vegetables, meat, and dairy credit determined under section 1400A.

(2)

Specified credits

Section 38(c)(4)(B) of such Code is amended—(A)in clause (xi), by striking and at the end,(B)in clause (xii), by striking the period at the end and inserting , and, and(C)by adding at the end the following:

(xiii)the credit determined under section 1400A.

(c)

Clerical amendment

The table of subchapters for chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to subchapter V the following new item:

Subchapter W. Tax incentives for grocery stores in underserved areas

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2024.