H.R. 1525House116th Congress (2019-2021)In Committee

Economic Development Act for Distressed Zones of 2019

Introduced March 5, 2019

AI-Generated Summary

Updated April 14, 2026 at 2:34 AM UTC

The Economic Development Act for Distressed Zones of 2019 creates a new federal tax credit to encourage businesses to hire workers, invest in property, and buy goods or services within designated high‑poverty census tracts. By offering a percentage of qualified wages, fringe‑benefit costs, depreciation, and purchases as a credit—higher when purchases come from minority‑owned firms—the bill aims to spur job creation and economic activity in those areas. Zones are defined by poverty rates and other distress measures and must be formally designated by the Treasury and Commerce secretaries after a state or local application that includes a comprehensive development plan.

Key Provisions

  • Adds a new tax credit (Subchapter AA) for businesses that operate in designated economically distressed zones.
  • The credit equals 40 % of qualified wages and related fringe‑benefit costs paid to employees who work in the zone, plus 40 % of depreciation/amortization on property used there, plus 30 % of purchases of goods or services from unrelated sellers in the zone (the purchase portion rises to 40 % if the seller is a qualified minority‑owned business).
  • Businesses cannot claim the same wages or expenses for this credit and for other similar credits (e.g., the research credit).
  • Defines “qualified economically distressed zone wages” and sets a cap based on the Social Security wage base; part‑time or partially‑located employees get a proportional portion.
  • Specifies what counts as “allocable employee fringe‑benefit expenses” (e.g., employer contributions to retirement, health, life or disability plans).
  • Provides a definition of “minority business” and “qualified individual” for the higher purchase credit.
  • Creates a process for designating census tracts as economically distressed zones: they must have ≥ 35 % poverty and meet other distress criteria, and must be approved by the Treasury Secretary and the Secretary of Commerce after a state or local application that includes a detailed development plan.
  • Designations can be made anytime within 10 years of enactment and last for 15 years; the rules apply to tax years beginning after Dec. 31, 2018.

Legislative Activity

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1 earlier action
HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

March 5, 2019

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HouseIntro Referral

Introduced in House

March 5, 2019

HouseIntro Referral

Referred to the House Committee on Ways and Means.

March 5, 2019

Floor Debate

22 members

What members said about H.R. 1525 on the floor

13 Republicans9 Democrats
Doug Collins
Rep. Doug CollinsR-GA-9 · Jun 4, 2019

Madam Speaker, I yield myself such time as I may consume. I rise today in opposition to H.R. 6, the American Dream and Promise Act of 2019. Last week, I went to El Paso to see what was going on on…

Sheila Jackson Lee
Rep. Sheila Jackson LeeD-TX-18 · Jun 4, 2019

Madam Speaker, I rise to support the underlying bill and the rule that is presently before us. As I do so, let me thank my colleague on the Judiciary Committee. We have served for any number of…

Zoe Lofgren
Rep. Zoe LofgrenD-CA-19 · Jun 4, 2019

Madam Speaker, today, we have the privilege of voting for the American Dream and Promise Act of 2019. This vote will bring Dreamers, young immigrants who came to the country as children, as well as…

Steny H. Hoyer
Rep. Steny H. HoyerD-MD-5 · Jun 4, 2019

Mr. Speaker, I thank the gentlewoman for yielding. More than that, I thank her for the thousands of hours that she has put in over the years in trying to address in a positive, constructive way our…

Nancy Pelosi
Rep. Nancy PelosiD-CA-12 · Jun 4, 2019

Mr. Speaker, I thank Congresswoman Zoe Lofgren for yielding and for her extraordinary leadership. Congresswoman Lofgren has been an immigration lawyer. She has taught immigration law, and she has…

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Donna E. Shalala
Rep. Donna E. ShalalaD-FL-27 · Jun 4, 2019

Madam Speaker, by direction of the Committee on Rules, I call up House Resolution 415 and ask for its immediate consideration. Madam Speaker, for the purpose of debate only, I yield the customary 30…

Ken Buck
Rep. Ken BuckR-CO-4 · Jun 4, 2019

Madam Speaker, I thank the gentleman from Georgia (Mr. Collins), the ranking member, for yielding. Madam Speaker, this bill we are debating today is fatally flawed. Republicans are for a…

Jerrold Nadler
Rep. Jerrold NadlerD-NY-10 · Jun 4, 2019

Madam Speaker, pursuant to House Resolution 415, I call up the bill (H.R. 6) to authorize the cancellation of removal and adjustment of status of certain aliens, and for other purposes, and ask for…

Debbie Lesko
Rep. Debbie LeskoR-AZ-8 · Jun 4, 2019

Madam Speaker, I yield myself such time as I may consume, and I thank Representative Shalala for yielding me the customary 30 minutes. Madam Speaker, circumstances demand that we make substantial…

Andy Biggs
Rep. Andy BiggsR-AZ-5 · Jun 4, 2019

Madam Speaker, I thank the gentleman from Georgia. I can't help but to be struck here as I reflect on the markup that we had, as we have listened to the Rules debate earlier, plus this debate. I…

Steve Chabot
Rep. Steve ChabotR-OH-1 · Jun 4, 2019

Mr. Speaker, I thank the gentleman for yielding. I claim the time in opposition to this very flawed piece of legislation here this afternoon. It is flawed in many ways. First of all, it doesn't do…

Louie Gohmert
Rep. Louie GohmertR-TX-1 · Jun 4, 2019

Mr. Speaker, we heard earlier some comments from the other side about, gee, what could have been done, and the desire for a bipartisan agreement on things. And yet, I know since President Trump came…

Zoe Lofgren
Rep. Zoe LofgrenD-CA-19 · Jun 4, 2019

Madam Speaker, I stand here today in strong support of H.R. 6, the American Dream and Promise Act of 2019, a product of decades-long advocacy, grit, and compromise. I am extremely proud to stand with…

Show 11 more
Steve King
Rep. Steve KingR-IA-4 · Jun 4, 2019

Mr. Speaker, I thank the gentleman, the ranking member, for yielding. Listening to the debate here, the first thing that I think was missed in this discussion was the subject of amnesty. This bill is…

Andy Biggs
Rep. Andy BiggsR-AZ-5 · Jun 4, 2019

Madam Speaker, I want to give context to this before I talk specifically about the idea of a closed rule here, which I oppose so much. First of all, there are about 690,000 in the DACA population,…

Pramila Jayapal
Rep. Pramila JayapalD-WA-7 · Jun 4, 2019

Madam Speaker, I am so very proud to rise in strong support of H.R. 6, the American Dream and Promise Act. At the heart and the core of this bill are 2.5 million people who are American in every…

Rob Woodall
Rep. Rob WoodallR-GA-7 · Jun 4, 2019

Madam Speaker, I thank the gentlewoman from Arizona (Mrs. Lesko), my colleague on the Rules Committee, for yielding. Madam Speaker, you heard my colleague's passion from this microphone just seconds…

Ben Cline
Rep. Ben ClineR-VA-6 · Jun 4, 2019

Madam Speaker, I thank the gentlewoman from Texas for her remarks. She alluded to a number of reforms to our legal immigration process, and yes, I stand ready to work with the gentlewoman on those…

Chip Roy
Rep. Chip RoyR-TX-21 · Jun 4, 2019

Madam Speaker, I thank the gentlewoman from Arizona (Mrs. Lesko) for her time and energy on this important issue. I thank my colleagues who have been speaking on the floor. Madam Speaker, I have got…

Michael C. Burgess
Rep. Michael C. BurgessR-TX-26 · Jun 4, 2019

Mr. Speaker, I thank the gentleman for yielding. As the majority leader gave his remarks a few moments ago, I was reminded that, in December of 2010, I was in this House of Representatives and,…

Tom McClintock
Rep. Tom McClintockR-CA-4 · Jun 4, 2019

Madam Speaker, as we dither and posture and virtue signal here today, our southern border is collapsing. The border patrol warns that before this year is out, they will have apprehended over 1…

Yvette D. Clarke
Rep. Yvette D. ClarkeD-NY-9 · Jun 4, 2019

Madam Speaker, to Speaker Pelosi, Chair Nadler, and Chair Lofgren, my colleagues Representative Roybal-Allard, Representative Velazquez, Representative Jayapal, and Representative Chu, their…

Lucille Roybal-Allard
Rep. Lucille Roybal-AllardD-CA-40 · Jun 4, 2019

Madam Speaker, let me begin by thanking Speaker Pelosi for making the Dream and Promise Act one of the top 10 Democratic priorities for the people and the Judiciary Committee for all their hard work…

Steve Womack
Rep. Steve WomackR-AR-3 · Jun 4, 2019

Madam Speaker, I rise in strong opposition to H. Res. 415, a rule providing for House consideration of H.R. 6, the American Dream and Promise Act of 2019. According to the Congressional Budget Office…

Bill Text

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Introduced in HouseIssued March 5, 2019

I

116th CONGRESS

1st Session

H. R. 1525

IN THE HOUSE OF REPRESENTATIVES

March 5, 2019

Miss González-Colón of Puerto Rico (for herself and Mrs. Kirkpatrick) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To provide tax incentives to promote economic development in economically distressed zones.

1.

Short title

This Act may be cited as the Economic Development Act for Distressed Zones of 2019.

2.

Economically distressed zones

(a)

In general

Chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subchapter:

AA

Economically Distressed Zones

Sec. 1400AA–1. Economically distressed zone credit.

Sec. 1400AA–2. Designation of economically distressed zones.

1400AA–1.

Economically Distressed Zone credit

(a)

Allowance of credit

There shall be allowed as a credit against the tax imposed by subtitle A for the taxable year an amount equal to the sum of—

(1)

an amount equal to 40 percent of the sum of—

(A)

the aggregate amount of the taxpayer’s economically distressed zone wages for such taxable year, plus

(B)

the allocable employee fringe benefit expenses of the taxpayer for such taxable year,

(2)

an amount equal to 40 percent of the depreciation and amortization allowances for the taxable year with respect to property of the taxpayer which are located and used in the active conduct of a trade or business within an economically distressed zone, and

(3)

an amount equal to 30 percent of the payments made by the taxpayer in course of a trade or business for purchases of services or tangible property from an unrelated person (40 percent in the case of such a purchase from an unrelated minority business) located within an economically distressed zone.

(b)

Denial of double benefit

Any wages or other expenses taken into account in determining the credit under this section may not be taken into account in determining the credit under sections 41, and any other provision determined by the Secretary to be substantially similar.

(c)

Definitions and special rules

For purposes of this section—

(1)

Qualified economically distressed zone wages

(A)

In general

The term qualified economically distressed zone wages means amounts paid or incurred by the taxpayer for the taxable year which are—

(i)

in connection with the active conduct of a trade or business of the taxpayer within an economically distressed zone, and

(ii)

for wages of an employee for services provided, and the principal place of employment of whom is, in such economically distressed zone.

(B)

Limitation on amount of wages taken into account

(i)

In general

The amount of wages which may be taken into account under subparagraph (A) with respect to any employee for any taxable year shall not exceed the contribution and benefit base determined under section 230 of the Social Security Act for the calendar year in which such taxable year begins.

(ii)

Treatment of part-time employees, etc

If—

(I)

any employee is not employed by the taxpayer on a substantially full-time basis at all times during the taxable year, or

(II)

the principal place of employment of any employee is not within an economically distressed zone at all times during the taxable year,

the limitation applicable under clause (i) with respect to such employee shall be the appropriate portion (as determined by the Secretary) of the limitation which would otherwise be in effect under clause (i).
(C)

Treatment of certain employees

The term qualified economically distressed zone wages shall not include any wages paid to employees who are assigned by the employer to perform services for another person, unless the principal trade or business of the employer is to make employees available for temporary periods to other persons in return for compensation.

(2)

Allocable employee fringe benefit expenses

(A)

In general

The term allocable employee fringe benefit expenses means the aggregate amount allowable as a deduction under this chapter to the taxpayer for the taxable year for the following amounts which are allocable to employment in an economically distressed zone:

(i)

Employer contributions under a stock bonus, pension, profit-sharing, or annuity plan.

(ii)

Employer-provided coverage under any accident or health plan for employees.

(iii)

The cost of life or disability insurance provided to employees.

(B)

Allocation

For purposes of subparagraph (A), an amount shall be treated as allocable to an economically distressed zone only if such amount is with respect to employment of an individual for services provided, and the principal place of employment of whom is, in such zone.

(3)

Minority business

(A)

In general

The term minority business means—

(i)

a sole proprietorship carried on by a qualified individual, or

(ii)

a corporation or partnership—

(I)

at least 50 percent of the ownership interests in which are held by one or more qualified individuals, and

(II)

of which a qualified individual is the president or chief executive officer (or a substantially equivalent position).

(B)

Qualified individual

The term qualified individual means any individual who—

(i)

is of Asian-Indian, Asian-Pacific, Black, Hispanic or Native American origin or descent, and

(ii)

is a United States citizen or legal resident of the United States or any of its territories or possessions.

(4)

Aggregation rules

(A)

In general

Members of an affiliated group shall be treated as a single taxpayer.

(B)

Affiliated group

The term qualified group means an affiliated group (as defined in section 1504(a), determined without regard to section 1504(b)(3)) one or more members of which are engaged in the active conduct of a trade or business within an economically distressed zone.

(C)

Related persons

Persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b).

1400AA–2.

Designation of economically distressed zones

(a)

In general

For purposes of this subchapter, the term economically distressed zone means any population census tract which—

(1)

has pervasive poverty, unemployment, low labor force participation, and general distress measured as a prolonged period of economic decline measured by real gross national product,

(2)

has a poverty rate of not less than 35 percent, and

(3)

has been designated as such by the Secretary and the Secretary of Commerce pursuant to an application under subsection (b).

(b)

Application for designation

(1)

In general

An application for designation as an economically distressed zone may be filed by a State or local government in which the population census tract to which the application applies is located.

(2)

Requirements

Such application shall include—

(A)

a Fiscal Plan submitted pursuant to section 201 of the Puerto Rico Oversight, Management, and Economic Stability Act, or

(B)

a strategic plan for accomplishing the purposes of this subchapter, which—

(i)

describes the coordinated economic, human, community, and physical development plan and related activities proposed for the nominated area,

(ii)

describes the process by which the affected community is a full partner in the process of developing and implementing the plan and the extent to which local institutions and organizations have contributed to the planning process,

(iii)

identifies the amount of State, local, and private resources that will be available in the nominated area and the private/public partnerships to be used, which may include participation by, and cooperation with, universities, medical centers, and other private and public entities,

(iv)

identifies the funding requested under any Federal program in support of the proposed economic, human, community, and physical development and related activities,

(v)

identifies baselines, methods, and benchmarks for measuring the success of carrying out the strategic plan, including the extent to which poor persons and families will be empowered to become economically self-sufficient, and

(vi)

does not include any action to assist any establishment in relocating from one area outside the nominated area to the nominated area, except that assistance for the expansion of an existing business entity through the establishment of a new branch, affiliate, or subsidiary is permitted if—

(I)

the establishment of the new branch, affiliate, or subsidiary will not result in a decrease in employment in the area of original location or in any other area where the existing business entity conducts business operations,

(II)

there is no reason to believe that the new branch, affiliate, or subsidiary is being established with the intention of closing down the operations of the existing business entity in the area of its original location or in any other area where the existing business entity conducts business operation, and

(III)

includes such other information as may be required by the Secretary and the Secretary of Commerce.

(c)

Period for which designations are in effect

Designation as an economically distressed zone may be made at any time during the 10-year period beginning on the date of the enactment of this section, and shall remain in effect with respect to such zone during the 15-year period beginning on the date of such designation.

(d)

Territories and possessions

The term State includes territories and possessions of the United States.

.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2018.