About New Markets Tax Credits
About the New Markets Tax Credit
The New Markets Tax Credit (NMTC) incentive was created through the Community Renewal Tax Relief Act of 2000 and the program is administered by the Department of Treasury’s CDFI Fund.
Its mission is to encourage the investment of private and patient capital in low-income communities.
The federal NMTC program has incentivized investment activity in low-income communities for over 20 years. Here's an overview of how the investment works:
- Investors receive a credit against federal income taxes for making NMTC investments into certified community development entities. The credit equals 39 percent of the investment amount and is earned over seven years.
- The NMTC investment is combined with other private capital to create more attractive lending products to qualified businesses in low-income census tracts than what is commonly available.
- NMTC capital can be used to finance operations or real estate and are used in many types of projects, including large commercial developments, community facilities, health centers, office buildings, arts centers, day care centers, small- business expansions, and homes for sale.
- From 2003 through 2020, the program has parceled out credits worth $26 billion*
- 43 percent of the US’s roughly 73,000 census tracts qualify for NMTC investments*
- There are qualified areas in all 50 states, the District of Columbia, Puerto Rico, and certain U.S. Territories
*Source: Tax policy Center