The New Markets Tax Credit (NMTC) program is a federal initiative in the United States aimed at stimulating economic development and investment in low-income communities. Enacted by Congress in 2000, the NMTC program is administered by the Community Development Financial Institutions (CDFI) Fund, which operates under the U.S. Department of the Treasury.
The primary objective of the NMTC program is to attract private capital to economically distressed areas, fostering job creation, community revitalization, and the provision of essential services. Through the program, investors receive tax credits against their federal income tax in exchange for making qualified equity investments in certified Community Development Entities (CDEs). These CDEs, in turn, deploy the invested capital to finance businesses and projects in low-income communities.
Investors in qualified CDEs receive a tax credit equal to 39% of the total qualified investment amount, distributed over seven years. This provides a significant financial incentive for private entities to invest in projects that might otherwise face challenges in attracting capital.
Community Development Entities (CDEs) are specialized organizations that are certified by the CDFI Fund to participate in the NMTC program. CDEs play a crucial role in sourcing, underwriting, and deploying NMTC investments to eligible businesses and projects. Ultimately, the program focuses on low-income communities that meet specific criteria based on poverty rates and other economic indicators. These target areas are designated as Qualified Census Tracts (QCTs) or eligible for the CDFI Fund’s other targeted programs.
NMTC investments can support a wide range of activities, including real estate development, business expansion, and the development of community facilities, such as healthcare centers, educational facilities, and retail spaces.
The NMTC program has proven to be a valuable tool for attracting private investment to underserved communities, creating jobs, and fostering sustainable economic growth. It has been utilized in various projects across the country, contributing to the revitalization of distressed neighborhoods and providing essential services to communities in need.
We invite individual investors and organizations to partner with Pacesetter CDE to effectively promote and utlize the New Markets Tax Credits Program to each stakeholders interests. Reach out to our team to be a part of the impactful work and projects exemplified in the links above.