The New Markets Tax Credits (NMTC) program was adopted in 2000, the result of a bipartisan effort to stimulate investment and economic growth in low income neighborhoods and rural communities.  The program was intended to provide access to patient capital to support the growth of businesses, create jobs and sustain healthy local economies.

Capital is attracted to eligible communities by providing private investors with a credit on their federal taxes for investments made in projects or businesses located in census tracts where the poverty rate is at least 20%, or where median family income does not exceed 80% of the area’s median income.

NMTC investors receive a tax credit equal to 39% of the Qualified Equity Investment (QEI) made in a Community Development Entity (CDE) over a seven-year period, receiving a 5% credit annually each of the first three years, and 6% in years four through seven. The CDE must then use substantially all of the Qualified Equity Investment to make investments into eligible projects or businesses in low income communities. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period.

Visit the CDFI Fund New Markets Tax Credit site to learn more about the program.