The New Market Tax Credit Program is an initiative of the Community Development Financial Institutions Fund, a department of the U.S. Treasury, in support of its mission to expand the capacity of financial institutions to provide capital, credit, and financial services in underserved markets. Tax payers receive a Federal Tax Credit for making qualified equity investments in designated Community Development Entities (CDE).
For a developer, participating in a NMTC program means access to loans lower than the market rate, subordinated debt, and enhanced equity arrangements. The tax credit totals 39% over a seven year period, and the investment must in turn be used by the CDE to substantially provide investments in low-income communities. A low-income community is any population census tract in which at least 20% of its population is at poverty level, or median family income (MFI) is at or below 80% of the area MFI. Ideal projects leverage additional sources of funding.
For a detailed explanation of the New Markets Tax Credit Program, please click FWNMRF
NMTC Documents of Interest