More About New Markets Tax Credits - Baker Tilly

The Community Development Financial Institutions (CDFI) Fund today sent a letter to brand-new markets tax credit allocatees with calendar year (CY) 2015-2020 allowance arrangements revealing a modification to extend the 36-month lookback duration to Dec. 31, 2022. The lookback duration formerly included deals closed by Might 31. The CDFI Fund modification uses to documented affordable expenses described in Section 3.

Introduction Historically, low-income neighborhoods experience an absence of financial investment, as evidenced by vacant industrial properties, outdated manufacturing centers, and inadequate access to education and health care service providers. The New Market Tax Credit Program (NMTC Program) aims to break this cycle of disinvestment by drawing in the private investment required to revitalize struggling regional economies.

The credit totals 39% of the initial financial investment amount and is declared over a period of 7 years. To find out more, please see our (English/ Espaol). Research It Here of the NMTC Program, consisting of information on qualified activities, can likewise be discovered in the Intro to the NMTC Program discussion.

For more details on CDE Accreditation, please see our CDE Certification page CDE Accreditation is meant for community development funding intermediaries. Organizations looking for NMTC-enhanced financing needs to not look for CDE Certification, but need to rather get in touch with CDEs directly. To locate a CDE serving your location, please visit our NMTC Awardee States Served map. Download our Notification of Allotment Availability for details on eligibility.

The New Markets Tax Credit (NMTC) was developed in 2000. Congress authorizes the amount of credit, which the Treasury then designates to certified applicants. From 2003 through 2020, the program has shelled out credits worth $26 billion (in 2020 dollars). The NMTC has supported more than 5,300 tasks in all 50 states, the District of Columbia, and Puerto Rico through program year 2016.

In the last few years, all applicants have actually pledged to place at least 75 percent of their NMTC jobs in "significantly distressed" census tracts. The credit is currently set to end in 2021, though Congress has actually extended it numerous times over its life time. NMTC investors provide capital to community advancement entities (CDEs), and in exchange are awarded credits against their federal tax commitments.