Please join Rural Development Partners (RDP) in encouraging Congress to make the New Markets Tax Credit (NMTC) a permanent part of the Federal Tax Code. The NMTC Program has been vital to the nation’s economy and low-income communities since established by Congress in December of 2000. NMTCs have spurred $8 of private investment for every $1 of Federal funding, revitalizing underserved rural and urban communities nationwide.
Through 2023, $76 billion in tax credit authority has been awarded by the CDFI Fund; more than $72 billion helped stimulate 8,000+ projects at an overall cost exceeding $136 billion. 1.2+ million jobs have been created in communities with a history of disinvestment… 76% in highly distressed regions (communities with low median incomes and high rates of unemployment), and greater than 30% of investments were made in qualified rural areas.
Bipartisan Support for Over 20 Years
As new congressional members come and go, RDP joins the many communities and businesses working to educate legislators on the progress and vitality of this valued program. The NMTC Program has had great bipartisan support since inception, recognized as a pivotal force in helping communities not only recover but grow stronger through job creation and business/community development. As communities grow, they become even more attractive to investors catalyzing a ripple effect that spurs further investments and revitalization, sometimes stretching beyond the local project community… a winning outcome for communities, businesses, our states, and the nation.
The NMTC program was initially authorized by Congress for seven years as part of the Community Renewal Tax Relief Act of 2000. Since then, Congress has extended the NMTC eight times, most recently through the Omnibus and COVID Relief and Response Act of 2020 at $5 billion in NMTC allocation authority, the largest extension in the history of the Credit scheduled to once again expire, December 31, 2025. Proposed bipartisan legislation (S.234 & H.R.2539) would extend the program indefinitely and expand both the allocation level and investor base.
How Does the NMTC Program Work?
The NMTC Program permits individual and corporate taxpayers to receive a non-refundable tax credit against their federal income tax in exchange for making equity investments in financial intermediaries known as Community Development Entities (CDEs). A CDE is a domestic corporation or partnership that provides loans, investments, or financial counseling in low-income urban and rural communities. CDEs apply to compete annually for New Markets Tax Credit allocation authority from the CDFI Fund. If received, NMTCs are carefully invested toward select, qualified projects expected to have maximum economic and catalytic impact in low-income communities. Projects must meet the specific criteria of Severely Distressed, Targeted Populations, or Qualified Non-Metro Counties. Since inception of the NMTC Program, the CDFI has completed 19 allocation rounds and issued 1,563 awards totaling $76 billion in tax allocation authority.
NMTCs often fill the financing gap when traditional financing falls short or is unavailable, such as in smaller rural communities located outside the preferred region of a traditional lender, or to spur jobs and economic development in communities desperately in need of economic stability. NMTC investments offer more favorable financing terms and conditions than are available through conventional financing… better rates, terms, and flexible provisions to encourage investments within low-income qualified regions. The tax credit provided to the investor typically totals 39% of the total investment cost and is claimed over a period of seven years.
Projects Financed with NMTCs
The flexibility of NMTCs support a wide range of development, both for-profit and non-profit businesses in manufacturing, food, retail, housing, health, technology, energy, education, and childcare… nearly everything that spurs economic development can be financed (examples). There are however exceptions, businesses not eligible for NMTCs include massage parlors, hot tub/suntan facilities, country clubs, racetrack/gambling facilities, stores whose principal purpose is the sale of alcoholic beverages for consumption off-premises, development/holding of intangibles for sale, private/commercial golf course, and certain farming businesses. A NMTC mapping tool can help determine if a prospective business or organization is in an eligible census tract.
“I strongly urge Congress to consider making the New Markets Tax Credit program a permanent part of the Federal Tax Code. The Credit’s successful track record of 20+ years demonstrates the potential of this program to positively impact low-income and rural communities across the nation for decades to come.” – Dan Helgeson, CEO of Rural Development Partners
Contact Your Legislator
Contact your state’s legislator to encourage permanent extension of the New Markets Tax Credit Program, creating long-term stability, increased competition, and better institutional infrastructure for our communities, states, and nation.
Rural Development Partners
Rural Development Partners is a CDE with a national service area. From 2004 through 2023, RDP has won twelve NMTC awards from the U.S. Treasury totaling $751.7 million, helping 50 businesses and nonprofits expand to provide quality jobs, economic impacts, and healthy food access in underserved communities. RDP seeks to serve and partner with businesses, non-profit organizations, communities, and government entities that share its mission to build public-private partnerships for catalytic job growth in rural America. To learn more about partnering with RDP, reference the RDP Lead Guide linked. Great impact stories can be found at RDP’s website and on the Video Page; follow us on social media at Facebook & LinkedIn.
