NMTC Extension legislation
NMTC extension legislation was introduced in the House and Senate on February 15, 2017. Congressmen Tom Reed (R-NY) and Richard Neal (D-MA), the Ranking Member on the committee, introduced the House bill (H.R. 1098), are the lead sponsors.
Senators Roy Blunt (R-MO) and Ben Cardin (D-MD) introduced the Senate bill (S. 384) along with two other colleagues.
Fact Sheet: The New Markets Tax Credit Extension Act of 2017 (S. 384/H.R. 1098)
- S. 384: Introduced in the Senate by Senators Blunt (R-MO) and Cardin (D-MD).
- H.R. 1098: Originally introduced in the House by Representatives Tiberi (R-OH), Reed (R-NY) and Neal (D-MA). Rep. Tiberi has since retired and Reps. Reed and Neal are the co-leads.
- Provides an indefinite extension of the New Markets Tax Credit (NMTC).
- Provides an increase in the annual NMTC allocation and indexes the allocation to inflation in future years.
- Provides Alternative Minimum Tax (AMT) relief for NMTC investments thereby ensuring NMTC investors the same consideration under the AMT as is currently provided to investors in many other federal tax credits.
- Senators wishing to cosponsor S. 384 may contact Tracy Henke (Tracy_Henke@blunt.senate.gov) with Senator Blunt or Beth Bell (Beth_Bell@cardin.senate.gov) with Senator Cardin.
- Representatives wishing to cosponsor H.R. 1098 may contact Elise Tollefson (Elise.Tollefson@mail.house.gov) with Rep. Reed or Aruna Kalyanam (email@example.com) with Rep. Neal.
History of the New Markets Tax Credit and How it Works
The NMTC was authorized in the Community Renewal Tax Relief Act of 2000 (PL 106-554) as part of a bipartisan effort to stimulate investment and economic growth in low income urban neighborhoods and rural communities that lack access to the patient capital needed to support and grow businesses, create jobs, and sustain healthy local economies. The NMTC program attracts capital to eligible communities by providing private investors with a federal tax credit for investments made in businesses or economic development projects located in some of the most distressed communities in the nation – census tracts where the individual poverty rate is at least 20 percent or where median family income does not exceed 80 percent of the area’s median income.
NMTC investors receive a tax credit equal to 39 percent of the total Qualified Equity Investment made in a Community Development Entity with the Credit realized over a seven-year period, amounting to 5 percent annually for the first three years and 6 percent in years four through seven. If an investor redeems the NMTC investment before the seven-year term has run its course, all Credits will be recaptured with interest.
The Impact of New Markets Tax Credit Investments
- Between 2003 and 2015, $42 billion in direct NMTC investments were made in businesses and these NMTC investments leveraged nearly $80 billion in total capital investment to businesses and revitalization projects in communities with high rates of poverty and unemployment.
- The NMTC generated about 10,000 jobs at a cost to the federal government of less than $20,000 per job.
- By law, all NMTC investments must be made in economically distressed communities. However, more than 72 percent of all NMTC investments have been in communities exhibiting severe economic distress, including unemployment rates more than 1.5 times the national average, a poverty rate of 30 percent or more, or a median income at or below 60 percent of the area median.
 CDFI Fund’s FY 2015 Agency Financial Report
 NMTC Coalition Estimate
 NMTC Economic Impact Report, NMTC Coalition (December 2017).