The New Markets Tax Credit (NMTC) was designed to increase the flow of capital to businesses and low income communities by providing a modest tax incentive to private investors. Over the last 15 years, the NMTC has proven to be an effective, targeted and cost-efficient financing tool valued by businesses, communities and investors across the country.
The NMTC expires on December 31, 2025. The New Markets Tax Credit Extension Act of 2021 (H.R. 1321), introduced by Reps. Sewell (D-AL), and Reed (R-NY), would extend the NMTC indefinitely. Senators Cardin (D-MD) and Blunt (R-MO) introduced S. 456, which is nearly identical to its House counterpart.
The Impact of New Markets Tax Credit Investments
- Between 2003 and Sept. 2020, $55 billion in direct NMTC investments were made in businesses and these NMTC investments leveraged more than $105 billion in total capital investment to businesses and revitalization projects in communities with high rates of poverty and unemployment.
- Between 2003 and 2015, the NMTC generated more than 1,000,000 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.