About the NMTC

After decades of cuts to community development grant programs, communities increasingly count on the New Markets Tax Credit to make important investments possible.


The New Markets Tax Credit (NMTC) is an important source of financing for businesses and community facilities in America’s most distressed rural and urban communities. Congress authorized the NMTC in 2000 to bring down the cost of capital in communities outside of the economic mainstream. Taxpayers receive a 39 percent tax credit (taken over seven years) for qualified investments into Community Development Entities (CDEs), organizations with a track record of loans and investments in underserved areas. CDEs use the proceeds of those investments to finance business expansions, community facilities, and other projects prioritized by communities.

After decades of cuts to community development grant programs, communities increasingly count on the New Markets Tax Credit to make important investments possible.

The New Markets Tax Credit (NMTC) is an important source of financing for businesses and community facilities in America’s most distressed rural and urban communities. Congress authorized the NMTC in 2000 to bring down the cost of capital in communities outside of the economic mainstream. Taxpayers receive a 39 percent tax credit (taken over seven years) for qualified investments into Community Development Entities (CDEs), organizations with a track record of loans and investments in underserved areas. CDEs use the proceeds of those investments to finance business expansions, community facilities, and other projects prioritized by communities.

Economic Impact (2003-2018)

Independent Evaluation

Summit Study

An independent compliance review by Summit Consulting found that program participants are significantly lowering the cost of capital for borrowers in low-income communities and exceeding statutory and regulatory requirements for the targeting of economic distress.

How It Works Infographic: Click to Expand
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