$5 Billion New Markets Tax Credit Program Extended for 2020

December 2019

On December 20, 2019, President Trump signed a bill that extends the New Markets Tax Credit program through 2020 at an allocation level of $5 billion.

The New Markets Tax Credit program provides tax credits to investors that make equity investments in specialized financial intermediaries called Community Development Entities (CDEs), which in turn make investments into low-income communities. The credit totals 39 percent of the investor’s investment in the CDE and is claimed over a period of seven years. Investors typically invest in CDEs through a leveraged structure, enabling those investors to receive tax credits in amounts that exceed the amount of their net equity investment.

Prior to the extension, the program was scheduled to expire at the end of 2019. Its extension was included in Fiscal Year 2020 appropriations bill, H.R. 1865.

Herrick’s Affordable Housing & Community Development team is eager to answer your questions in this area and help you realize your plans for a successful New Markets Tax Credit transaction.

For more information on this issue or other related matters, please contact:

Peter Franklin at +1 212 592 1491 or [email protected]

© 2019 Herrick, Feinstein LLP. This information is provided to keep clients and interested parties informed of legal developments that may affect or interest them. The information is not intended as legal advice or legal opinion and should not be construed as such.