New Markets Tax Credit Program Extended Through 2025January 8, 2021
The New Markets Tax Credit program was extended through 2025 at an annual allocation level of $5 Billion by the Consolidated Appropriations Act of 2021, which was signed into law on December 27, 2020. Prior to the extension, the program was scheduled to expire at the end of 2020.
The New Markets Tax Credit (NMTC) 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.
The NMTC was established in 2000 and has financed more than 6,000 projects and created over 1,000,000 jobs in the United States, District of Columbia, and Puerto Rico.
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:
© 2021 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.