Friday, March 23, 2012
Donald J. Marples
Section Research Manager
The New Markets Tax Credit (NMTC) is a non-refundable tax credit intended to encourage private capital investment in eligible, impoverished, low-income communities. NMTCs are allocated by the Community Development Financial Institutions Fund (CDFI), a bureau within the United States Department of the Treasury, under a competitive application process. Investors who make qualified equity investments reduce their federal income tax liability by claiming the credit. The NMTC program, enacted in 2000, is currently authorized to allocate $33 billion through the end of 2011. To date, the CDFI has exhausted through 664 awards totaling $33 billion in NMTC’s allocation authority.
The 111th Congress extended and modified the NMTC program authorization. The American Recovery and Reinvestment Tax Act of 2009, P.L. 111-5, increased the NMTC allocation for 2008 and 2009 to $5 billion from $3.5 billion. Further, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) extended the NMTC authorization through 2011 at $3.5 billion per year.
In the 112th Congress H.R. 2655 and H.R. 3224 would both extend the NMTC through 2016 with allocation authority of $5 billion $10 billion, respectively.
Date of Report: March 7, 2012
Number of Pages: 11
Order Number: RL34402
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Posted by Penny Hill Press, Inc. at 10:09 AM