New Markets Tax Credit: An Introduction

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
Price: $29.95

Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.