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Navigating a rewarding financing tool: New Markets Tax Credit
Credits & Incentives talk with Deloitte
“Credits & Incentives talk with Deloitte,” is a monthly column by Kevin Potter of Deloitte Tax LLP, featured in the Journal of Multistate Taxation and Incentives, a Thomson Reuters publication. The September edition co-authored with Jarick Poulson of Deloitte Tax LLP, gives an overview of the New Markets Tax Credit (NMTC) and how it can impact a business.
Before the end of the year, the US Treasury Department will announce a total of $7 billion in New Markets Tax Credit (NMTC) awards to Community Development Entities (CDEs), each with a tailored mission of stimulating investment in low-income urban neighborhoods and rural communities1. This announcement will mark the largest award in the NMTC program's 15-year history.
In a 2015 announcement, US Treasury Secretary Jacob J. Lew said, "Every community deserves a chance to succeed, and the . . . tax credit allocation authorities announced today will go to community development organizations that will make much needed private sector investments in businesses and real estate projects located in the nation's distressed urban and rural communities. Along with these investments come jobs, vital services, and opportunities where they are needed the most."2
Over its history, the NMTC program has contributed to meaningful and transformative impacts on qualifying, low-income community businesses and the communities in which they operate. The program has been named multiple times as one of the top contenders for the prestigious Innovations in American Government Award. In the program's first 10 years, NMTC investments generated nearly $118 billion in economic activity and created 744,267 jobs in low-income rural and urban communities.3
Although $7 billion of investments in one year is a sizable amount, many companies may not have heard about the NMTC program. This introduction is intended to offer an overview and practical insights into seeking the benefits of NMTC financing.
For a full list of references, please view the PDF.