New Market Tax Credit Program (Federal)

The New Market Tax Credit (NMTC) Program incentivizes community development and economic growth through the use of tax credits that attract private investment to distressed communities. The NMTC Program attracts private capital into low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax in exchange for making equity investments in specialized financial intermediaries called Community Development Entities (CDEs).

The Treasury Department’s Community Development Financial Institutions (CDFI) Fund allocates tax credit authority to CDEs who to offer tax credits to investors in exchange for equity in the CDE. Using the capital from these equity investments, CDEs can make loans and investments to businesses operating in low-income communities on better rates and terms and more flexible features than the market. In exchange for investing in CDEs, investors claim a tax credit worth 39% of their original CDE equity stake, which is claimed over a seven-year period.

CDEs have approved service areas that range from local to national in scale. CDEs that may have available NMTC allocation authority remaining, and the amount of Qualified Equity Investments not yet raised, can be identified on the CDFI Fund website.

NMTC-qualified low income Census Tracts exist in all 5 counties of the Austin MSA and can identified with the CDFI Fund’s mapping tool.