August 1, 2021

Volume XI, Number 213

Advertisement

July 30, 2021

Subscribe to Latest Legal News and Analysis

July 29, 2021

Subscribe to Latest Legal News and Analysis
Advertisement

NMTC Extended Through 2025 with $5 Billion Annual Appropriations

The New Markets Tax Credit (NMTC) program was extended through 2025 with a $5 billion annual appropriation as part of the Consolidated Appropriations Act, 2021, signed by President Trump on December 28, 2020. Before the extension, the NMTC was set to expire at the end of 2020.

The NMTC appropriation increased from $3.5 billion per year for calendar years 2010 to 2019 to $5 billion per year for calendar years 2020 through 2025. Additionally, the legislation permits any unallocated funds less than the $5 billion appropriation to be carried forward through 2030, instead of 2025 as under prior law.

The NMTC program was created to encourage investment in low-income communities (LICs) and grow businesses, create jobs and sustain healthy local economies through federal tax incentives. Investments eligible for the NMTC have included businesses in a variety of sectors including manufacturing, food, retail, health, technology, energy, education and childcare. According to the Community Development Financial Institutions Fund, the NMTC program has created or retained more than 830,000 jobs since 2003 and the program generates eight dollars of private investment for each dollar of federal spending.

The NMTC program provides a tax credit equal to 39% of an investor’s qualified equity investments (QEIs) in community development entities (CDEs) over seven years. A project must be located in a LIC or in certain high-migration rural counties to be eligible for the NMTC. LICs are defined as Census Tracts that have poverty rates of 20% or more or that have a median family income less than 80% of a relevant comparison area.

McDermott’s View: The extension of and increased appropriation for the NMTC program will create opportunities for businesses and project developers seeking funding from CDEs. Businesses and developers should begin exploring potential transactions and projects now. This is also a good time for tax equity investors to consider making new or increased investments in NMTC-eligible projects.

© 2021 McDermott Will & EmeryNational Law Review, Volume XI, Number 7
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Martha Groves Pugh, Federal Income Tax Attorney, McDermott Will Emery Law Firm
Counsel

Martha Groves Pugh is counsel in the law firm of McDermott Will & Emery LLP and is based in its Washington, D.C., office.  She focuses her practice on federal income tax issues with a particular emphasis on the nuclear and energy industries.  Marty has helped clients seek and receive many private letter rulings and has extensive experience in drafting legislative language for tax proposals. Her practice also includes tax planning for proposed transactions and advising clients on audits, appeals and litigation issues...

202-756-8368
Brian Moore Associate Washington, DC Tax  Federal Taxation  State & Local Tax  Tax Structuring
Associate

Brian Moore focuses his practice on US and international tax matters. While in law school, Brian served as an AmeriCorps JD Veterans Legal Assistance Intern for Legal Assistance of Western New York and he was an articles editor for the Yale Law and Policy Review. Prior to attending law school, he served as a research assistant for the White House Council of Economic Advisors where he assisted the chairman and members of the council in advising the president on tax policy and other public finance matters. Additionally, he was a research analyst for a global think tank and a research...

202-756-8246
Advertisement
Advertisement