The New Markets Tax Credit program was authorized in the Community Renewal Tax Relief Act of 2000 as part of a bipartisan effort enacted by a Republican Congress and signed by President Clinton to stimulate investment and economic growth in low-income urban neighborhoods and rural communities. Over the past fifteen years, the federal NMTC program has proven to be an effective tool valued by job-creating businesses, communities, and investors across the country.
Jointly administered by the U.S. Treasury Department and the Internal Revenue Service (IRS), the NMTC program provides a credit against federal income taxes for investors who make Qualified Equity Investments (QEIs) in Community Development Entities (CDEs). Investors earn tax credits by investing in CDEs, which are specialty investment companies whose primary business is to make investments in low-income communities.
Based on the success of the program, Congress has reauthorized it multiple times and expanded its use on the Gulf Coast to encourage investment in the rebuilding efforts following Hurricane Katrina. In December 2015, Congress passed legislation which was signed by the President reauthorizing the New Markets Tax Credit program for five additional years.