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Tax Blog

The New Markets Tax Credit

The US Department of the Treasury announced a new $7 billion allocation in the New Markets Tax Credit (NMTC). The goal of the program is to aid low income communities. Outcomes have included investment in non-metropolitan areas, job creation, expansion of minority owned businesses, extended healthcare and extension of healthy food throughout food deserts.

The benefit is generally 20-25% of the project and 120 organizations have received tax credit allocation authority last year. The requirements of the program are contained in the Internal Revenue Code, Section 450. Large scale agriculture, housing, liquor store and other sin tax businesses do not qualify for this credit.

One factor with this credit is actually the state in which the community development entity is in. The targeted states include Texas, Georgia, Nevada, Tennessee, Arkansas, Florida, Kansas, West Virginia, Utah, and Wyoming. These states have historically underutilized the program. It is worth noting all of these states’ electoral votes went to President-Elect Donald Trump in the 2016 election. Additionally, 9 of the 10 states have Republican governors, they exception being West Virginia.

Comments: We make no judgment regarding the politics of each state; however, we would like to recommend to any business wanting to receive a grant in any of the aforementioned states, the NMTC is a wonderful way to help communities and it can be profitable. The NMTC has been a wonderful thing, it is time to continue and expand on an idea that has had tangible benefits to the communities they have been used in.

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