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Abstract: 

The New Markets Tax Credit (“NMTC”) program was enacted in December 2000 as part of the Community Renewal Tax Relief Act. The primary purpose of the program is to bring low-income communities into the economic mainstream by stimulating private investment. The program is founded on the idea that there are good economic opportunities in low-income communities and that a relatively small federal tax credit can draw private sector investors into a “new market.” The NMTC provides a moderate federal tax credit to stimulate investment and growth in low-income communities that have been ignored by traditional investors. By lowering the risk threshold on potential transactions in distressed communities, the program facilitates access to new patient investment capital to stimulate business and economic development. There is a good chance Congress will extend the NMTC program into the future, so that it will continue to remain an attractive investment option for banks and other investors.

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Affiliations:  1: Venable LLP.