New Markets Tax Credit allocation awards, $3.5 billion available

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Overview

Each year the US Department of the Treasury, through the Community Development Financial Institutions (CDFI) Fund, awards allocation authority to Community Development Entities (CDEs). These CDEs act as intermediary vehicles for the issuance of awards and loans to businesses located in distressed communities.

Companies contemplating a new location, expansion of a current location, and/or investment in new assets should consider the potential value available through the New Markets Tax Credit program. Benefits include up-front cash for real estate or operational projects.

The takeaway

The NMTC program offers businesses the potential to receive between 15% to 25% of cash benefits for qualified projects, thereby encouraging development in severely distressed areas and increasing project return on investment.

While projects in all states are likely to receive funding under the program, for this round many CDEs may focus on projects located in states declared underserved by CDFI including: Alabama, Florida, Georgia, Indiana, Kansas, Nevada, Tennessee, Texas, West Virginia, and Wyoming.

Care should be taken to navigate the competitive and complex process of securing NMTC allocations.  Among the many considerations, businesses must:

  • Determine business and  location eligibility
  • Understand the impact of the project in the community
  • Identify available allocation from CDEs at both the federal and state level
  • Structure and finance projects.

Contact us

Peter Michalowski

Peter Michalowski

State and Local Tax Leader, PwC US

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