Today, Reps. Terri Sewell (D-AL), Tom Reed (R-NY), Sens. Ben Cardin (D-MD) and Roy Blunt (R-MO) introduced the New Markets Tax Credit (NMTC) Extension Act of 2021. The legislation permanently extends NMTC at $5 billion in annual credit authority, adjusts that amount for inflation in future years and provides an exception from the Alternative Minimum Tax (AMT) for New Markets investments.
This legislation builds on recent important Congressional action in support of NMTC. In 2019, Congress increased the amount of credits available to $5 billion, a 44% increase and in the recently enacted Consolidated Appropriations Act, the NMTC was extended through 2025.
The credit recently received a five-year extension as part of COVID-relief, but establishing the NMTC as a permanent part of the tax code will provide certainty in delivering resources to low-income and marginalized communities, creating jobs, increasing economic opportunity and improving lives at a time when the economic frailty of our underserved communities has never been more apparent.
The projected annual impact of $25 billion in New Markets Tax Credits includes an estimated 690 new manufacturing expansions and industrial projects; 275 mixed-use projects combining housing, commercial, and social services; 255 new or improved health clinics, hospitals, and medical offices; and 775 investments in daycare centers, Boys and Girls Clubs, and other community facilities. It will also generate an estimated 590,000 jobs.
Established in 2000 in the Community Renewal Tax Relief Act (P. L. 106-554), the New Markets Tax Credit is a bipartisan effort to stimulate investment and economic growth in low-income urban neighborhoods and rural communities. Since then, the New Markets Tax Credit has financed more than 6,500 projects and created over one million jobs in all 50 states, the District of Columbia and Puerto Rico.
“Following devastating impacts from COVID-19, the New Markets Tax Credit is absolutely vital for many of America’s urban neighborhoods and rural communities and will provide billions of dollars for high-impact, community revitalization projects,” said Bob Rapoza, spokesperson for the NMTC Coalition. “Over the years, the credit has been instrumental in financing plant and equipment for small manufacturing businesses and patient flexible capital to other small businesses, hospitals, healthcare centers, homeless shelters and other transformative projects that improve communities, create jobs and economic opportunity. We appreciate the leadership of several Members of Congress in championing this effort for communities across the U.S., including Reps. Terri Sewell (D-AL) and Tom Reed (R-NY) and Sens. Ben Cardin (D-MD) and Roy Blunt (R-MO).”
For examples of how the NMTC is making an impact in each state, see the NMTC Coalition's newly released report, NMTC at Work in Communities Across America, featuring updated state statistics sheets on NMTC efficacy and more than 80 Tax Credit success stories.