Overview:
The New Markets Tax Credit (NMTC) program is operated through the Community Development Financial Instituntion (CDFI) Fund, a division of the US Department of the Treasury.  Passed into law in 2000, NMTCs were designed to spur economic development investments in low-income communities.  NMTCs provide investors with a credit against federal income tax liability for a qualified investment.

NMTCs are allocated annually by the CDFI Fund based upon Congressional appropriations.  NMTCs are not awarded on a project-by-project basis; rather they are allocated to qualified Community Development Entities (CDEs) under a competitive application process.  These CDEs then offer the credits to taxable investors in exchange for stock or a capital interest in the CDEs.

How it Works:
The credit provided to the investor totals 39% of the cost of the investment and is claimed over a seven-year credit allowance period.  All of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities. In each of the first three years, the investor receives a credit equal to five percent of the total amount paid for the stock or capital interest at the time of purchase. For the final four years, the value of the credit is six percent annually. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period.

Eligibility:
To qualify as a CDE, an entity must be a domestic corporation or partnership that: 1) has a mission of serving, or providing investment capital for, low-income communities or low-income persons; 2) maintains accountability to residents of low-income communities through their representation on a governing board of or advisory board to the entity; and 3) has been certified as a CDE by the CDFI Fund.

If you have questions related to NMTC in the City of Cincinnati, please contact:

Stephen Dronen, Community Development Analyst
Phone:   (513) 352-6126
Fax:   (513) 352-6257
stephen.dronen@cincinnati-oh.gov