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July 16, 2020

Treasury awards $3.5 billion in New Markets Tax Credit program

On July 15, 2020, the Treasury Department announced $3.5 billion in tax credits under the latest round of the New Markets Tax Credit (NMTC) program. The amount includes awards to 76 organizations headquartered in 30 states and the District of Columbia.

The NMTC program, administered by Treasury's Community Development Financial Institutions (CDFI) Fund, was established in December 2000 by Congress. The program was designed to encourage investments into operating businesses and real estate projects located in low-income communities. It allows individual and corporate investors to receive a tax credit against their federal income tax for making qualified equity investments in investment vehicles called Community Development Entities (CDEs). An investor's credit totals 39% of the investment in a CDE and is claimed over seven years. Substantially all of the amount of investment must be used by a CDE to make qualified investments in low-income communities. In the previous 16 rounds, the CDFI Fund has allocated 1,254 awards totaling $61 billion in tax credit authority.

In the latest round, CDFI received a total of 206 applications, requesting a total of $14.7 billion. Of all the applicants, 76 CDEs (about 37% of the total applicant pool) received the $3.5 billion in allocations (about 24% of the total requested amount). The average allocation award in this round ranged from $15 million to $65 million. About 76% of the amounts awarded went to loans to, or equity investments in, business; 24% went to loans to, or equity investments in, real estate.


First, congratulations are due to all 76 successful CDEs. Second, now that the award has been announced, CDEs will be spending some time further evaluating pipeline and potential projects. It is incumbent on taxpayers with projects that could benefit from a sub-allocation of NMTCs to reach out promptly to CDEs that received awards. The CDEs are expected to place a significant emphasis on projects that directly benefit low-income populations in economic distress. Seventy-five successful CDEs have committed to providing at least 75% of their investments in areas with 1) multiple indicia of economic distress; 2) significantly greater indicia of economic distress than required by NMTC Program rules; or 3) high unemployment rates.

Third, CDEs will now also be looking towards the 2020 application round. No timetable has been set, but historically the application round opens two to three months following the release of awards. Taxpayers and potential CDEs should start considering their options for the 2020 application.


Contact Information
For additional information concerning this Alert, please contact:
New Markets Tax Credit Group
   • Michael Bernier (
   • Megan Knutson (
   • Mike Roney (