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June 3, 2021

Biden's FY2022 budget proposes making new markets tax credit permanent

The Biden Administration's FY2022 budget and Treasury Green Book proposes making the new markets tax credit (NMTC) permanent, with authority to allocate $5 billion annually after 2025, when the program was scheduled to end.


The NMTC Program, established in 2000, allows for individuals and corporations to be allocated a credit under IRC Section 45D against federal income taxes for making qualified equity investments (QEIs) in community development entities (CDEs). The credit totals 39% of the investment and may be claimed by the investor over seven years. Generally, a CDE must invest at least 85% of its QEIs in qualified low-income community investments (QLICIs).

The Taxpayer Certainty and Disaster Relief Act of 2020, Section 112, extended the credits until December 31, 2025, and set the amount that can be allocated in credits through 2025 at $5 billion annually. In addition, the carryover of unused credits may be allocated until 2030 (from 2025).

Budget proposal

The budget proposal would permanently extend the NMTC, with a new allocation for each year after 2025. These annual amounts would be $5 billion in allocation authority, indexed for inflation after 2026.

According to the Green Book, "permanent extension of the NMTC would allow CDEs to continue to generate investments in low-income communities. This would also create greater certainty for investment planning purposes."


Making the NMTC program permanent has been a long sought-after goal of many in the NMTC industry. Permanency will provide certainty for economic opportunity, job creation, investment, increased service offerings and many other sought-after impacts for these distressed communities. The hope is that this will also allow for a more consistent schedule for awards and applications so communities can rely on this funding on a more consistent and reliable basis. A more reliable program should provide more stability for investors, CDEs, projects seeking funding and communities in need of the assistance.

Permanency would likely draw new interest in the program and make an already competitive program even more competitive. That is why the increase in the allocation authority to $5 billion annually will be important. With this likely increased interest, we would expect that new goals and jurisdictions will be pursued as CDEs aim to submit applications that stand out against the competition.


Contact Information
For additional information concerning this Alert, please contact:
Tax Credit Investment Advisory Services
   • Michael Bernier (
   • Megan Knutson (
   • Michael Roney (