New Markets Tax Credit (NMTC)
A credit for investments in Community Development Entities that serve low-income communities and stimulate economic growth.
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This is a simplified estimate. Actual savings depend on your complete tax situation.
Eligibility
Investors in Community Development Financial Institutions
Requirements
- 1Must invest through a qualified CDE
- 2Investment must serve low-income communities
- 3Credit claimed over 7 years
Required Tax Forms
Understanding the New Markets Tax Credit (NMTC)
A credit for investments in Community Development Entities that serve low-income communities and stimulate economic growth.
Tax credits directly reduce the amount of tax you owe, making them more valuable than deductions which only reduce taxable income. On average, taxpayers save approximately $200,000 with this credit.
To claim this credit, you will need to file Form 8874 and Form 3800 with your annual tax return. Make sure you meet all eligibility requirements and keep documentation of qualifying expenses or activities.
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Frequently Asked Questions
What is the New Markets Tax Credit (NMTC)?
A credit for investments in Community Development Entities that serve low-income communities and stimulate economic growth.
How much is the New Markets Tax Credit (NMTC) worth?
The average savings from the New Markets Tax Credit (NMTC) is approximately $200,000 per year, depending on your specific situation.
Who is eligible for the New Markets Tax Credit (NMTC)?
Investors in Community Development Financial Institutions. Key requirements include: Must invest through a qualified CDE; Investment must serve low-income communities; Credit claimed over 7 years.
What forms do I need to claim the New Markets Tax Credit (NMTC)?
You will need to file Form 8874, Form 3800 with your tax return to claim this credit.
Is the New Markets Tax Credit (NMTC) refundable?
Most business and energy tax credits are nonrefundable but can be carried forward to future tax years.
Can I claim the New Markets Tax Credit (NMTC) with other tax credits?
Yes, in most cases you can claim the New Markets Tax Credit (NMTC) along with other eligible tax credits. However, some credits have interactions that may reduce the benefit. Consult a tax professional for your specific situation.