An Analysis of New Markets Tax Credits

  • December 7, 2011
  • • Written by:  J. Russell Hardin, Ph.D. CPA, Thomas G. Noland, Ph.D., CPA 

Winter 2011/2012, Vol. 36, No. 3

Abstract: Conventional access to credit and investment capital for developing small businesses, creating and retaining jobs, and revitalizing neighborhoods is often limited in economically distressed communities or in communities with large low-income populations. This article takes a look at how the Federal New Markets Tax Credit (NMTC) encourages investors to make investments in impoverished, low-income communities that traditionally lack access to capital. The NMTC provides investors (individuals, financial institutions, other corporations, etc.) with a tax credit for investing in communities that are economically distressed or consist of low-income populations, and targets debt and equity capital to businesses or organizations situated in similarly distressed communities.