Treasury Announces $5 Billion in New Markets Tax Credits, Unveils Reform Plan
The U.S. Department of the Treasury has awarded $5 billion in New Markets Tax Credits (NMTC) to 104 community development entities nationwide, while simultaneously announcing major reforms aimed at refocusing the program on lasting economic revitalization in disadvantaged communities.
The allocation, announced on September 19, represents the 2023 round of the program, which provides investors with a 39% tax credit over seven years for equity investments in community development projects. More than 20% of the investments will target rural areas, with recipients spread across 35 states, Puerto Rico, and the District of Columbia.
Program Goes Permanent Under “One Big Beautiful Bill”
Treasury Secretary Scott K.H. Bessent highlighted the program’s new permanent status, secured through recent legislation. “Under President Trump’s leadership, the One Big Beautiful Bill made the NMTC program permanent. Investors, businesses, and communities now have the long-term certainty they need to plan ahead,” Bessent stated. “With the NMTC program now permanent, it is imperative that these federal incentives are focused on lasting job creation rather than the latest political trends.”
The program’s permanence marks a significant shift from its previous status, where it required regular congressional reauthorization. Since its inception, the Community Development Financial Institutions (CDFI) Fund has allocated a total of $81 billion through 1,667 awards over 20 rounds.
Reform Package Targets Economic Development Priorities
What’s changing about how these tax credits work? Quite a bit, according to Treasury officials.
The CDFI Fund, which administers the program, will modify allocation agreements to strengthen provisions for permitted uses and enhance monitoring of how awardees deploy the credits, according to program documents. The reforms also aim to ensure compliance with federal anti-discrimination laws.
Looking ahead, Treasury plans to prioritize four key areas: affordable housing development, small business growth, domestic manufacturing that creates reliable jobs, and rural hospitals and essential community health infrastructure. All recipients in the current round have committed to investing at least 85% of their allocations in areas of high distress or unemployment, noted the CDFI Fund.
Double Round Planned for 2024-2025
The Treasury has also announced plans for a double allocation round covering both 2024 and 2025, totaling $10 billion. Applications for this round opened on November 19, 2024, with a deadline of January 29, 2025, and allocations expected to be announced in fall 2025.
“The upcoming double round represents a significant opportunity for community development entities to secure tax credit authority for projects with lasting impact,” said an official familiar with the program. The CDFI Fund received 216 applications for this round.
How the Credits Work
The New Markets Tax Credit provides a substantial incentive structure for investors. Those who make qualified equity investments receive a tax credit equal to 39% of their investment spread over seven years—5% annually for the first three years and 6% annually for the final four years, explains the Tax Policy Center.
These investments flow through Community Development Entities to projects in low-income communities. The program has historically enjoyed bipartisan support for its role in channeling private capital into economically distressed areas.
With the program now permanently authorized, Treasury’s reform efforts signal a shift toward ensuring these tax incentives create lasting economic benefits rather than short-term gains. As Secretary Bessent put it, the focus is now squarely on “lasting job creation” in communities that need it most.
