New Markets Tax Credit Set to Expire
An important tax incentive for investments in economically distressed neighborhoods is set to expire at the end of 2013.
The New Markets Tax Credit (NMTC) is designed to increase the flow of capital and spur investment and job creation in communities with high unemployment and other measures of economic distress. The NMTC provides private investors with a 39 percent federal tax credit for investments made in businesses or economic development projects in some of the most distressed communities in the nation.
Since 2003, NMTC investments have directly created over 350,000 jobs — including more than 40,000 in Ohio – and leveraged $55 billion in capital investment to credit-starved businesses in communities with high poverty and unemployment rates. In Columbus, for example, the NMTC helped investors purchase land and construct a grocery store in a distressed neighborhood.
Legislation sponsored by Sens. Jay Rockefeller (D-WV) and Roy Blunt (R-MO) is currently pending in Congress to make the NMTC permanent. S. 1133, The New Markets Tax Credit Act of 2013, would extend the Credit indefinitely by making it a permanent part of the Internal Revenue Code, and enhance the potential impact of the Credit by increasing the annual NMTC allocation. However, Congress must pass the legislation before the end of the year in order for the NMTC to continue.