Treasury Awards $10 Billion in New Markets Tax Credits

The U.S. Department of the Treasury’s Community Development Financial Institutions (CDFI) Fund has announced the recipients of the 2024-2025 New Markets Tax Credit (NMTC) allocation round, awarding a record $10 billion in allocation authority. This marks the largest NMTC allocation in the program’s history and follows the New Markets Tax Credit program’s recent permanency under the One Big Beautiful Bill Act (OBBBA), reinforcing the federal government’s long-term commitment to drive private investment into economically distressed communities. 

Since its inception, the New Markets Tax Credit program has played a significant role in community development and broader economic development across the United States by leveraging private capital to support businesses and community facilities in low-income areas. To date, the NMTC program has helped generate more than $143 billion in development financing, supported more than 8,900 businesses nationwide and contributed to the creation of more than 1.2 million jobs in underserved communities. As a federal tax incentive embedded in the Internal Revenue Code, the NMTC program encourages qualified equity investment from NMTC investors into community development entities that, in turn, provide below-market NMTC financing to projects in eligible census tracts. 

Historic 2024-2025 NMTC Allocation Highlights 

The 2024-2025 allocation continues the Treasury’s emphasis on rural and non-metro investment, building on recent reforms designed to increase capital flows into deeply distressed communities. Allocatees have committed to deploying at least 20% of their qualified equity investments in low income community locations outside major metropolitan areas, including rural hospitals, manufacturing facilities and small business hubs. This round is expected to support a wide range of NMTC projects, including rural healthcare facilities, small businesses, domestic manufacturing facilities, childcare and educational facilities, and other job-creating real estate projects that often face limited access to traditional financing. 

In total, allocation authority was awarded to 142 Community Development Entities (CDEs) operating across 41 states, the District of Columbia and Puerto Rico. These CDEs are certified community development organizations that raise private investment and deploy New Markets Tax Credit financing into qualified active low-income community businesses (QALICBs). Treasury data shows that many allocatees are committed to exceed minimum program requirements, directing capital to areas with high unemployment, persistent poverty and limited access to credit. As allocation agreements were recently released by the Department of the Treasury, CDEs are actively evaluating priority projects, structuring NMTC transactions and continuing to build their pipeline for future NMTC allocation rounds. 

How the New Markets Tax Credit Program Works 

Under the New Markets Tax Credit program, investors receive a federal tax credit equal to 39% of their qualified equity investment in a CDE, claimed over a seven-year compliance period. The CDE then uses that capital to provide NMTC loans or equity investments into eligible projects in low-income communities, typically at below-market interest rates and with more flexible terms than conventional bank financing. This structure allows projects to fill financing gaps that otherwise wouldn’t be feasible while supporting economic growth and job creation in distressed communities. 

To qualify, a project must generally be located in a designated low-income community census tract, and the operating business must meet QALICB requirements related to income, property and service tests. Many successful NMTC projects are manufacturing/industrial or community facilities, such as Federally Qualified Health Centers (FQHCs), charter schools, grocery stores, food banks, multi-service/workforce development facilities, or mixed-use real estate that directly serves low-income persons and supports long-term community development goals. 

Because NMTC allocation is finite and highly competitive, CDEs typically prioritize projects that demonstrate strong community impact, readiness to close and a clear need for NMTC funding as part of the capital stack. That often includes showing how the project will support job creation, expand services in a low-income community or catalyze additional private investment in a distressed community. 

What This NMTC Allocation Means  

For sponsors working in low-income communities, this $10 billion NMTC allocation presents a historic opportunity to secure flexible NMTC financing for real estate and operating business projects that align with community needs. In practice, this may include: 

• Manufacturing and industrial projects that bring quality jobs and long-term investment into persistent-poverty census tracts 

• Real estate projects such as health clinics, community facilities, grocery-anchored retail, workforce training centers or mixed-use affordable housing developments  

• Community-based projects sponsored by nonprofits, including schools, childcare centers and social service facilities that serve low-income individuals and families 

Many of these projects are difficult to finance using traditional debt sources alone, especially in distressed or rural markets. NMTC financing can fill a critical gap by bringing in NMTC investors and equity investment that lowers the overall cost of capital to the project, often in combination with other tax credits or incentives. As the OBBBA made the New Markets Tax Credit program permanent, developers and nonprofits can now think about NMTC investment strategies on a longer-term basis rather than planning around periodic reauthorization. 

Positioning Your NMTC Project for Success 

Given the complexity of NMTC transactions, it’s important for project sponsors to begin NMTC planning early, ideally while assembling the broader capital stack and before major construction or acquisition milestones. Competitive NMTC projects usually demonstrate: 

• A strong location in a qualifying low-income community census tract 

• Clear, measurable community impact, including job creation, access to essential services or economic growth in an underserved community 

• A defined NMTC transaction structure, including projected sources and uses, NMTC leverage and anticipated NMTC investor participation 

• A realistic timeline that aligns with CDE deployment deadlines and allocation agreements 

How Creative Planning Can Help 

At Creative Planning, our Credits & Incentives team works directly with sponsors to navigate the New Markets Tax Credit program from start to finish, including early feasibility, the closing process and the compliance period. We assist clients with analyzing eligibility and maximizing program benefits, engaging and sourcing NMTC allocation with our CDE partners, structuring NMTC transactions and moving projects toward execution. Our focus is on delivering value to sponsors by structuring NMTC projects that enhance project feasibility, improve overall ROI and strengthen capital stack. We work to position transactions to meet program requirements, attract NMTC capital and achieve meaningful community impact.

Beyond NMTC strategy, Creative Planning also pursues the same value-driven approach when identifying and securing other federal, state and local credits and incentives that can further reduce project costs and enhance ROI, ensuring no potential benefit isn’t procured. For additional background on how to think strategically about tax incentives, Creative Planning’s resources on proactively seeking business tax credits and recent business tax changes under the OBBBA provide helpful context for integrating NMTC funding into a broader tax credit strategy. 

If you’d like to explore whether your project may be a fit for New Markets Tax Credit financing, reach out to our team. We can help assess eligibility, timing considerations and the potential benefits to your project as well as coordinate with your existing advisors or capital providers as needed. For more detail on structuring NMTC investments and maximizing the benefit of the New Markets Tax Credit program, you can also review our article, Tips for Maximizing Your New Markets Tax Credit.