Support Growing for New Markets Tax Credit Extension

The House Ways and Means Committee is studying nearly all of the so-called tax extenders in advance of an expected extension in December 2012 as well as fundamental tax reform, which could come as early as 2013. The Select Revenue Measures Subcommittee is expected to hold a second hearing on tax extenders in early June, although a date has yet to be announced.

Lawmakers have said that tax breaks that meet certain metrics like job creation and capital formation have a great chance of surviving, but have refused to indicate which extenders they deem to be safe.

The NMTC was originally enacted in 2000 as part of the Community Renewal Tax Relief Act (Pub. L. No. 106-554), and its initial allocation authority was for a total of $15 billion from 2001 through 2007.

The program has been renewed a couple of times, most recently as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Pub. L. No. 111-312), which provided an allocation limit of $3.5 billion for each of 2010 and 2011 and extended through 2016 the carryover period for unused credits.

It provides a 39 percent tax credit of the cost of the qualified equity investment in economically distressed or low-income communities and is claimed over a seven-year period.

If lawmakers choose to extend the NMTC, it would most likely be folded into a larger bill extending dozens of expired and expiring tax breaks.

President Obama proposed to extend and modify the tax credit in his fiscal year 2013 budget submission, choosing to authorize NMTC allocations of $5 billion each for 2012 and 2013.