Small Block

Capital Deployment Risk · Tax credit recapture

New Markets Tax Credits

Definition

For the investor, the new markets tax credit can be taken back: if, within the 7-year period beginning when the investment is issued, the entity ceases to be a qualified community development entity, stops using the proceeds as required, or redeems the investment, the investor's tax is increased by the credit recapture amount.[1]

Federal law

  1. Community Renewal Tax Relief Act of 2000 (H.R. 5662, enacted by Consolidated Appropriations Act, 2001, § 1(a)(7)), Pub. L. 106-554, § 1(a)(7) [H.R. 5662, § 121], 114 Stat. 2763A-605. Created the new markets tax credit (26 U.S.C. § 45D). Official text: govinfo.gov, U.S. Government Publishing Office.
  2. One Big Beautiful Bill Act (popular name), Pub. L. 119-21, § 70423, 139 Stat. 235. Made the annual new markets tax credit allocation permanent. Official text: govinfo.gov, U.S. Government Publishing Office.

Also defined as