The Basics of New Markets Tax Credit Permanence

What is the New Markets Tax Credit Program?

Simply put, the New Market Tax Credit (NMTC) Program is a government tool that encourages investments in communities that need economic growth. The government gives Community Development Entities, which include CDFIs, the authority to leverage specialized tax credits. These tax credits are similar to coupons that lower the amount an individual or organization owes in taxes. Investors purchase these tax credits from CDEs, who in turn use that money to provide loans to local businesses and projects in their communities. The goal of this program is to bring money, jobs, and opportunities to communities that have historically had fewer resources available.

The program was created as many low-income communities have historically struggled to attract private investment. Traditional lenders often view these projects as too risky or not profitable enough, making it difficult for businesses and organizations to secure the financing they need. The NMTC Program helps bridge that gap by making it more attractive for private investors to support projects that might not otherwise receive funding. To read more about how CDFIs have helped develop the Kansas City community, check out our Impact Page.

The Permanence of NMTC

The New Markets Tax Credit Program was created as part of the Community Renewal Tax Relief Act of 2000 and signed into law by President Clinton. Until 2025, the NMTC Program was not permanent. Every so often, Congress reviewed its impact and decided whether or not it should be extended. The lack of certainty around the program’s future made it harder for organizations to plan larger developments and limited the impact of the program.

However, on July 4th, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, ensuring the stability of this program. Over the last decade and a half, the credits have had a very successful history, turning $54 billion in tax credits into an investment of more than $400 billion in low-income communities, and provided these areas with many job-creating investments and community facilities.

Examples in Our Community

New Markets Tax Credits have had a lasting impact in the Kansas City community in a variety of ways, supporting the growth of schools, community centers, food shelters, and more. One of our members, IFF, with the help of US Bank, financed the Brookside Charter School. This institution ensures students feel empowered in their daily lives by creating a safe environment where they learn by working side-by-side with staff to prepare leaders for today’s society. The total cost for this project amounted to over $11.4 million, with the NMTC amount totaling $10.23 million.

More recently in 2023, another member, Central Bank of Kansas City, partnered with the National Community Investment Fund to develop Welcome House, a high-quality residential program for men struggling with alcoholism and addiction. An undertaking like this involved the construction of a 28 thousand square-foot, three-story building on the existing parking lot of the functionally obsolete 80-bed facility. This project amounted to $14 million in New Market Tax Credits, with the overall cost nearing $16 million.

Summary & Overall Importance

The New Markets Tax Credit Program has been one of the most effective tools for bringing capital into communities that are often overlooked by traditional finance. By encouraging investment through tax credits, the NMTC program helps CDEs and CDFIs finance projects that create jobs, strengthen local businesses, and expand access to important services. Making the NMTC Program permanent gives communities, investors, and community lenders the confidence to plan for the future instead of wondering whether the program will continue from one congressional extension to the next. That certainty means more long-term projects can move forward, bringing lasting economic opportunity to neighborhoods that need it most. For Kansas City and communities across the country, the permanence of the New Markets Tax Credit Program represents more than a policy change—it is a long-term commitment to creating stronger local economies and expanding opportunities for future generations.

Our Impact

The KC CDFI Coalition as a whole has been awarded over $965 million in New Markets Tax Credits since 2002, helping communities come together by providing capital and resources to our local entrepreneurs and leaders.