State Tax Credits to Supplement Federal New Markets Tax Credits

Mississippi recently enacted a credit for equity investments in Community Development Entities (CDEs) that use the capital to make qualified low-income community investments in Mississippi. This Mississippi tax credit, by supplementing investments made under the federal New Markets Tax Credits (NMTC) program, provides an additional incentive for investors to choose Mississippi when selecting where to send their NMTC dollars. The Mississippi tax credit incentive, of course, is only valuable to the extent that investors have an appetite for Mississippi state tax credits.

We are assisting a client with passing a similar state tax credit in North Carolina, where a number of large banks and other institutional investors have a significant appetite for North Carolina tax credits. Due to the fact that many recipients of NMTC allocations have a choice as to where they make qualified NMTC investments, the addition of a state tax credit incentive may help North Carolina to increase its share of NMTC investments. Will the North Carolina legislature act to improve the climate for NMTC investments in North Carolina's low-income communities? If you are interested in supporting our efforts to pass a North Carolina state tax credit companion to the federal NMTC, or if you are interested in working with us to push similar state tax credit incentives in other mid-Atlantic states, please contact Peter Duffley.