The New Markets Tax Credit Extension Act of 2025 makes permanent a federal tax incentive program that encourages investment in economically distressed communities. Currently set to expire after 2025, the bill removes the expiration date so the credit can continue indefinitely, allowing investors to receive tax breaks for funding businesses and projects in low-income areas. The legislation also adds annual inflation adjustments to increase the credit amount each year after 2025, ensuring the incentive keeps pace with inflation. Additionally, the bill provides relief under alternative minimum tax rules for new investments made after December 31, 2024, ensuring investors can fully claim the credit. The changes take effect for the 2025 tax year and beyond, affecting investors, community development organizations, and businesses operating in underserved markets that rely on this program to attract capital.
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