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Tax Credit Finance Resource Center

Tax credit programs allow businesses and investors to claim tax credits for committing resources to a project or business. Several different types of tax credit programs exist at the federal and state levels to encourage investments in redevelopment projects, affordable housing, specific industries, and communities of all sizes.

The Tax Credit Finance Resource Center provides information about the various tax credit programs available and how they can be used within the context of development finance. Tax credits directly reduce a tax payer's tax liability and are not a deduction, thus making them a very desirable and effective tool. They can be used in urban, rural and suburban communities, and in some cases on a regional basis. They can also provide a targeted impact by addressing many different community sectors, such as low-income neighborhoods, historic districts and under-served markets that present opportunities for new investment.

There are three main federal tax credit programs: New Markets Tax Credits, Historic Rehabilitation Tax Credits and Low-Income Housing Tax Credits. There are also numerous state tax credit programs available, which can be found in the map provided in the resource center below.

In order to receive a tax credit, an investor must first demonstrate that an investment has been made. Such a resource commitment could be an investment in a bricks and mortar real estate project or a cash investment in a business. The distributor of the tax credit is authorized to issue credit based on the actual outlay of resources as evidenced by the investor. Tax credits can be used for several purposes in development projects: to provide an increased internal rate of return for investors, to reduce the interest rates on a particular financing package, and perhaps most importantly, to provide a repayment method for investors in place of cash. In the latter case, the credits can often be sold on the secondary market to generate income.

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-Understanding Tax Credits

Interested in learning more about Tax Credits? This section contains resources on understanding the basics of Tax Credits.

The Low Income Housing Tax Credit: How It Works and Who It Serves
The Low-Income Housing Tax Credit (LIHTC) is a complex but crucial tool for the production and preservation of affordable rental housing. In this report, the Urban Institute outlines the basics of the LIHTC program, including how it works, the various partners involved, how financing is structured, how investors benefit from the program, and who lives in the LIHTC properties.
Historic Tax Credits - Community Development Fact Sheet
This Community Developments Fact Sheet summarizes certain aspects of the Historic Tax Credit (HTC) program for national banks and federal savings associations (collectively, banks) and explains how HTCs may be used to support a bank’s affordable housing and community development strategies.
New Markets Tax Credit Summary Report - FY 2003 to FY 2017Members only Login
The CDFI Fund requires all CDEs that have been awarded NMTC allocations to submit an annual report detailing how they invested Qualified Equity Investment (QEI) proceeds in low-income communities. The Summary Report categorizes all CDE investments utilizing the North American Industry Classification System (NAICS) from FY 2003 - FY 2017.
Introduction to the New Markets Tax Credit Program - CDFI Fund
This 2018 presentation from the CDFI Fund provides an introduction to the New Markets Tax Credit program.

-Resources

View all Tax Credit Finance Resources

-Federal Historic Tax Credit (HTC) Resources

Federal Tax Incentives for Rehabilitating Historic Buildings - FY20 Annual ReportMembers only Login
The Federal Historic Preservation Tax Incentives Program, administered by the National Park Service in partnership with the State Historic Preservation Offices, is the nation’s most effective program to promote historic preservation and community revitalization through historic rehabilitation. The 2020 annual report for the Historic Tax Credit program shares accomplishments and select projects from the past year.
CDFA // BNY Mellon Development Finance Webcast Series: Historic Preservation FinancingMembers only Login
During this installment of the CDFA // BNY Mellon Development Finance Webcast Series, we will explore the challenges of historic preservation projects and how financing tools can be combined to make preservation projects possible.
Opportunity Zone Development Profile - Ox Fibre ApartmentsMembers only Login
Ox Fibre Apartments will bring 83 new affordable apartments to Frederick, MD—a growing community located within one hour of both Washington, D.C. and Baltimore. Layering Opportunity Zones equity with state LIHTC, federal Historic Tax Credits (HTC), and additional sources of debt will allow the developer to bring a 19th century warehouse back to life while providing much-needed one-, two-, and three-bedroom homes at price points affordable to current residents.
Joint Committee on Taxation Report: Overview of Selected Provisions for Financing Infrastructure InvestmentsMembers only Login
This report by the Staff of the Joint Committee on Taxation was prepared on January 29, 2020 for a hearing before the House Committee on Ways and Means. It discusses an overview of infrastructure financing options, including the highway trust fund, infrastructure banks, tax-exempt bonds, P3s, NMTCs, Opportunity Zones, LIHTCs, and Historic Rehab Tax Credits.
Historic Tax Credits - Community Development Fact Sheet
This Community Developments Fact Sheet summarizes certain aspects of the Historic Tax Credit (HTC) program for national banks and federal savings associations (collectively, banks) and explains how HTCs may be used to support a bank’s affordable housing and community development strategies.
View More Federal Historic Tax Credit Resources

-Low-Income Housing Tax Credit (LIHTC) Resources

Fact Sheet: The American Jobs Plan Housing ProvisionsMembers only Login
The Biden-Harris Administration is proposing a bold investment in America's housing infrastructure to make housing more affordable for working and middle-class families. The American Jobs Plan pairs $213 billion in direct funding with more than $100 billion in new and expanded tax credits with bipartisan support to build and modernize housing across the country.
How States Can Direct Economic Development to Places and People in NeedMembers only Login
To address local disparities and help struggling areas thrive, governments at all levels have spent billions of dollars on a range of geographically targeted, or "place-based," economic development programs — mostly in the form of financial incentives — designed to boost job creation and business investment, incentivize real estate development, or increase property values in specific places. The Pew Charitable Trusts performed a literature review of more than 100 studies to better understand the reasons for the lack of effectiveness of place-based programs.
IRS Revenue Procedure 2020-45: 2021 Housing Credit and Housing Bond Volume Caps
IRS Revenue Procedure 2020-45 sets out the 2021 Low-Income Housing Tax Credit and Bond Volume Caps.
Understanding Whom the LIHTC Serves - Data on Tenants in LIHTC UnitsMembers only Login
As mandated through the Housing and Economic Recovery Act of 2008, state agencies administering the Program are required to submit demographic and economic data on LIHTC tenants to HUD. While not inclusive of all tenants served by the LIHTC, the summary tables of state tenant data received as of December 31, 2017, provides a useful picture of the program's beneficiaries.
Internal Revenue Bulletin: 2020-10
IRS Notice 2020-10 provides population figures to calculate calendar-year 2020 limits for private activity bonds (PABs) and low-income housing tax credit (LIHTC) for all 50 states, Washington, D.C., and Puerto Rico. The PAB cap is the greater of the population multiplied by $105 or $321,775,000. The LIHTC cap for each state is the greater of the population multiplied by $2.8125 or $3,217,500.
View more LIHTC Resources

-New Markets Tax Credit (NMTC) Resources

Public Data for NMTC Program for Fiscal Years 2003 - 2019Members only Login
This excel sheet from the CDFI Fund contains transaction-level data collected on New Markets Tax Credit (NMTC) investments across the nation from fiscal years (FY) 2003 - 2019.
New Markets Tax Credits: A Flexible Capital Source and a Change Agent
The New Markets Tax Credit program, created to spark investment in disadvantaged communities, has become a valuable source of flexible capital for healthcare providers and health systems to tackle the immediate needs of both their organizations and communities to affect positive change. NMTC funding has been used for new construction or renovation of facilities including emergency rooms, mental health departments, primary care and community clinics, and specialty service facilities such as testing sites, wellness centers, and radiology and imaging facilities.
NMTC Program Award Book CY2019
The CDFI Fund has released its calendar year 2019 awards for the New Markets Tax Credit (NMTC) program. The round of funding awarded over $3.5 billion in NMTC allocation to 76 community development entities.
NMTC Progress Report 2020Members only Login
This is the 2020 edition of NMTC Coalition’s annual report on the loans, investments, and community impact of the New Markets Tax Credit.
COVID-19 Rebirth Using Proven Tools
This white paper looks at how 5 successful programs can be used to finance the recovery from COVID-19. The 5 programs are C-PACE and R-PACE, State Historic Tax Credits, State Opportunity Zones Programs, State New Markets Tax Credits, and Solar and Energy Tax Credits (ITCs).
View more NMTC Resources

-State Tax Credits

How States Can Direct Economic Development to Places and People in NeedMembers only Login
To address local disparities and help struggling areas thrive, governments at all levels have spent billions of dollars on a range of geographically targeted, or "place-based," economic development programs — mostly in the form of financial incentives — designed to boost job creation and business investment, incentivize real estate development, or increase property values in specific places. The Pew Charitable Trusts performed a literature review of more than 100 studies to better understand the reasons for the lack of effectiveness of place-based programs.
MLK Gateway I: Opportunity Zone Investment Profile
This investment profile from the Economic Innovation Group showcases the MLK Gateway in Washington, DC. Located in the Anacostia neighborhood, MLK Gateway will bring new life to a historic Main Street corridor through a center of commerce, culture, and technology; foster community prosperity; and provide a vibrant mix of neighborhood-serving retail. Financing on the project includes OZ equity, NMTC equity, grants, credit enhancement, pre-development loans, and construction loans.
CDFA // BNY Mellon Development Finance Webcast Series: Investing in Childcare Facilities Members only Login
During this installment of the CDFA // BNY Mellon Development Finance Webcast Series, we will showcase various childcare facilities financing programs from across the country and highlight projects that have successfully utilized these tools.
CDFA // BNY Mellon Development Finance Webcast Series: Historic Preservation FinancingMembers only Login
During this installment of the CDFA // BNY Mellon Development Finance Webcast Series, we will explore the challenges of historic preservation projects and how financing tools can be combined to make preservation projects possible.
COVID-19 Rebirth Using Proven Tools
This white paper looks at how 5 successful programs can be used to finance the recovery from COVID-19. The 5 programs are C-PACE and R-PACE, State Historic Tax Credits, State Opportunity Zones Programs, State New Markets Tax Credits, and Solar and Energy Tax Credits (ITCs).
View more State Tax Credit Resources

-Programs Map

Search the map below for tax credit programs by state. This specialized search is part of CDFA's State Financing Program Directory, the only online resource cataloging the development finance programs offered by state governments. Click on a state to see a sample of state tax credit programs available. Login with a CDFA Member account at the top of the page to view full results.

-Case Studies

CDFA Food Systems Finance Webinar Series: Financing Food-Centered Redevelopment
During this installment of the CDFA Food Systems Finance Webinar Series, we explored how investing in food-centered redevelopment can restore local food systems infrastructure, catalyze additional neighborhood development, and protect healthy, sustainable communities.
CDFA Charter Schools Financing Initiative: Development Finance Strategies for Charter Schools
CDFA's first publication of the CDFA Charter Schools Financing Initiative series, funded with support from the National Alliance For Public Charter Schools. This paper demonstrates how charter schools can access development finance tools and public finance and provides real-world examples of how these tools have been successfully implemented.
CDFA Food Finance White Paper Series: Advancing Food Systems Through Development Finance
This is the sixth and final white paper in a series examining the potential creation of a food systems asset class that supports the market growth of local and regional food systems. This paper presents three replicable strategies for restoring local food systems: reframe food systems development as infrastructure and economic development; build effective relationships and partnerships across the entire food system; and plan for strategic food system financing.
Incorporating PACE Into Complex Projects - Rachel Davis, Caleb Bell, Jerry Brunswick, Frances Kern Mennone, Scott RingleinMembers only Login
Rachel Davis, Caleb Bell, Jerry Brunswick, Frances Kern Mennone, and Scott Ringlein present Incorporationg PACE Into Complex Projects.
CDFA Food Finance White Paper Series: Food Systems & Investment Tools
This paper continues a white paper series demonstrating the ways in which traditional development financing is already supporting food systems, with a focus on finance tools that help to stimulate investment. An overview of investment tools, such as tax credits and opportunity zones, is provided with examples of current programs as well as an extensive collection of case studies to illustrate how these tools can make an impact.
View More Case Studies

-Headlines

-Publications

Tax Credit Finance Reference Guide
Written in conjunction with Ice Miller LLP, the Tax Credit Finance Reference Guide examines how to effectively apply tax credits to development opportunities, and explains the basics of tax credits and the fundamentals of using these tools. In addition, the guide walks through the pros and cons of using tax credits along with the guidelines for completing due diligence, performance monitoring, and benchmarking success. This comprehensive Reference Guide discusses in detail the primary tax credits available at the federal level, along with certain state tax credit programs, and includes numerous case studies of successful tax credit projects.
Practitioner's Guide to Economic Development Finance
The Practitioner's Guide to Economic Development Finance 2nd Edition is the only comprehensive resource dedicated to building and utilizing the development finance toolbox. The Practitioner's Guide provides the insight and practical information needed to critically understand how economic development is financed and the tools, strategies and techniques used to build strong communities. From bonds, tax increment finance and special districts to tax credits, seed & venture capital, revolving loan funds and much more, this Guide outlines the financing tools required for succeeding in today's competitive economic development climate.
Unlocking Capital: A Handbook for Becoming a High Performing Development Finance Agency
Unlocking Capital: A Handbook for Becoming a High Performing Development Finance Agency (Handbook) serves as a companion to the Practitioner’s Guide to help illuminate the structures of development finance agencies (DFAs), essential conduits to access development finance tools. The Handbook provides an overview of DFAs and their myriad roles in various development efforts. Included in this discussion is a comprehensive look at over a dozen high-performing DFAs throughout the country. The Handbook is designed to be a starting point for local leaders to engage in the creation or acceleration of a DFA to build and utilize the development finance toolbox.
View More Publications

-Webcasts

CDFA Food Systems Finance Webinar Series: Financing Food-Centered Redevelopment
During this installment of the CDFA Food Systems Finance Webinar Series, we explored how investing in food-centered redevelopment can restore local food systems infrastructure, catalyze additional neighborhood development, and protect healthy, sustainable communities.
Superfund Redevelopment Program Webinar Series - Opportunity Zones and Superfund SitesMembers only Login
There are over 300 Superfund National Priorities List sites and thousands of Superfund removal sites located in or partially in Opportunity Zones. This webinar discussed Opportunity Zone tax benefits in the context of redeveloping Superfund sites and other types of contaminated properties and how communities, local governments, and developers can utilize these benefits.
CDFA Reframe, Build, Plan: Restoring America's Local Food Systems
CDFA released the final publication of the CDFA Food Finance White Paper Series, Advancing Local Food Systems Through Development Finance. This webinar provides an overview of this publication as we review CDFA's framework for expanding traditional financing and attracting capital to local food systems through the Reframe, Build, Plan approach.
CDFA - PFM Capital Markets Webinar Series: Pricing Private Activity Bonds in Complex Capital StacksMembers only Login
During this installment of the CDFA-PFM Capital Markets Webinar Series, project finance experts and issuers discussed the viability of how private activity bond deals can fit into complex capital stacks.
CDFA // BNY Mellon Development Finance Webcast Series: Investing in Childcare Facilities Members only Login
During this installment of the CDFA // BNY Mellon Development Finance Webcast Series, we will showcase various childcare facilities financing programs from across the country and highlight projects that have successfully utilized these tools.
View More Webcasts

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