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 
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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.
-Resources
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-Federal Historic Tax Credit (HTC) Resources
Community Investment Explorer Tool 2.0Members only Login
Developed by the Federal Reserve Bank of St. Louis, the newly enhanced Community Investment Explorer (CIE) 2.0 includes over 73 million transactions totaling over $3.2 trillion in community and economic development capital from 2012 to 2020. This interactive tool allows users to find out where capital is going, how equitably is it being distributed, and for what purpose is it serving.
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.
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.
View More Federal Historic Tax Credit Resources
-Low-Income Housing Tax Credit (LIHTC) Resources
Community Investment Explorer Tool 2.0Members only Login
Developed by the Federal Reserve Bank of St. Louis, the newly enhanced Community Investment Explorer (CIE) 2.0 includes over 73 million transactions totaling over $3.2 trillion in community and economic development capital from 2012 to 2020. This interactive tool allows users to find out where capital is going, how equitably is it being distributed, and for what purpose is it serving.
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-New Markets Tax Credit (NMTC) Resources
Case Study: Lac Vieux Desert Health CenterMembers only Login
The Lac Vieux Desert Band of Lake Superior Chippewa Indians is responsible for delivering high-quality public services and investing in new business opportunities for its community. The band used New Markets Tax Credits (NMTC) to finance this project.
Community Investment Explorer Tool 2.0Members only Login
Developed by the Federal Reserve Bank of St. Louis, the newly enhanced Community Investment Explorer (CIE) 2.0 includes over 73 million transactions totaling over $3.2 trillion in community and economic development capital from 2012 to 2020. This interactive tool allows users to find out where capital is going, how equitably is it being distributed, and for what purpose is it serving.
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.
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-State Tax Credits
Soil Wealth Areas: Place-based Financing for Conservation, Rural Communities & Regen AgMembers only Login
A new report from Croatan Institute highlights how the Soil Wealth Area model can facilitate more investment in regenerative agriculture, enhance conservation, and support resilient rural economies. The report provides specific recommendations for implementing Soil Wealth Areas in each of the regions analyzed and creating a wider Soil Wealth Community for practitioners to share learnings about their experiences with place-based financing.
CDFA Food Systems Finance Best Practices Guidebook
Linking development finance and food systems can be a daunting undertaking for any community. Research on the current ecosystem of food systems finance has positioned CDFA to identify key strategies for the path ahead in this work. The Food Systems Finance Best Practices Guidebook defines how traditional development finance tools can be used to launch and expand food and agricultural-related businesses and projects, and create successful food systems finance programs at the local and regional levels.
Incentives for Entrepreneurial FirmsMembers only Login
Many economic development organizations (EDOs) have embraced the mission to support entrepreneurial firms in their communities. EDOs engage in their entrepreneurial ecosystems, in part, by providing resources, sometimes in the form of business incentives. The purpose of this report is to provide practitioners and policymakers with insights regarding the use of these incentives and guidance for offering incentives to entrepreneurial firms.
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.
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 Best Practices Guidebook
Linking development finance and food systems can be a daunting undertaking for any community. Research on the current ecosystem of food systems finance has positioned CDFA to identify key strategies for the path ahead in this work. The Food Systems Finance Best Practices Guidebook defines how traditional development finance tools can be used to launch and expand food and agricultural-related businesses and projects, and create successful food systems finance programs at the local and regional levels.
Community Investment Explorer Tool 2.0Members only Login
Developed by the Federal Reserve Bank of St. Louis, the newly enhanced Community Investment Explorer (CIE) 2.0 includes over 73 million transactions totaling over $3.2 trillion in community and economic development capital from 2012 to 2020. This interactive tool allows users to find out where capital is going, how equitably is it being distributed, and for what purpose is it serving.
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.
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-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 -Training Courses
Intro Tax Credit Finance Course
September 27-28, 2023
Daily: 12:00 PM - 5:00 PM Eastern
The Intro Tax Credit Finance Course examines the application of tax credit programs in greater economic development finance efforts. This course discusses the practical application of tax credit programs including brownfields, new markets, low-income housing, historic preservation, and state-specific programs.
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-Upcoming Events
Intro Tax Credit Finance Course
September 27-28, 2023
Daily: 12:00 PM - 5:00 PM Eastern
The Intro Tax Credit Finance Course examines the application of tax credit programs in greater economic development finance efforts. This course discusses the practical application of tax credit programs including brownfields, new markets, low-income housing, historic preservation, and state-specific programs.
Register
View more Upcoming Events
-Webcasts
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.
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