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Legislation Would Create Tax Credit for Investment in CDFIs

Tuesday, June 21, 2022 - 1:00PM

A bipartisan group of U.S. senators introduced legislation to create a tax credit for private investment in community development financial institutions (CDFIs). The Community Development Investment Tax Credit Act (S. 4418) would create a credit worth 3% of qualified investments in CDFIs for the first 10 credit allowance dates and 4% for the next 10 credit allowance dates, with a 1% increase for equity or equity equivalent investments. Qualified investments would include equity investments, loans with a minimum term of 10 years and equity equivalent investments for CDFI loan funds. CDFIs would be required to apply for allocation through the CDFI Fund and the credit would be capped at $1 billion in 2022, $1.5 billion in 2023 and $2 billion for each year thereafter, adjusted for inflation. The bill’s sponsors are Sens. Roger Wicker, R-Mississippi; Cindy Hyde-Smith, R-Mississippi; Mark Warner, D-Virginia; and Chris Van Hollen, D-Maryland. The sponsors also released a one-page summary of the legislation.

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