New Markets Tax Credit Calculator 2026 — §45D NMTC 7-Year Schedule
Calculate the 39% §45D New Markets Tax Credit over 7 years (5% years 1–3, 6% years 4–7) for qualified equity investments in CDEs. Annual credit schedule, recapture risk, and multi-investment aggregation.
$
Amount invested in a CDE at original issue %
21% for C-Corp, or individual marginal rate $0
Total 7-Year Credit
$0
Average Annual Credit
39%
Credit % of QEI
$0
Tax Liability Reduction
Annual Credit Schedule
| Year | Calendar Year | Credit Rate | Credit Amount | Cumulative Credit |
|---|
How to Use This NMTC Calculator
Enter your Qualified Equity Investment amount and year of investment. The calculator generates the full 7-year credit schedule using the statutory rates: 5% in years 1–3 and 6% in years 4–7. The total credit equals 39% of the QEI — a significant return on investment for patient capital willing to hold through the compliance period.
The Formula
Year 1–3 Credit = QEI × 5% per year
Year 4–7 Credit = QEI × 6% per year
Total 7-Year Credit = QEI × 39%
Credit reduces tax liability dollar-for-dollar (not a deduction)
Year 4–7 Credit = QEI × 6% per year
Total 7-Year Credit = QEI × 39%
Credit reduces tax liability dollar-for-dollar (not a deduction)
Example
$5,000,000 QEI made in 2026:
Years 1–3 (2026–2028): $5M × 5% = $250,000/year = $750,000 total
Years 4–7 (2029–2032): $5M × 6% = $300,000/year = $1,200,000 total
Total 7-Year Credit: $1,950,000 (39% of $5M)
Years 1–3 (2026–2028): $5M × 5% = $250,000/year = $750,000 total
Years 4–7 (2029–2032): $5M × 6% = $300,000/year = $1,200,000 total
Total 7-Year Credit: $1,950,000 (39% of $5M)
Extended
7-Year NMTC Claim Schedule & Multi-Investment Aggregation
Generate a year-by-year credit table, toggle recapture risk, and aggregate multiple QEI investments with a cumulative SVG timeline
Build a complete NMTC portfolio. Add multiple QEI investments, toggle recapture risk year-by-year, and view the cumulative credit timeline.
Aggregated Year-by-Year Credit Schedule
| Year | Calendar Yr | Rate | Total Credit | Cumulative |
|---|
Cumulative Credit Timeline
CDE Qualifying Business Test Checklist
Frequently Asked Questions
What is the New Markets Tax Credit (NMTC) and how does it work?
The NMTC under §45D gives investors in Community Development Entities (CDEs) a 39% total federal tax credit over 7 years on their Qualified Equity Investment (QEI). The credit is taken as 5% per year in years 1–3 and 6% per year in years 4–7. CDEs must deploy at least 85% of QEI into Qualified Active Low-Income Community Businesses (QALICBs) in low-income census tracts.
What is a Qualified Equity Investment (QEI)?
A QEI is an equity investment in a CDE that has received a NMTC allocation from the CDFI Fund (Treasury). The investment must be made at original issue in exchange for stock or a capital interest. The investor may be a corporation, partnership, or individual. The credit is claimed over the 7-year compliance period and is subject to recapture if the CDE fails qualification requirements.
When can the NMTC credit be recaptured?
Recapture occurs if, during the 7-year period: (1) the entity ceases to be a CDE, (2) the proceeds cease to be used as required, or (3) the investor redeems or cashes out the investment. Recapture risk decreases each year as less credit remains at risk. By year 7, all credits have been claimed and recapture risk is zero. Most NMTC structures include a put/call arrangement at the end of year 7.
What is the difference between the NMTC and Opportunity Zone investments?
NMTC offers a 39% credit on investment over 7 years — the credit reduces tax liability dollar-for-dollar. Opportunity Zone investments defer and potentially exclude capital gains but do not generate a tax credit. NMTC requires a CDFI Fund allocation and is a competitive process; Opportunity Zones are self-certified. NMTC is generally more suitable for traditional institutional investors; OZ is better for capital gains deferral strategies.
Can the NMTC credit be transferred or sold?
The NMTC credit itself cannot be directly transferred like the transferable §45Q or clean energy credits. However, the investment interest (and thus the economic benefit of the credit) can be sold. In practice, NMTC transactions are often structured so a bank or institution holds the QEI, takes the credits, and the leverage lender provides a non-qualified loan below the CDE for the economic return. The 2023 IRA did not directly add transferability to NMTC.