Legislation that would extend the New Markets Tax Credit (NMTC) has been introduced by Sen. Jay Rockefeller (D-W.Va.).

S. 1583 would extend the program, which is set to expire at the end of 2009, for five years and provide $5 billion in annual NMTC allocation authority. The legislation also provides an additional incentive by permitting the credit to offset the alternative minimum tax.

“We created this program to spur jobs, investment, and economic growth,” said Rockefeller in a statement. “Where abandoned buildings and closed storefronts once were, real estate and commercial development have now brought life back into low-income and rural communities. By providing investors with a tax incentive, the NMTC program has given families and businesses in distressed neighborhoods a new sense of economic hope and opportunity.”

The program permits taxpayers to receive a credit against federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs). Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities. The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year credit allowance period.