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The Basics: Tax Credit Syndications

The Basics: Tax Credit Syndications

Socially responsible investing that makes financial sense.

Our syndications team provides qualified investors with customized tax credit investment portfolios that are originated and managed by U.S. Bancorp Community Development Corporation (USBCDC). Our funds are a great choice for investors seeking attractive after-tax returns from a diversified, low-risk pool of tax credit investments. Best of all, these investments provide clear benefits for our communities and society at large.

How Investors Use Tax Credits

Tax credits are used to induce investments from the private sector in support of projects that benefit distressed communities and populations; enable historic preservation; and provide clean energy. When an investment is made in a development entity or eligible project, investors receive tax credits that can be used to offset their own federal or state income tax obligations.

In the case of USBCDC, some of the tax credits are used to offset U.S. Bancorp’s own tax obligations, while others are made available to qualified investors in a practice referred to as "syndication."

In addition to syndicating federal Low-Income, New Markets, Historic and Renewable Energy Tax Credits, USBCDC is also able to make certain, transferable state tax credits available to investors through our State Tax Credit Clearinghouse, which was approved to operate by the Office of the Comptroller of the Currency in 1998 and was the first entity in the nation to broker tax credits. More than 40 states support state tax credit programs that include:

  • Low-Income Housing
  • New Markets
  • Historic Preservation
  • Renewable Energy
  • Brownfields (formerly contaminated properties)
  • Film Production

State tax credits can be used to offset individual income, corporate income, franchise, insurance premium and other types of state tax liabilities. State tax credits are sometimes issued in certificate form and others allocated via a partnership investment.

The Benefits of Tax Credit Investing

The fund of tax credit investments made available by our syndications group is especially attractive to investors seeking socially responsible investment options but who may:

  • Lack expertise in tax credit programs
  • Prefer to outsource the administrative compliance and management requirements
  • Need assistance in pairing their capital with community development projects nationwide

USBCDC has the institutional strength and flexibility to tailor a fund portfolio to meet specific investment needs. Funds are generally diversified by tax credit type, size, geographic location and other factors to mitigate investment risk. Benefits include:

  • Potential after-tax returns. The fund investment offers appealing after-tax returns generated by a stream of tax credits and other tax-related benefits.
  • Supporting social impact initiatives. Assets placed into a fund can be aligned with an investor’s social impact initiatives, be it community development, job creation, affordable housing, social services or environmental sustainability.
  • Fulfilling an investor’s Community Reinvestment Act (CRA) obligations. The CRA, enacted by Congress in 1977, encourages depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods.
  • U.S. Bank Guaranty. Some investments include a guaranty from U.S. Bank, offering further potential assurance of the after-tax return.

A Dedicated Team

Our experienced team works closely with investors to establish funds that help to meet a range of needs.

Portfolio Highlights

See how our investments help generate financial, social and environmental rewards.

Equal Housing Lender Equal Housing Lender

U.S. Bank and its representatives do not provide tax or legal advice. Each tax and financial situation is unique. Consult your tax and/or legal advisor for advice and information concerning a particular situation.

U.S. Bank is not responsible for and does not guarantee the products, services or performance of its affiliates and third parties.

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