Federal tax credits: Still an investment opportunity?

At U.S. Bank, we believe investments in affordable housing, renewable energy and new markets tax credits will continue to offer attractive after-tax returns. Learn more about how banks can invest in these federal tax credit programs, while leveraging their U.S. federal tax liability.

Tags: Taxes
Published: April 05, 2018

After operating in 2017 with unknowns as to when and how tax reform would occur, the tax credit investment industry now has clarity as we enter 2018.

If you manage a financial institution, your organization will probably welcome lower tax rates

Lower tax rates are good news for banks. With these lower rates, we’re likely to see some current investors curtailing their investment appetite, or exiting the market entirely, if only for a period of time. Pricing is expected to adjust to maintain recent yields, because tax losses are now worth less at the lower marginal corporate tax rate.

There’s also a possibility that yields may need to increase to account for the loss of demand from current investors. This is offset somewhat by the reentry of Fannie Mae and Freddie Mac as affordable housing investors. All this variability makes 2018 an opportune time to inquire about investment opportunities.   

In 2018 tax credit investing should continue to offer attractive returns to banks that want to offset federal tax liability

As a financial institution, your organization can:

  • Align with a larger financial partner so risk is shared, or potentially covered, by their guaranties
  • Accomplish your Community Reinvestment Act (CRA) goals by investing in affordable housing or new markets tax credits
  • Further your environmental sustainability goals with investments in renewable energy
  • Offset U.S. federal tax liability and potentially earn attractive after-tax returns


U.S. Bank can help. For more information, please contact your U.S. Bank representative or visit usbank.com for an overview of our community development industry experts.