Header
Name(s) shown on the return and the identifying number.
8874
New Markets Credit
- Agency
- IRS
- Revision
- Rev. November 2021
- Fillable fields
- 40
- Pages
- 3
- Official source
- IRS form page
- Checked
- October 21, 2026
Form 8874: New Markets Credit
Form 8874 is used to claim the new markets credit for qualified equity investments made in qualified community development entities (CDEs). The form says this credit is part of the general business credit, and it is attached to the tax return.
The instructions say the credit is generally allowed to the holder of a qualified equity investment on each of 7 credit allowance dates: the date of the initial investment and each of the next 6 anniversary dates. Line 1 lists each investment held on a credit allowance date in the current tax year, line 2 adds credits passed through from partnerships and S corporations, and line 3 carries the total to Schedule K or to Form 3800.
The instructions are printed in the same PDF. The IRS About page also lists a recent development titled "New markets credit updated and made permanent". You can fill out Form 8874 free in your browser on this page and download it without an account.
What's on Form 8874
Line 1, columns (a) to (c)
Name and address of the qualified CDE, the CDE's employer identification number and the date of the initial investment.
Line 1, columns (d) to (f)
Amount of the qualified equity investment, the credit rate as a percentage, and the credit, figured as column (d) times column (e).
Line 2
New markets credit from partnerships and S corporations.
Line 3
The sum of lines 1 and 2, with the note on where partnerships, S corporations and all other filers report it.
Instructions on pages 2 and 3
Definitions of a qualified CDE and a qualified equity investment, how to figure the credit, recapture, basis reduction and the line 1 instructions.
How to fill out Form 8874
- 1
Header
Enter the name or names shown on the tax return and the identifying number.
- 2
Line 1, columns (a) to (d)
The instructions say to enter the information for each qualified equity investment held directly on a credit allowance date in the current tax year: the CDE's name, address and EIN, the date of initial investment and the amount.
- 3
Column (e): credit rate
The instructions say to enter "5" for the first, second or third year of the 7-year credit period, and "6" for any later year.
- 4
Column (f) and extra rows
Multiply column (d) by column (e). If more space is needed, the instructions say to attach a statement, write "See attached" in column (a) of the last row and enter the statement's total credit in column (f).
- 5
Line 2
Enter the new markets credit received from partnerships and S corporations.
- 6
Line 3
Add lines 1 and 2. The form says partnerships and S corporations report this amount on Schedule K, and all others report it on Form 3800, Part III, line 1i.
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Where it goes, recapture and basis
Attach to the tax return
The form says "Attach to your tax return." The form prints Attachment Sequence No. 127.
How the credit is figured
The instructions say the credit equals the qualified equity investment multiplied by 5% (6% for the fourth through seventh years), and is not allowed for a date on which the investment is not a qualified equity investment.
Recapture
The instructions list three events within 7 years of original issuance that can bring a credit recapture amount: the entity stops being a qualified CDE, substantially all proceeds stop being used for qualified low-income community investments, or the investment is redeemed.
Selling the investment
The instructions say a sale or other disposition alone does not cause recapture, but the credit cannot be claimed for any credit allowance date after the disposition.
Basis reduction
The instructions say basis in the qualified equity investment is reduced by the new markets credits allowed, even if part of the credit is carried forward, with listed exceptions for figuring certain gain exclusions.
Related forms
8874-A
Notice of Qualified Equity Investment for New Markets Credit
17 fields, 2 pages
8874-B
Notice of Recapture Event for New Markets Credit
19 fields, 2 pages
3800
General Business Credit
1,921 fields, 9 pages
1040
U.S. Individual Income Tax Return
199 fields, 2 pages
1065
U.S. Return of Partnership Income
440 fields, 6 pages
1120-S
U.S. Income Tax Return for an S Corporation
390 fields, 5 pages
Who files Form 8874?
The form is attached to the tax return of the taxpayer claiming the credit. The About page lists Form 1040, Form 1065, Form 1120 and Form 1120-S among the related returns.
Official sources and the blank
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Questions about Form 8874
What is a qualified CDE?
The instructions describe a domestic corporation or partnership whose primary mission is serving or providing investment capital for low-income communities or persons, that stays accountable to their residents, and that is certified as a qualified CDE by the CDFI Fund.
What credit rate goes in column (e)?
The instructions say "5" for the first, second or third year of the 7-year credit period and "6" for any later year.
Do partners and S corporation shareholders file Form 8874?
The form says taxpayers that are not partnerships or S corporations, and whose only source of the credit is those pass-through entities, are not required to file it. They can report the credit on Form 3800, Part III, line 1i.
What are Forms 8874-A and 8874-B?
The instructions say a qualified CDE provides Form 8874-A when a qualified equity investment is acquired, and Form 8874-B when a recapture event occurs.
Does selling the investment trigger recapture?
The instructions say not solely because of a sale or other disposition, but the credit cannot be claimed for any credit allowance date after the disposition.
Has the credit changed since this revision?
The form's What's New says the allocation was extended for calendar years through 2025. The IRS About page lists a later recent development titled "New markets credit updated and made permanent", dated 29-JUN-2026.