Minnesota’s Angel Tax Credit is back

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DEEDThe Minnesota Angel Investor Tax Credit (AITC) has been renewed for 2015 & 2016, enacted last week as part of a larger tax bill cleared by the House, Senate and ultimately Governor Mark Dayton.

Introduced in 2010, the AITC provides a 25-percent credit to investors or investment funds that put money into qualified startup companies focused on high technology or new proprietary technology.  The original plan carved out $50m through 2014 and each year those allotments were distributed faster than the previous one. This year, they were gone by March 3rd.

In addition to $15m for each year, the new legislation also provides an extra $3m for 2014:

“Minnesota’s Department of Employment and Economic Develpment (DEED) will accept certification applications starting Monday, March 31, and will begin processing tax credit allocation applications on May 11. Tax credit allocation applications received before that date will be treated as having been received on May 11, provided all parties to the allocation have also been certified by that date.”

Note that $7.5m annually is reserved specifically for entities (a) located in greater Minnesota (outside of the 7 county metro), (b) women owned, or (c) minority owned companies. In the event that this pool is not claimed by September 30th of the calendar year, those credits revert back into the general fund, available to any qualified business/investors.   Another key technical change going into effect next year is the prohibition of credits for investors who already own (either individually or in combination with family) 20% or more of a company.  The reasoning here, we’re told, is that “Those investors would have likely invested anyways.”  For a deep dive on all the fine print and clauses, see HF 1777.

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