Minnesota legislature passes historic angel tax credit



By Thomas Lee, MedCity News

“The Minnesota House and Senate Monday overwhelmingly approved a five year, $50 million tax credit designed to spur early stage investment in high tech start-ups, including biotechnology and medical devices.

Minutes after the House passed a job bill, which included the angel credits, 112-20, the Senate followed suit 58-3. The lopsided vote capped an epic, seven year struggle to make Minnesota more competitive with neighboring states like Wisconsin, whose generous angel credits had lured homegrown start-ups across the border.”

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What will the Angel Investment Tax Credit do?

According to sources familiar with the matter (MOJO MN), there may still be amendments, however here is the gist of it:

The Angel Investor Tax Credit has been discussed and debated for years at the Capitol, but is finally on its way to becoming law.  The bill provides for a 25% tax credit for Angel Investment, to a maximum of $125,000 in tax credits per year/per investor.  The bill budgets $11 million in credits for 2010, with $12 million in credits for 2011 through 2014.  This tax credit is scheduled to sunset in 2015.  The R&D tax credit increased from 5% to 10% of the first $2.5 million in R&D investment.  In addition, the R&D credit is now expanded beyond “C” corporations to partnerships and “S” corporations.  The R&D tax credit is refundable if a business’s tax liability is less than its credit due.  The tax credits in the bill were offset by an elimination of a low-income motor fuels tax.  This tax was part of the 2008 transportation bill containing the gas tax increase.  The state has not yet issued any refunds under this program.