Angel Tax Credit

Qualified investors, funds and businesses that invest in start-up high-technology businesses may be eligible for a refundable credit against their invididual or corporate income tax. The investing entity need not be located in the state of Minnesota to qualify for the refundable credit.

The credit is equal to 25% of the investment in a qualified business, with a maximum credit of $125,000 per person per year. Minimum investments are $10,000 for an individual and $30,000 for a fund. Investors can claim no more than $1 million in credits per business.

A qualified business is one that engages in at least one of the following activities:

• using proprietary technology to add value to a product, process or service in a qualified high-technology field;
• researching or developing a proprietary product, process or service in a qualified high-technology field; and/or
• researching, developing or producing a new proprietary technology for use in agriculture, tourism, forestry, mining, manufacturing or transportation.

In addition, a qualified business must be headquartered in Minnesota and employ fewer than 25 employees, with at least 51 percent of the workers and total payroll based in the state. The business must have been in operation for no more than 10 years and can not have received previous equity investments exceeding $2 million.