A number of states have passed tax credits for angel investors in an effort spur additional financing and new business formation for entrepreneurs. If early returns from a program in Minnesota are any indication, the tax credits may be a widespread success.
The program gives a 25-percent tax credit – up to $125,000 – to angel investors who invest in eligible Minnesota companies. The Minnesota Daily reports that since the credit went into effect on July 19, at least 35 companies have already applied for it – some of which applied on the first day of the program.
To continue to build off of this momentum, legislators are also working to institute a similar measure nationwide. Several members of Congress recently introduced a bill that would give angel investors federal tax breaks as well.
Angel investors have played an important role in helping to finance the growth of small businesses in recent years. According to the Faster Times, because angels are often experienced businesspeople, they can help give entrepreneurs advice as well as financing.