Minnesota's Angel Tax Credit provides a 25% credit to investors or investment funds that make qualified equity investments in startup companies headquartered and run here in Minnesota which are focused on high technology, new proprietary technology, or a new proprietary product, process or service in specified fields.
It is important to note that allocated funds may not be available at the time of your investment depending on the status of funds available.
Each year the Minnesota legislature approves a budget to fund this tax credit. Once the funds are exhausted for the year, there is no guarantee that additional funds will be allocated.
In 2022, $5 million in credits were available, $2.5 million of which were reserved for minority- and women-owned businesses, as well as businesses located in Greater Minnesota. **As of June 2022, these funds have been depleted, however, additional funds have been requested and are awaiting approval through a special session.**
The maximum credit is $125,000 per person, per year ($250,000 if filing jointly). The credit is refundable.
Residents of other states and foreign countries are eligible. No Minnesota tax liability is needed to receive the tax credit, though a Minnesota tax return must be filed.
An investor may use their revocable trust (though not an irrevocable trust) or their IRA as their investment vehicle, as long as a clear audit trail is provided showing the investor is the "owner" of that vehicle.
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