Legislators propose federal angel investment tax credit

In an effort to help encourage the growth of entrepreneurs who form an LLC, several members of Congress are proposing a federal tax break for angel investors who give funding to eligible technology startups.

Under the proposed bill, angel investors would get a credit of up to 25 percent of their equity investment in companies that also qualify for the government’s Small Business Innovation Research program.

“Clearly there is a big appetite for this around the country,” Maryland Representative Chris Van Hollen told the Washington Business Journal. “I think it’s going to be very well received because it’s targeted at areas that need a boost right now and can add significant value.”

The individual tax credits would be limited to 50 percent of the startup’s SBIR grant amount, and the program would have a $500-million national cap. Lawmakers are now looking for a way to balance the increased spending with cuts to other programs.

Many states have also taken similar steps to encourage small business growth. In recent months, Ohio, Minnesota and several other states have enacted legislation giving angels a 25-percent take break for their eligible investments.ADNFCR-3052-ID-19911792-ADNFCR

Melissa Clark
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Melissa Clark

Head of Content & Customer Marketing at Incfile
Melissa sets the vision for Incfile's content marketing and customer relationship management. Melissa has more than 10 years experience in various marketing roles, and a passion for supporting small businesses as they incorporate and grow. She loves sharing information that will help business owners maximize their LLCs, Corporations and Nonprofits. In her spare time, Melissa is an active member of The Junior League and enjoys running half marathons.
Melissa Clark
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