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.
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