The Kentucky Angel Investment Act Program saw resounding success once again in 2017, boasting more than $8.2 million in investments leveraged for startups and small business in the Commonwealth. The program began accepting applications today from investors for 2018 tax credits.
“This program’s continued success shows just how healthy the entrepreneurial spirit in this state is,” said Terry Gill, secretary of the Kentucky Cabinet for Economic Development. “Small businesses and startups are important forces for growth and prosperity in Kentucky. The Angel Investment Tax Credit contributes directly to a thriving economy and job creation by providing an incentive for investors to help fund these businesses.”
The program allows angel investors – people who provide funding for startup companies – to receive tax credits. Qualified investors can receive tax credits for up to 50 percent of their investments made in companies based in enhanced counties – those with high unemployment rates – and 40 percent for all other counties.
For 2018, the program again offers a total of up to $3 million in tax credits, available on a first-come, first-served basis. Individual investors are limited to $200,000 in credits annually.
Investors outside Kentucky can participate in the program. Although out-of-state investors may not have Kentucky tax liability, they can recover a portion of their investments by selling their credits to buyers who do.
Through the end of November 2017, nearly 23 percent of investors making investments – 21 of 93 – originated from outside Kentucky. They represented 11 states plus Canada, and helped deepen the pool of funding and expertise available to Kentucky companies.
The Office of Entrepreneurship within the Kentucky Cabinet for Economic Development operates the program.
For tax credit eligibility, investors and small businesses must first be approved – or qualified – by the Cabinet prior to the investment. Applications to become a qualified investor or a qualified small business are accepted on an ongoing basis.
Angel investors must apply for tax credits prior to making an investment. The Kentucky Economic Development Finance Authority must approve each application before credits are issued.
For more information, and to apply for 2018 Angel Investment Tax Credits or to apply for qualification as a recipient business or angel investor, visit www.thinkkentucky.com/kaitc.