Calling All Angels: DEED Has A Tax Credit For You
The Minnesota Angel Tax Credit, which provides a 25 percent credit for investments to qualified Minnesota-owned businesses, has been successful: Since 2010, it has attracted $318 million of investment for 347 companies.
But the program has had a bit of a problem. In its first few years, it seemed to overwhelmingly benefit companies run by white men in the Twin Cities metro (admittedly a majority of all Minnesota businesses).
So in 2015, the Minnesota Department of Employment and Economic Development, which runs the tax credit, set aside $7.5 million of the program’s annual $15.5 million largesse for businesses owned by women and minorities or based in Greater Minnesota.
The results were mixed. The program funded 10 women-owned, 13 minority-owned and 13 Greater Minnesota-based businesses, for a total of 33 of 114 overall. But the companies used $4.4 million of the $7.5 million available. On Oct. 1, the remaining $3.1 million, per rules DEED implemented, was returned to the general pool for all qualified companies to access.
The silver lining: The Angel Tax Credit is so popular that the entire pot is frequently spent by February or March. A second infusion of cash later in the year adds another opportunity for businesses that weren’t ready for investment at the beginning of the year.
The set-aside credits remain in place for 2016, and the program overall remains popular. So far, DEED has approved $3.8 million in tax credits. Of that, $400,000 has been for underrepresented businesses.
The program sunsets after 2016, but DEED is looking to renew the program.