Minnesota’s Angel Tax Credit Program Renewed
Minnesota’s Angel Tax Credit program has been very popular with investors and entrepreneurs since it launched in 2010. Early in this year’s legislative session, backers of the program put out the call to renew the program citing its importance to the state’s startup ecosystem and the Minnesota economy as a whole.
But somehow amid the focus on Covid-19 recovery and other big issues at the Capitol this year, news about fate of the tax credit program got lost in the shuffle. The program received $15 million in new funding: $10 million for 2021 and $5 million for 2022. Gov. Tim Walz signed the omnibus budget bill on June 30.
Steve Grove, Commissioner of the Minnesota Department of Employment and Economic Development (DEED), said that the Angel Tax Credit funding may not have drawn much notice in the shadow of the state’s large jobs bill.
“It’s an incredibly popular program,” said Grove. “It was renewed…we certainly have been telling people about it.”
The Angel Tax Credit program provides a 25 percent tax credit for angel investors in small, emerging businesses. The program allows a maximum tax credit of $125,000 per year per person, or $250,000 for those who are married and filing jointly.
Grove noted that DEED’s Launch Minnesota program was also fully funded with $2.5 million per year. That covers Launch Minnesota through June 30, 2023. More than 60 percent of its budget – $1.6 million per year – is slated for innovation grants to eligible entrepreneurs and startups.
Launch Minnesota was created and funded by the legislature in 2019 as another tool to help boost the state’s startup economy.
Behind the scenes, Grove said that the startup and investment communities were very politically active this year in pushing for both the Angel Tax Credit and Launch Minnesota.
“The kind of political movement amongst startup leaders and venture capitalists to push legislators to fund Launch and Angel really exploded this year in ways it hadn’t before. The Senate didn’t include Launch in their budget and it just really kind of galvanized dozens if not hundreds of leaders in the community here,” said Grove. “It’s not really a community that has organized itself politically in the past.”
Grove argues that the Angel Tax Credit should be a permanent part of the state’s budget, not something that has to fight for fresh funding every biennium.
“It is a waste of energy and time to take such a successful program and debate it every two years,” said Grove.