Investors can receive tax credits
COVINGTON, Ky. (July 23, 2014) — Angel investors now have another reason to invest in Kentucky’s small and startup companies — tax credits.
Gov. Steve Beshear joined state lawmakers, community leaders and angel investors today to sign House Bill 445. The legislation expands the Kentucky Investment Fund Act (KIFA) so that individual angel investors — people who provide capital for startup companies — can receive tax credits. Currently, only groups of angel investors (with fund managers) can take advantage of the credits.
The expansion is designed to encourage more investment in Kentucky’s small businesses. The expanded credit, in turn, is expected to spark more innovation, business creation and jobs.
“Private investment is a critical component of a thriving innovation ecosystem,” Beshear said. “This legislation will provide great incentive for angel investors to support entrepreneurs and small businesses across the Commonwealth and to invest in Kentucky’s future.”
Starting next year, individual angel investors can receive a tax credit of up to 50 percent of their investment in counties with high unemployment rates, or enhanced counties, and 40 percent in all other counties.
Out-of-state investors can take advantage of the credit too. Though out-of-state investors may not have any Kentucky tax liability, they can transfer that tax credit to someone else within the Commonwealth. If a Kentucky taxpayer is willing to purchase the credit, the investor will recover some portion of the investment.
The Kentucky Cabinet for Economic Development, along with the Kentucky Innovation Network, also is hosting a series of entrepreneur pitch competitions throughout the state. The competitions feature Kentucky entrepreneurs presenting their business ideas to a group of local angel investors. Winners receive cash prizes and the opportunity to present their businesses to the Kentucky Angels in Frankfort this fall.
The angel tax credit is operated through the Office of Entrepreneurship within the Kentucky Cabinet for Economic Development.