Frankfort, Ky. – After leveraging $7.4 million this year for startups and small businesses in the Commonwealth, the Kentucky Angel Investment Act Program will accept 2016 tax-credit applications from investors beginning Dec. 11.
“Coming off the program’s first year where investors applied for 100 percent of available tax credits, we’ve now proved it helps small businesses grow and thrive in Kentucky,” said Gov. Steve Beshear. “While investors receive tax credits, the program encourages entrepreneurs to found, innovate and grow businesses in the Commonwealth. That ultimately creates jobs and catalyzes development of new technology.”
The program allows angel investors – people who provide funding for startup companies – to receive tax credits. Qualified investors can receive tax credits of up to 50 percent of their investments made in companies based in counties with high unemployment rates – enhanced counties – and 40 percent for all other counties.
Investors outside Kentucky can also take advantage of the program. Although out-of-state investors may not have Kentucky tax liability, they can recover a portion of their investments by selling their tax credits to a buyer within the Commonwealth.
Through the end of November 2015, more than a quarter of investors receiving tax credits – 28 of 104 – were from outside Kentucky. They represented 11 states 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.
To be eligible for tax credits, angel 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 2016, the program again offers a total $3 million in tax credits, available on a first-come, first-served basis. Individual investors are limited to $200,000 in credits annually.
In 2014 the Kentucky General Assembly expanded the angel tax credit legislation so individual investors could take advantage of the credits. Under the previous legislation, only groups of angel investors – those with fund managers – were eligible.
Additional program information, including a fact sheet and application forms, is available atwww.thinkkentucky.com/kaitc.