Nisha Avey is head of the Nebraska Department of Economic Development's Angel Investment Tax Credit program. We asked her some questions to learn more about the impact of this unique program.
1) How did the Angel Investment Tax Credit Program get started?
In 2011, the Nebraska Legislature passed the Nebraska Angel Investment Tax Credit Act (LB 389), pursuant to which the Nebraska Department of Economic Development was authorized to issue up to $3,000,000 in refundable Tax Credits in each year commencing in 2011 and continuing through 2022. LB156, which went into effect on May 28, 2015, raised the annual maximum allocation to $4,000,000.
2) How does the program work?
The Act provides a refundable Tax Credit of up to 40% (depending on demand) of a Qualified Investor’s or Qualified Fund’s investment in a Qualified Small Business. Investors and Small Businesses wishing to participate in the program must get certified with the Department and tax credit allocations must be issued before the Qualified Investment is made. Upon allocation of a Tax Credit to a Qualified Investor, the Qualified Investment must be made within 90 days and notification of the investment provided to the Department. The Qualified Investor may then claim the tax credit for the year issued when filing taxes in the subsequent year.
3) Who is eligible to take advantage of it?
Nebraska residents who plan to make a Qualified Investment of at least $25,000 into a Qualified Small Business may apply for a tax credit. The Qualified Small Business must be headquartered in Nebraska, have 25 or fewer employees, at least 51% of payroll must be in Nebraska, and the primary business activity must be using proprietary technology to add value to, or researching, developing or producing a proprietary product, process or service in a high-technology field.
4) What do you see for the future of the program?
The Angel Investment Tax Credit program has been very popular and has been oversubscribed for many years, even after adding $1,000,000 per year. I would anticipate the program will be around for many years, possibly extended beyond the current sunset in 2022.
5) Do you have any specific stories or highlights you'd like to mention?
From 2011 to 2016, 614 Qualified Investments were made into 113 Qualified Small Businesses, with a total of $54,884,750 invested and $19,156,848 in credits issued.