New Tax Credits Available For Michigan Startup Investors
A new 25 percent state Small Business Investment Tax Credit, designed to encourage investments in start-up and early-stage Michigan technology companies, is aiming to help Michigan entrepreneurs secure capital and reduce risks associated with a new business or novel technology.
“Michigan’s growing technology culture can only get stronger with this incentive to foster new investment in our homegrown tech businesses,” said Michael A. Finney, president and CEO of the Michigan Economic Development Corp. “Michigan is a powerhouse of often overlooked innovators and new technology entrepreneurs, who, along with their employees, will now have a new tool to assist their business expansion plans.”
The angel credit program allows qualified investors to receive a 25 percent personal tax credit on their investments in qualified Michigan-based seed- and early-stage companies with a pre-investment valuation of less than $10 million. Prior approval by the Michigan Strategic Fund is required to qualify businesses and investment groups.
Individuals will have 60 days after making an investment, alongside or through an qualified investment group, to apply for their credit.
Among several qualification criteria, state law requires a minimum investment of $20,000 be made through or alongside an MSF-registered investment group and before Jan. 1, 2013. Individual investors are limited to a maximum tax credit of $250,000 in any one year and may not claim more than this amount in any one business. No more than $250,000 in credits may be awarded to investors in any one company, and the total amount of credits certified by the Michigan Strategic Fund cannot exceed $9 million per calendar year.
“Michigan’s new angel tax credits mean we should expect the number of angel groups and deals to double over the next few years, said Mina Sooch, vice chairman and past chairman of the Michigan Venture
Capital Association. “Additional capital for young companies can attract executive talent back to Michigan and help build a critical mass of talent and deals that are essential to a robust entrepreneurial economy that creates new industries and jobs here.”