OLR Bill Analysis
AN ACT EXPANDING INVESTMENT ELIGIBILITY UNDER THE ANGEL INVESTOR TAX CREDIT PROGRAM.
This bill (1) opens the angel investor tax credit program to businesses in any industry, instead of just those in specified technology industries and (2) generally restricts the amount of credits that may be awarded for investments in businesses in those technology industries.
By law, angel investors (i.e., investors who are considered “accredited investors” by the Securities and Exchange Commission) who invest at least $25,000 in approved businesses are eligible for a personal income tax credit equal to 25% of their investment, up to $250,000. A business must apply to Connecticut Innovations, Inc. (CI) for approval to receive credit-eligible investments. CI then certifies that the business meets the applicable criteria (e.g. is principally located in the state, has been in operation less than seven years, and has less than $1 million in annual revenue).
Under current law, only businesses engaged in bioscience, advanced materials, clean technology, photonics, and information technology (which the bill defines as “emerging technology businesses”) can apply to CI for approval. Under the bill, a business in any industry can apply to and be approved by CI if it meets the applicable criteria.
By law, the angel investor tax credit program is capped at $3 million per year, and investors apply to CI to have credits reserved for their investments in CI-approved businesses. Currently, all the credits are dedicated to emerging technology businesses, because only these qualify. Under the bill, the amount of credits that CI may reserve each year for investments in emerging technology businesses is capped at 75% of the total amount of credits available that year ($2.25 million), except that CI may exceed the cap if any unreserved credits remain after April 1 in each year.
EFFECTIVE DATE: July 1, 2017
Joint Favorable Substitute