PA 17-110—sHB 5583
AN ACT EXPANDING INVESTMENT ELIGIBILITY UNDER THE ANGEL INVESTOR TAX CREDIT PROGRAM
SUMMARY: This act (1) opens the angel investor tax credit program to Connecticut businesses in any industry, instead of just those in emerging technology industries, and (2) generally limits the amount of credits that may be awarded for investments in businesses in emerging technology industries.
By law, “angel investors” who invest at least $25,000 in Connecticut Innovations, Inc. (CI)-approved businesses are eligible for a personal income tax credit equal to 25% of their investment, up to $250,000. (“Angel investors” are investors who (1) review new or proposed businesses for potential investment, (2) are considered “accredited investors” by the Securities and Exchange Commission, and (3) may seek active involvement in their business investments.) A business must apply to CI for approval to receive credit-eligible cash 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 prior law, only businesses engaged in bioscience, advanced materials, clean technology, photonics, and information technology (which the act terms collectively as “emerging technology businesses”) could get CI approval. Under the act, a business in any industry can get CI approval 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. Previously, all the credits were dedicated to emerging technology businesses, because only they qualified. Under the act, 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 this cap if any unreserved credits remain after April 1 in each year.
EFFECTIVE DATE: July 1, 2017