With policymakers increasingly looking for ways to encourage startups to launch and scale throughout the U.S., more than half of the states offer tax credits for early stage investors. Of course, the programs vary widely from state to state — some are successful and expanding, others are stagnant and expiring and still others that are desperately trying to introduce legislation to create them.
While they differ in size and scope, the purpose of angel tax credits is essentially the same — to reduce the risk and cost of angel investing in order to encourage more entrepreneurial activity in high-growth startups. If successful, the credits help entrepreneurs start and scale locally without having to build their fortunes elsewhere.
Nebraska has had an angel investment tax credit since 2011. Recent proposals have suggested increasing the amount available from $3 million to $4 million. While there is still work to be done in passing the increase, early efforts have been very popular and successful. Georgia has experienced similar success — estimating “more than 200 net new jobs and a payroll of about $10 million” — and is looking to extend their credits for another three years.
Meanwhile, things don’t look so rosy for Maryland. According to a recent article in the Baltimore Business Journal, legislation proposing an angel tax credit in the state has little chance of passing. The bill “has yet to make it out of committee in the Maryland House and Senate. With other big priorities, like the state budget, left to tackle before the legislative session ends Monday, proponents of the bill (HB 789/SB 584) say they will try again next year.
[image via Tax Credits]
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