Angel Investment Tax Credit
Updated Angel Investment Act Guidelines, along with updated Qualified Investor, Qualified Small Business and Qualified Investment applications reflecting the legislative changes set forth in Senate Bill 162 of the 2021 Legislative Session, are tentatively scheduled to be released on June 25, 2021. Please check this page on that date for the updated forms. The acceptance date for Qualified Investment applications based on the new Angel Investment Act Guidelines is tentatively scheduled for July 1, 2021 at 9 a.m. local time in Frankfort, Ky. Should you have any questions in the meantime, please contact Tim Back at Tim.Back@ky.gov.
Qualified Investor, Qualified Small Business and Qualified Investment applications subject to the current guidelines are still being accepted for 2021 calendar year certification. See the Additional Resources section below for the current Kentucky Angel Investment Act Guidelines and applications. Applications must be submitted on the current form. For assistance with applications, email firstname.lastname@example.org.
Encouraging Capital Investments in Kentucky Small Businesses
The Cabinet for Economic Development understands that investment in Kentucky small businesses is crucial to the economic welfare of the Commonwealth. To encourage business growth and job creation, the Kentucky Angel Investment Act Tax Credit allows angel investors – people who provide capital for startup companies – to receive tax credits. Qualified investors can receive a tax credit of up to 40 percent of their investment in counties with high unemployment rates, or enhanced counties, and 25 percent in all other counties.
The purpose of the Kentucky Angel Investment Tax Credit program is to encourage qualified individual investors to make capital investments in Kentucky small businesses, create additional jobs, and promote the development of new products and technologies. Qualified individual investors making qualified investments in qualified small businesses may be eligible for incentives in this program. The Commonwealth, through KEDFA, allocates the credits to qualified investors.
The Cabinet does not provide financial screening of the companies or individuals involved in the program and limits its certification to the statutory parameters for a Qualified Investor, Qualified Small Business and Qualified Investment per KRS 154.20-230 through 240. Cabinet staff will not perform due diligence on the small businesses and cannot guarantee any return on investment.
- A Qualified Small Business is a legal entity registered and in good standing with the Kentucky Secretary of State and has no more than 100 full-time employees.
- The business must be engaged in Bioscience; Environmental and energy technology; Health and human development; Information technology and communications; Materials science and advanced manufacturing; or Other new economy knowledge based activity.
- A Qualified Investor holds no more than twenty percent (20%) ownership in and is not employed by the Qualified Small Business prior to making a Qualified Investment in that business.
- A Qualified Investment is a minimum cash investment of $10,000 made by a Qualified Investor in a Qualified Small Business.
- Tax credits may be transferred to an individual tax payer and can be carried forward for up to 15 years.
Refer to the Kentucky Angel Investment Act Guidelines for more detailed program information.