Angel Investment Tax Credit Program

Angel investors and angel investor networks that invest in Qualified New Business Ventures may be eligible to claim an income tax credit on that investment, equal to 12.5% in each of two years.

Angel investors are accredited (sophisticated) investors, for the purposes of this program, as determined by the Department of Commerce (see Accredited (Sophisticated) Investor Status Form), whose cash investment in a Qualified New Business Venture is made in exchange for common stock, a partnership or membership interest, preferred stock or an equivalent ownership interest that is acceptable to Commerce.  An angel investment network is a group of accredited (sophisticated) investors organized for the sole purpose of investing in a single Qualified New Business Venture.

Angel Investor FAQ's:

• A Qualified New Business Venture is an early-stage company with high-growth potential that meets the Department of Commerce's eligibility criteria.  To qualify for tax credits, that business must be certified by Commerce as a Qualified New Business Venture prior to the angel or angel network's investment in the business (For a list of certified businesses, click here). 

• Up to $500,000 in aggregate investment by an angel investor or a member of an angel investment network in a single Qualified New Business Venture may qualify for the tax credit.

• A tax credit may be earned on each investment made in a Qualified New Business Venture, up to the $500,000 aggregate maximum.  Commerce may allocate $3 million in tax credits in each calendar year, up to the authorized maximum of $30 million.  Commerce will, however, issue the tax credits continuously.  Investments taking place after the annual $3 million maximum has been reached will be able to earn credits in the next available year.

• Businesses can receive up to $4 million in tax credit- eligible cash equity investment, of which no more than $1 million in tax credit-eligible investment can come from angel investors. 
  Example:  $500,000 in angel investment + $3,500,000 in venture capital funds = $4 million in investments eligible to earn tax credits. 

To claim tax credits earned through their investments, angel investors must follow the Department of Commerce's verification process.  Investors and Qualified New Business Ventures must also comply with certain subsequent reporting requirements.

For more information about Angel Investment Tax Credits, contact:

       Kathy Collins
       608/267-0769
       Kathy.Collins@Wisconsin.gov

The State of Wisconsin does not endorse the quality of management or the potential for earnings of the certified Qualified New Business Venture.  Furthermore, the Qualified New Business Venture's use of the phrase "certified" and/or "qualified new business venture" is not a recommendation or endorsement of the investment or the company by the Wisconsin Department of Commerce.