Angel investment tax credits passed

Refundable income tax credits for investments in high-tech business are offered by a bill approved by the Legislature May 18.

LB389, introduced by Bellevue Sen. Abbie Cornett at the request of the governor, provides up to $3 million in annual tax credits for investments made in a business with at least 51 percent of its work force and payroll in Nebraska and 25 or fewer employees primarily engaged in researching, developing or using products and services in the high-tech field.

The bill defines high-tech field to include aerospace, agricultural processing, renewable energy, energy efficiency and conservation, environmental engineering, food technology, cellulosic ethanol, information technology, materials science technology, nanotechnology, telecommunications, biosolutions, medical device products, pharmaceuticals, diagnostics, biologicals, chemistry and veterinary science.

To qualify for tax credits, an individual must invest at least $25,000 in a calendar year and qualified funds — composed of three or more investors — are required to invest at least $50,000.

Refundable credits equaling 35 percent of the investment are granted to investors with caps of $350,000 for married couples filing joint returns and $300,000 for all other filers. Credits may not exceed $1 million per taxable year for any one business.

Refundable credits of 40 percent are offered for investments made in a business that is located in a distressed area, which is defined as a city; a county with a population of fewer than 100,000 residents; an unincorporated area within a county; or a census tract that has an unemployment rate that exceeds the statewide average, a per capita income below the statewide average or a population decrease between the two most recent censuses.

The bill funds the tax credits by reducing the amount of credits offered under the Nebraska Advantage Rural Development Act from $4 million to $1 million. The new limit will be imposed in 2012, and the angel investment program will expire after 2017.

LB389 passed 49-0 on final reading.