Increased angel investment tax credits advanced

Senators gave first-round approval April 7 to a bill that would increase tax credits available to business investors.

Currently, investors can apply for up to $3 million in annual refundable tax credits for investments made in a business with at least 51 percent of its workforce and payroll in Nebraska and 25 or fewer employees primarily engaged in researching, developing or using products and services in the high-tech field.

LB156, as introduced by Gering Sen. John Stinner, would have increased the annual maximum available amount of the angel investment tax credit to $5 million. Stinner said Nebraska currently ranks very low in access to capital.

“In its first year in 2012, the funds were gone by mid-July. In 2015 the funds were gone Jan. 1, the first day they were available,” he said. “Clearly the demand is greater than the available credits. This program has demonstrated success and needs to be expanded.”

A Revenue Committee amendment, adopted 25-0, changed the proposed increase from $5 million to $4 million.

According to state statute, the high-tech field includes 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.

Refundable credits of 40 percent are offered for investments made in a business 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.

Following the adoption of a technical amendment, senators advanced the bill to select file on a 25-0 vote.