The state of Iowa offers an Angel Investor Tax Credit to encourage venture capital investments in Seed stage companies in Iowa. The tax credit is worth 25% of the investment up to $100,000 per year. Every year there are $2 million in tax credits available to investors. Each business that is eligible for the tax credit can offer up to $500,000 in tax credits to its investors. Below are guidelines for eligibility.
- Principal operations located in the state of Iowa;
- At least 50% of all employees in Iowa
- At least 50% of the business’s total payroll to employees reside in Iowa
- Headquarters is located in Iowa (the headquarters are defined as the home office for a substantial amount of executive employees)
- Operating for six years or less
- Must be participating in an entrepreneurial assistance program, unless waived by the IEDA
- Primary operations do not include retail sales, real estate or the provision of health care services or other services requiring a professional license
- Net worth must be less than or equal to $10 million
- Must have secured all of the following at the time of application for tax credits:
- At least two investors
- Total equity financing and/or binding commitments equal to at least $500,000 from investors’
- Must make an investment in a certified Qualifying Business
- Must make Investments in the form of cash for equity
- Must have less than a 70% ownership stake in the Qualifying Business
How do I apply for the Iowa Angel Investor Tax Credit?
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.