About
The Angel Investment Tax Credit is a state-administered tax incentive program managed by the Minnesota Department of Revenue in partnership with the Minnesota Department of Employment and Economic Development (DEED). Established in 2010, the program is designed to stimulate angel investment in early-stage Minnesota businesses by offering qualified investors a refundable income tax credit equal to 25 percent of new investments made in certified companies. Individual investors can claim up to $125,000 in annual credits, while married couples filing jointly may claim up to $250,000 per year. The program operates under an annual allocation cap, with $25 million of tax credits approved per calendar year on a first-come, first-served basis. To participate, both investors and portfolio companies must apply for certification through DEED, and investors must submit tax credit requests within 60 days prior to each investment. Eligible companies must be small businesses located primarily in Minnesota or operating in certain designated industries. Investors who receive qualifying certificates can claim their credits on Schedule M1REF when filing their Minnesota Individual Income Tax Return (Form M1). The program is distinctive in offering refundable rather than non-refundable credits, meaning investors may receive tax refunds exceeding their tax liability. Since its inception, the credit has been part of Minnesota's broader effort to encourage venture capital formation and support startup ecosystem development across the state. The program has established itself as a meaningful incentive among state-level angel investment tax credit programs, which emerged in eleven states between 2005 and 2010.