Thursday March 20, 2014 0 commentsColorado has been on a roll for the last few years when it comes to enticing angel investors to put some money into the state's innovation and technology sector in exchange for a tax credit.
In 2011, (then) State Rep. John Kefalas successfully steered an extension of a one-year pilot program through the Legislature called the Colorado Innovation Investment Tax Credit (House Bill 11-1045).
The measure continued the 2010 pilot program's tax credits to angel investors who gave at least $25,000 to a small Colorado business that was less than five years old and involved in the research, development or manufacturing of new technologies, products or processes.
Angel investors are loosely defined as wealthy individuals or groups of investors who provide capital to early-stage companies.
Under the 2010 and 2011 programs, angel investors who invested at least $25,000 in a startup company could receive a 15 percent tax credit not to exceed $20,000.
Now, in the 2014 Legislative session, another bill - HB 14-1012 - is aimed at increasing that tax credit and attracting more angel investment to Colorado's tech sector - specifically, the state's so-called "advanced industries."
The bill, known as the Advanced Industry Investment Income tax Credit, ups the tax credit on their state income tax bill to 25 percent of their investment or 30 percent if the company is in a rural or economically distressed area.
The bill was introduced Jan. 8 by bi-partisan House sponsors Max Tyler(D) and Cheri Gerou (R). On Feb. 27, the House Committee on Finance referred it to the House Appropriations Committee.
The new bill has some additional qualfiications. The maximum amount of a tax credit is capped at $50,000 and the state would only be allowed to issue $2 million in credits per calendar year on the program set to expire Jan. 1, 2018.
In addition, unused tax credits in 2014 could be rolled over into 2015 and carried forward for five tax years.
Colorado is regarded as one of the nation's top states for innovation, and this is the kind of support that's needed to keep and improve upon that image and reality.
Advanced industry startups - defined as those in the areas of aerospace, bioscience, electronics, energy and natural resources, information technology and infrastructure engineering - are key engines in our state's economy, providing jobs, tax revenues and prosperity.
We encourage legislators to pass the bill and put a strong and certain angel investor tax credit program in place for the next four years.