Cheat Sheet: The Illinois Angel Investment Tax Credit Program

In March 2011, the State of Illinois’ Department of Commerce and Economic Opportunity enacted the Illinois Angel Investment Tax Credit Program. The program gives angel investors a tax break for investing in businesses founded and headquartered in Illinois. Here’s the basic breakdown of information for entrepreneurs and investors.

FOR ENTREPRENEURS:

• Business must be headquartered in Illinois with over 51 percent of workers employed in Illinois.
• Innovative companies with less than 100 total employees at original founding with the potential for increased capital and employment opportunities are eligible to receive tax credited investments.
• The company must come into existence less than 10 years prior to certification with the program.
• Less than “$10,000,000 in aggregate private equity investment in cash or $4,000,000 in investments that qualified for tax credits,” can be received, according to the DCEO website.
• Upon approval of registration and qualification, the Department will notify the eligible company in writing.
• Registration must be done each taxable year to continue as a qualified business. So far, 20 companies are listed as eligible.

FOR INVESTORS:

• Individual investors or investment firms can receive up to $10,000,000 in tax credits per calendar year while registering and adhering the program’s guidelines.
• The investment made to a company needs to stay with the company for no fewer than three years.
• Qualified investors can register and receive up to 25 percent of their investment to a registered and qualified company back in tax credit.
• Once a credit has been given, it cannot be transferred or sold to another investor or entity.
• The basis of the credit cannot exceed the maximum of $2,000,000 per investment.
• Permission for the program will be granted to firms on first-come/first-serve.

For more information about the program, visit the DCEO’s website.