Angel tax credit cap lifted as part of Wis. budget

A lifetime cap on state angel investment tax credits was eliminated in the $70-billion, two-year budget Gov. Scott Walker signed into law Sunday.

Under the Act 255 program, an individual investor can claim a 25 percent income tax credit on the total amount invested in a qualified new business venture (QNBV). The program was designed to spur growth in early stage high-tech companies that studies show create large amounts of jobs.

Under current law, the total had been capped at $47.5 million, and nearly $36 million had been issued through 2012, according to a Legislative Fiscal Bureau study. The study estimated the program would expire in 2014 without action.

Lifting the tax credit ceiling was a goal of the Wisconsin Technology Council and its policy papers, as well as the Wisconsin Growth Capital Coalition, which helped to inform legislators of its importance to the early stage economy.

From its inception in 2005 through 2012, the QNBV/Act 255 program, which also includes tax credits for early stage funds, has distributed $58.8 million in tax credits, according to a recent report to by the Wisconsin Economic Development Corporation.

The QNBV firms have attracted additional capital to fund their operations and growth, from both Wisconsin investors, who can claim the credit, and other investors.

The most recent Wisconsin Portfolio, produced by the Wisconsin Angel Network and the Tech Council, tracked more than $163 million invested in state companies, many of which are QNBV-certified. That was a 7% jump from 2011.

Several neighboring states to Wisconsin offer similar tax credit programs, with Minnesota and Nebraska offering refundable credits, where the taxpayer receives a cash payment for the amount of the credit in excess of the tax liability for that year. Refundability in Wisconsin remains a goal for the Tech Council, WAN and the WGCC.

Such a program could attract out-of-state investment in Wisconsin startups, according to the Legislative Fiscal Bureau study.