Angel Investor Tax Credit

Encouraging venture capital investment in Iowa startups at the seed capital stage

Angel Investor tax credits are offered to increase the availability and accessibility of venture capital, particularly for ventures at the seed capital investment stage. The program encourages the creation of wealth through high-paid, new jobs while promoting industrial development and innovation. The total amount of tax credits available per fiscal year (July 1 – June 30) is $2 million. 

  • Investors can receive a maximum of $100,000 in tax credits per calendar year for a household (a household includes a person, the person’s spouse and/or dependent). 
  • The investors in any one business can be issued a maximum amount of $500,000 in tax credits per calendar year

The tax credit is:

  • Equal to 25% of an investor’s equity investment
  • Refundable to investors who file personal net income tax
  • Not refundable for investors filing corporate income tax, franchise tax, taxes on gross premiums or moneys and credits taxes

Eligibility

Qualifying Business Eligibility

To be certified as a Qualifying Business and for its investors to be eligible to receive a tax credit, a business must satisfy all the following criteria at the time for which an investment tax credit is claimed:

  • Principal operations located in the state of Iowa; a business is considered to have its principal business operations located in Iowa if:
    • 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)
  • In operation six years or less
  • Must be participating in an entrepreneurial assistance program (this requirement may be waived by the Iowa Economic Development Authority (IEDA) if the business can establish that the owner/business has other experience that adequately replaces participation in an entrepreneurial assistance program)
  • Cannot be primarily engaged in 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 (with regard to this criterion, an “investor” includes a person who executes a binding investment commitment to a business)
    • Total equity financing, binding investment commitments, or some combination thereof, equal to at least $500,000 from investors

Investor Eligibility

  • ​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 to Apply

Process for Qualifying Business certification:

  • Submit an application and supporting documents for staff review
  • IEDA will send the Qualifying Business a certification letter if eligibility criteria is met
  • Investments will be considered eligible if they were made within 120 days prior to the submission of the application or at any point thereafter

Process for Investors:

  • After making an investment in a certified Qualifying Business, submit an application to receive a tax credit
  • Applications are processed on a first-come, first-serve basis
  • The Iowa Economic Development Authority Board must approve a tax credit award; if approved, staff issues a tax credit certificate
  • If applications totaling more than the program amounts are received and approved, the applications will placed on a waitlist on a first-come, first-served basis in subsequent fiscal year
Program Contact(s)

Kristin Hanks-Bents
515.725.0440
startupcredit@iowaeda.com

 

 

 
Iowa Economic Development Authority
200 East Grand Avenue
Des Moines, Iowa 50309
Phone: 1.515.725.3000
email: Email Us

Questions?
Drop Us a Line.

Stay Informed.
Sign Up to Receive Updates.
Emails highlighting economic development news, program updates and upcoming events.