Popular Nebraska angel tax credit may increase $1 million this year
Nebraska State Senator John Stinner of Scottsbluff introduced a bill this session, LB 156, that would increase the amount of available angel investor tax credits from $3 million to $5 million per year. The Legislature’s Revenue Committee advanced LB 156 unanimously, but set the amount of available credits at $4 million.
Nebraska State Senator John Stinner of Scottsbluff introduced a bill this session, LB 156, that would increase the amount of available angel investor tax credits from $3 million to $5 million per year.
The Legislature’s Revenue Committee advanced LB 156 unanimously but set the amount of available credits at $4 million.
Senator Stinner views the angel tax credit as an investment in job creation and growing Nebraska’s economy.
“The tax credit provides an incentive to help rebuild the middle class,” Stinner said. “The credits are only available to investors and companies within the state, so it’s a way for Nebraskans to help Nebraskans.”
Stinner also sees the tax credit from his own experience in banking.
“As a CPA and banker, I think it provides a way for ideas and innovations to receive start-up funding and grow into businesses that are suitable for banks to invest in,” Stinner said. “Many of these businesses are based on intellectual property, and in early stages these are very difficult to value from a banking perspective.”
The angel investor tax credit was first established in 2011 and allows a 35% state income tax credit for investment in qualified businesses (40% for businesses in distressed areas).
Demand in the past two years has been so high that the entire $3 million in available credits was allocated on the first allowable day (January 1), prompting the introduction of LB 156.
Not just for urban areas
The program’s benefits aren’t limited to Lincoln and Omaha.
“There are at least two angel investors in my district participating in the program,” Sen. Stinner said.
The potential for statewide impact was echoed by Dan Hoffman, Chief Operating Officer of Invest Nebraska.
“There are angel investors and participating businesses in rural communities as well as Omaha and Lincoln,” Hoffman said.
Hoffman pointed out a significant increase in Nebraska’s national ranking for capital availability since the tax credit program started.
“In 2010, Nebraska was ranked last in the country. By 2014, we moved up to 36th,” he said.
Bill requires priority designation to pass
Consideration by the full legislature depends on two factors.
First, the bill must be given priority designation by a senator, committee or Speaker of the Legislature. With the volume of bills introduced, the priority designation can be a critical factor in whether the bill is scheduled for debate.
Second, the tax credits in the bill reduce revenue to the state’s General Fund, meaning that final consideration would be delayed until the main budget bills are passed. Remaining bills that cost money, either through spending or reduced revenue, are considered based on whatever room is left in the budget.
Regardless, Senator Stinner believes LB 156 adds an important tool to the state’s economic development tool box.
“The demand is there,” Stinner said. “This bill provides another way to keep entrepreneurial investment here in Nebraska.”
Photo Credit: Nebraska Unicameral Information Office
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