Angel and Fund Credits

Angel Investment Tax Credit


Qualified Investor, Qualified Small Business and Qualified Investment applications for the 2022 calendar year are posted under the Additional Resources header below. Investors and businesses wanting to participate in the Angel Investment Act tax credit program during calendar year 2022 need to submit new applications for 2022, even if certification was obtained in a prior year. 2022 applications can be submitted beginning on Monday, December 13, 2021 at 9 a.m. local time in Frankfort, Ky.

See the Additional Resources section below for the most current version of the Kentucky Angel Investment Act Guidelines and applications. Applications must be submitted on the current form. For assistance with applications, email ced.angel@ky.gov.


Encouraging Capital Investments in Kentucky Small Businesses


The Cabinet for Economic Development understands that investment in Kentucky small businesses is crucial to the economic welfare of the Commonwealth. To encourage business growth and job creation, the Kentucky Angel Investment Act Tax Credit allows angel investors – people who provide capital for startup companies – to receive tax credits. Qualified investors can receive a tax credit of up to 40 percent of their investment in counties with high unemployment rates, or enhanced counties, and 25 percent in all other counties.

The purpose of the Kentucky Angel Investment Tax Credit program is to encourage qualified individual investors to make capital investments in Kentucky small businesses, create additional jobs, and promote the development of new products and technologies. Qualified individual investors making qualified investments in qualified small businesses may be eligible for incentives in this program. The Commonwealth, through KEDFA, allocates the credits to qualified investors.

The Cabinet does not provide financial screening of the companies or individuals involved in the program and limits its certification to the statutory parameters for a Qualified Investor, Qualified Small Business and Qualified Investment per KRS 154.20-230 through 240. Cabinet staff will not perform due diligence on the small businesses and cannot guarantee any return on investment.

 

Key Guidelines:

  • A Qualified Small Business is a legal entity registered and in good standing with the Kentucky Secretary of State and has no more than 100 full-time employees.
  • The business must be engaged in Bioscience; Environmental and energy technology; Health and human development; Information technology and communications; Materials science and advanced manufacturing; or Other new economy knowledge based activity.
  • A Qualified Investor holds no more than twenty percent (20%) ownership in and is not employed by the Qualified Small Business prior to making a Qualified Investment in that business.
  • A Qualified Investment is a minimum cash investment of $10,000 made by a Qualified Investor in a Qualified Small Business.
  • Tax credits may be transferred to an individual tax payer and can be carried forward for up to 15 years.

Refer to the Kentucky Angel Investment Act Guidelines for more detailed program information.

Additional Resources

Kentucky Investment Fund Act (KIFA)

The Kentucky Investment Fund Act (KIFA) offers a 40 percent tax credit to certain personal and corporate investors in approved investment funds. The purpose of KIFA is to encourage capital investment in the Commonwealth of Kentucky, to encourage the establishment of small businesses in Kentucky, to provide additional jobs, and to encourage the development of new products and technologies in the state through capital investments.

Key Guidelines:

  • Minimum fund size is $500,000 with no less than four investors
  • Qualified investments must meet certain criteria including investments in Kentucky-based businesses with less than 100 employees (see detailed fact sheet for further qualifications)
  • Investments must be in qualified activities such as industrial, manufacturing, commercial, health care, etc. (see detailed fact sheet for further details).

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