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Illinois Angel Investment Tax Credit Program

  

The Illinois Angel Investment Tax Credit Program encourages investment in innovative, early-stage companies to help obtain the working capital needed to further the growth of their company in Illinois. Investors in companies that are certified as Qualified New Business Ventures (QNBVs) can receive a state tax credit equal to 25% of their investment (up to $2 million). 

A total of $10 million in Angel Investment tax credits a year are allocated. Credits will be released by quarter, on a first-come first-served basis. Once tax incentive credits for a particular quarter are exhausted, no further credits can be allocated until the subsequent quarter. Please review the 2023 Allocation Schedule (pdf), slidedeck and presentation before applying.  For information about the program and to schedule a webinar contact AngelInvestment@Illinois.gov.

 

Calendar Year 2023 Application Documents

(If applying as an investor using a trust as an investor’s financial vehicle, your application must include the trust identification and disclosure form found at the bottom of this page)

Calendar Year 2023 Reporting Documents

Businesses - Qualified New Business Venture

Businesses must register for each taxable year in which they desire to be a qualified new business venture (QNBV).  The QNBV Review Committee meets every other Thursday to review applications. View a schedule, including expected date to hear back from DCEO about a QNBV application.

Please familiarize yourself with the program here before applying.

Businesses seeking eligibility as a QNBV must meet all of the following conditions: 

  • Principal place of business must be in Illinois
  • Must be registered in good standing with the Illinois Secretary of State's Office to transact business in Illinois
  • At least 51% of the employees employed by the business must be located in Illinois
  • Must have the potential for increasing jobs, increasing capital investment in Illinois, or both
  • Must be principally engaged in innovation in a qualifying sector as defined in the statute OR undertaking pre-commercialization activity related to proprietary technology that includes conducting research, developing a new product or business process, or developing a service that is principally reliant on applying proprietary technology
  • Must not be principally engaged in a disqualifying sector as defined by statute
  • Must have fewer than 100 employees
  • Must have been in operation in Illinois for not more than 10 consecutive years
  • Must have received not more than $10,000,000 in aggregate investments to date
  • Must agree to maintain a minimum employment threshold (at least 51% of the business' employee positions in Illinois and at least 75% of the business' employee positions created following a receipt of an investment located in Illinois) for 3 years from the date of the last tax credit certificate issued for an investment into the business
  • Must have received not more than $4,000,000 in investments that qualified for tax credits

 

QNBV Set-Asides

On 8/24/2017, SB 2012 was signed by the governor.  As part of this bill, the Angel Tax Credit Program was structured to include two specific set-asides.  The certificate provided to each QNBV upon certification indicates which, if any, apply. 

  1. $500,000 in tax credits are set-aside for investments made in QNBVs which are “minority owned businesses", "women owned businesses", or "businesses owned by a person with a disability." The legislation specifies that these terms be defined as they are used in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act.

  2. $500,000 in tax credits are set-aside for investments made in QNBVs with their principal place of business in counties with a population of not more than 250,000. 

 

Investor Claimants

The Illinois Angel Investment Tax Credit Program offers tax credits to qualifying claimants in an amount equal to 25% of the claimant’s eligible investment made directly in a qualified new business venture.  While the tax credit may not exceed the taxpayer's Illinois income tax liability for the taxable year, the credit may be carried forward up to 5 years following the excess credit year. 

Angel investors must adhere to the following requirements: 

  • Investments must be made in a certified QNBV.
  • Investments must be made on or after the date the QNBV was certified to participate in the program in the eligible CY.
  • Investments must be given at a risk of loss and in consideration for an equity interest of the QNBV. For the purposes of this definition, an investment is at risk of loss if its repayment depends entirely upon the success of the business operations of the qualified new business venture.
  • $10,000 is the minimum amount an applicant must invest in any single QNBV to be used as the basis for a credit.
  • $2,000,000 is the maximum amount an applicant may invest in a single QNBV to be used as the basis for a credit.
  • Investments must remain in the QNBV for a minimum of 3 years. Investors must attest their investment remains in the QNBV on the first, second and third anniversary of investment. Attestation forms will be accepted within 30 days prior to the anniversary of the investment.
  • Tax credits cannot be sold or otherwise transferred.
  • Only equity investments are eligible for tax credits.
  • The Department may accept a Simple Agreement for Future Equity (SAFE agreement) as an eligible investment if the agreement has certain provisions that keep a SAFE investor in more or less the same position as a non-SAFE equity investor in terms of risk exposure and the SAFE must convert automatically and unconditionally within three years from the investment date. See examples of acceptable clauses. 
  • Investors must submit proof that funds were transferred and received by the QNBV. Acceptable documentation may include front and back of cancelled check or incoming wire documentation from the QNBV. The Department may request additional documentation as needed. 

Please Note:  Applicants (whether an individual, trust, partnership, LLC, or corporation) should exercise caution by ensuring that the “claimant name” is uniform across all evidentiary documentation.  Evidentiary documentation includes but is not limited to: the online application, the equity contract/SAFE, and the checking/bank account/wire transfer.  Failure to maintain uniformity will delay processing of the tax credit and may result in denial.

Reference Documents

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