Angel Investor Tax Credit

The Angel Investor Tax Credit Program Act of 2005 (Act 400) enhances the Louisiana entrepreneurial business environment by rewarding qualified individual investors for investing in early stage, wealth-creating businesses. Investors can receive refundable Louisiana income or corporation franchise tax credits of up to 50 percent of the money invested. The total angel investor tax credits shall not exceed $5 million. Qualification for the tax benefits of Act 400 requires that both the entrepreneurial business and the investor(s) meet the following specific certification requirements:

• a fully developed business plan
• the principal business operations are located in Louisiana including Louisiana as the primary place of employment for the employees of the business;
• the business operates as a person defined as an “employer” within the meaning of the state's Quality Jobs Rules;
• the number of jobs to be created, and the title and salary ranges of those jobs;
• the business is not primarily engaged in the business of retail sales, real estate, professional services, gaming or gambling, natural resource extraction or exploration, or financial services including venture capital funds;
• the business has a plan or progression through which more than 50 percent of its sales will be derived from outside Louisiana ;
• the amount of investment requested and a Source and Use statement showing that the investment funds will be used for capital improvements, plant and equipment, research and development, working capital for the business or other business activity approved by LED; and
• the Louisiana Tax Identification Number of the business.

UNDER NO CIRCUMSTANCES SHALL THE LED SECRETARY'S CERTIFICATION OF THE APPLICANT AS A LOUISIANA ENTREPRENEURIAL BUSINESS BE CONSIDERED OR IMPLIED TO BE AN ENDORSEMENT OF THE BUSINESS OR ANY INVESTMENT IN THAT BUSINESS, AND THE APPLICANT SHALL SO ADVISE ALL INVESTORS OF THIS FACT.

Accredited Investor - To qualify for an angel investor tax credit, all of the following qualifications shall be required of each applicant:

• the investment in the Louisiana Entrepreneurial Business must be an investment that is at risk and not secured or guaranteed;
• the funds invested by the applicant cannot have been raised as a result of other Louisiana tax incentive programs, funds pooled or organized through capital placement agreements or as the result of illegal activity;
• the angel investor, as defined, cannot be the principal owner of the business who is involved in the operation of the business as a full-time professional activity;
• the investment in the Louisiana Entrepreneurial Business by the applicant must be maintained for three years;
• an Accredited Investor shall be defined as:
• an Angel Pool, all of whose participants shall be Accredited Investors;
• a natural person who has individual or joint net worth that exceeds $1 million at the time of the investment or individual income exceeding $200,000, or joint income exceeding $300,000.

Information contained in this document is just a synopsis of highlights of the Angel Investor Tax Incentive Program. Statutory and rule requirements must be followed in all applications. For additional information about this program call Craig Hartberg at 225-342-5882.

For more details on how the program works, please click here. To download the Angel Investor Tax Credit Rules (PDF), click here.