Minnesota Angel Tax Credit
Minnesota Department of Employment and Economic Development (DEED)
25% investor credit (refundable)
25% MN tax credit makes angel raises easier
Minnesota's Angel Tax Credit gives investors a 25% refundable tax credit (up to $125K individual / $250K couple) on equity investments in qualifying high-tech and innovative startups. Startups benefit by attracting angel capital from investors who gain a state-subsidized return — effectively lowering the cost of equity capital for qualifying MN-based companies in biotech, medical devices, agtech, clean energy, software, and other innovation sectors.
- Funding type
- Program
- Level
- State
- Amount
- Investors receive a 25% refundable Minnesota income tax credit on qualifying equity investments — up to $125,000 credit per individual investor per year, $250,000 for couples filing jointly. For a $1M equity round, investors get $250,000 back in state tax credits. Startup benefit: lower effective cost of equity capital and a competitive advantage over non-MN startups when attracting MN-based angels.
- Realistic amount
- For a startup raising $500K–$2M in a qualifying round, the Angel Tax Credit can attract an additional $100K–$500K in ang…
- Deadline
- Rolling — companies apply for qualified business certification before closing an investment round.
- Status
- active
- States
- MN
- Payment model
- in kind
Who qualifies
- Startup company incorporated in Minnesota or registered to do business in Minnesota
- Primary focus on high technology, new proprietary technology, or a new proprietary product, process, or service
- Qualifying sectors: software, bioscience, medical devices, clean energy, agriculture technology, advanced materials, and other innovation-focused industries
- Company must be certified as a 'qualified business' by DEED before investors make qualifying investments
- Company must have fewer than 25 employees at the time of investor certification (typical threshold for small startup qualification)
- Investment must be a new equity investment (not a loan or convertible note until conversion)
Hard requirements
- Must be incorporated
- Location restriction: Minnesota
What it covers
Eligible expenses
- New equity capital raised from certified investors for business development and growth
- All equity investment can qualify — no restriction on how the company uses the capital after receiving it (typical operational and growth expenses)
Ineligible expenses
- This is an investor-level credit — the company does not receive a direct expense reimbursement
- Loans and debt instruments (until equity conversion, if applicable)
How to apply
-
1
Company applies for qualified business certification
Submit the online Qualified Business Application to DEED at mn.gov/deed. Document that the company is MN-based, primarily technology-focused, and meets the eligibility criteria. DEED reviews and certifies qualifying companies.
-
2
Investors apply for certified investor status
Each investor separately applies to DEED for certified investor status (accredited investor per SEC Rule 501, pays $350 non-refundable fee). Both certifications must be complete before money changes hands.
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3
Close equity investment with certified investors
With both certifications in place, close the equity round. Minimum investment is $10,000 per investor ($7,500 for woman/minority/veteran-owned businesses or Greater Minnesota companies).
-
4
Document the investment for tax credit filing
DEED issues confirmation of the qualifying investment. Investors use this documentation to claim the 25% refundable credit on their Minnesota income tax return.
Get your qualified business certification BEFORE you talk to investors — angels who discover the 25% credit after they've already wired money can't retroactively qualify. Lead with it in your pitch deck.
Deadline & timing
Investor certification and business certification must BOTH be completed before the qualifying investment is made. Retroactive certifications are not accepted. Apply at least 4–8 weeks before your targeted close date.
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Last reviewed 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.