State Tax Credits
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Many states offer tax credits for startup investments.
Those states with a state income tax will reduce your capital gains tax burden.
The typical requirements are as follows:
- The business must be a C-Corp or an LLC entity.
- The entity was organized no more than 3 years before the investment.
- It must have less than $500K of revenue.
- You must hold some operations of the business within the state.
- The business must have at least two full-time employees, but less than 20 total employees.
- The business must be a growth startup that excludes restaurants, retail, and other lifestyle businesses.
- The business must be able to increase jobs in the area for some number of years after investment.
- You cannot have more than $10M in assets.
Each state has a unique set of rules but most follow these guidelines.
Check your state’s website for applicable laws regarding tax breaks for startup investments.
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