Missouri gears up to offer tax credits for angel investing after years of pushing for them

by Eric Schmid | St. Louis Magazine | June 15, 2026 at 5:00 AM

The Missouri Innovation, Public Safety, and Accountability Act, passed by the state legislature and sent to Gov. Mike Kehoe last month, has drawn considerable attention for the provisions that allow cities to establish “innovation zones” to tap into a collection of new statewide incentives aimed at getting companies to move in or converting older office buildings into residential uses.

Also folded inside the sweeping economic development bill is a long-sought provision establishing a tax credit for angel investments, which backers hope will spur more investment into early-stage companies across the state. They say it finally puts Missouri on more equal footing with its neighbors that already offer such credits, such as Iowa, Kansas, Illinois, and Kentucky. 

“For more than 20 years, this has been a boulder that people across Missouri have been pushing up the proverbial hill,” says Ben Johnson, BioSTL’s vice president of strategy and operations. Johnson also serves as president of NEXT Missouri, a statewide coalition of organizations and entrepreneurs that advocates for policies that make the Show-Me State more attractive for startups and entrepreneurship.

“Missouri has no shortage of ideas, no shortage of entrepreneurs, and we really don’t have a shortage of capital,” he says. “That capital just isn’t connected to those innovative ideas.” 

Johnson, and others in the state, say an angel investing tax credit would help to change that by creating an incentive for wealthier people to cut checks for early stage companies. It creates rules that allow accredited investors to receive up to 40 percent of their investment in a single “qualified knowledge-based” business in any part of the state back in the form of a tax credit. That increases to 50 percent for a startup located in a rural county, and to 60 percent for those located within an “innovation zone,” which municipalities across the state will be allowed to establish (typically in their central business district).

The escalating percentages are meant to help startups beyond the state’s core urban areas tap into capital, says Jason Wiens, NEXT Missouri coalition director.

“It can be especially challenging for those that are located in rural communities, and so we wanted to make sure that there was an extra incentive too for investors to be looking for good high quality companies, which we know exist all across Missouri,” he says.

Wiens adds the credits—capped at $6 million annually for 2027 and 2028, with the option to grow if they’ve been entirely exhausted each year—are set to be evenly divided between four geographies: the St. Louis region, the Kansas City region, and the remaining areas of the state both north and south of Interstate 70. If credits aren’t fully allocated in a specific region after the first six months in the calendar year, they become available statewide, he says. 

“We know there are strong businesses in all communities across the state, and we wanted all those businesses to have an equal shot at the beginning of every year to use those credits to attract the investment capital that they needed to start and grow,” Wiens says.

An individual investor can only claim up to $75,000 in credits for their investment into any single company. There’s also a cap of $300,000 on the total amount of tax credits any one investor can claim across all their investments made in a single year.

The restrictions are intentional, Johnson says. “It’s not enough for an investor to throw good money after a bad deal. We don’t want the public tax payer taking on that level of risk,” he says. “It’s just a little bit of an incentive to de-risk, to bring new money off the sidelines.”

That’s what St. Louis Arch Angels chairman and CEO Brian Kinman hopes to see happen. 

“There’s always a need for more people to participate in the early stage funding of companies,” he says. “We see a tremendous opportunity for more growth in innovation and entrepreneurship in this region, because of more people being involved. An investor tax credit is an appealing one, because you know it can get people’s attention.”

He says his organization estimates that only about 1 percent of people who may qualify as accredited investors in the St. Louis Region are actually engaged in angel investing. The Securities and Exchange Commission defines an accredited investor as someone with over $1 million in net worth excluding their primary residence, and $200,000 in individual annual income or $300,000 for couples.

To David Weaver, founder and principal of Transitions Law Group, which mostly represents early-stage emerging companies from their inception to Series B financing rounds, an angel investment tax credit can encourage wealthier people to give early-stage investing a try, with a tax vehicle that feels similar to philanthropic giving.

“If you’re familiar with that, you’re already writing checks you’re not getting back except for the feelings and the tax deduction,” he says. “This credit [can] make investing have that kind of immediate pop for something you may lose on seven times out of 10. You get an immediate credit, as opposed to waiting for the deduction when you accrue the loss.”

The broader bill now needs the governor’s signature to become law. That would trigger the state’s Department of Economic Development and the Missouri Technology Corporation to begin their rulemaking process for the program.

The agencies will need to have the rules up and running in time for the program to start in 2027, Weaver says: “The statute sets out the primary elements, the criteria, but how that’s actually implemented into practice is part of the regulatory or rulemaking process.”

The bill lays out a process where angel investment tax credits are allocated to qualified companies vetted by the state. They’re only issued to an investor after their check hits a startup’s bank account, Johnson says. 

“Until there’s an actual transaction into a company, there’s no credit that materializes,” he says. That way it incentivizes direct investment into a new company rather than rewarding investments into a venture capital fund.

“The angel investor is a means to an end,” he says. “The end really is the capital that is a tool for startups, for an entrepreneur to grow, de-risk their technology, hire people in the state, get customers and access the market that’s going to drive the success of their company.”

One element Weaver will be paying attention to is the state’s process for vetting early-stage companies that want to tap into the benefit. He says MTC already has some processes for reviewing companies seeking investment from its venture capital fund, and would expect to see a similar kind of scrutiny for a tax credit allocation, with the state examining business plans, pitch decks and how they’ll contribute to economic development.

“We want actual, legitimate, viable companies,” he says. “We don’t want people promoting scams in order to be able to get tax credits.”

But, he adds, he hopes MTC only evaluates whether a new company is viable and leaves it up to investors to decide if it’s worth supporting. Even so, he notes that the application process with the state could become a friction point.

“Forms already exist when you apply for money with MTC,” Weaver says. “Having taken a lot of clients through that process, that takes time, just the due diligence part that they go through. It rarely takes a week. It takes weeks.”

Still, he’s encouraged by a new opportunity for the businesses he works with to attract more capital when it’s needed most.

“They want to raise money. Most of them are growing on other people’s money. The tax credits will hopefully incentivize local investors to invest more, or at least maybe bring more people into the picture,” Weaver says. “It’s a significant piece of the puzzle, but it’s not the whole puzzle.”