COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:0712H.01I Bill No.:HB 235 Subject:Business and Commerce; Economic Development Type:Original Date:March 12, 2025Bill Summary:This proposal establishes the Missouri Angel Investment Incentive Act.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND
AFFECTED
FY 2026FY 2027FY 2028Fully
Implemented
(FY 2033)
Revenue Fund*
Less than
($199,177)
Less than
($6,209,252)
Less than
($6,212,807)
Up to
($15,164,876)
Total Estimated
Net Effect on
General
Revenue
Less than
($199,177)
Less than
($6,209,252)
Less than
($6,212,807)
Up to
($15,164,876)
*Oversight notes the costs for a new tax credit with a cap of $6 million and a 20% increase each
year beginning in FY 2029. Additionally, the above expenditure includes the costs of (1) DOR
and (1) DED FTE.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND
AFFECTED
FY 2026FY 2027FY 2028Fully
Implemented
(FY 2033)
Total Estimated
Net Effect on
Other State
Funds $0$0$0$0
Numbers within parentheses: () indicate costs or losses. L.R. No. 0712H.01I
Bill No. HB 235
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March 12, 2025
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND
AFFECTED
FY 2026FY 2027FY 2028Fully
Implemented
(FY 2033)
Total Estimated
Net Effect on
All Federal
Funds $0$0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND
AFFECTED
FY 2026FY 2027FY 2028Fully
Implemented
(FY 2033)
General Revenue
– DOR 1 FTE1 FTE1 FTE1 FTE
General Revenue
– DED 1 FTE1 FTE1 FTE1 FTE
Total Estimated
Net Effect on
FTE 2 FTE2 FTE2 FTE2 FTE
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND
AFFECTED
FY 2026FY 2027FY 2028Fully
Implemented
(FY 2033)
Local
Government$0$0$0$0 L.R. No. 0712H.01I
Bill No. HB 235
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March 12, 2025
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FISCAL ANALYSIS
ASSUMPTION
Sections 348.273 & 348.274 Angel Investment Incentive Act
Officials from the Office of Administration – Budget & Planning (B&P) the proposed
legislation creates the Missouri Angel Investment Incentive Act. Beginning January 1, 2026, a
tax credit shall be allowed for forty-percent of an investor's cash investment of a qualified
Missouri business. The Director of the Department of Economic Development and the Missouri
Technology Corporation (MTC) shall not allow tax credits of more than $75,000 for a single
business or a total of $300,000 in credits for a single year per investor. The legislation caps the
tax credit at $6 million during calendar years 2026 or 2027, increasing by twenty-percent for
each calendar year thereafter beginning January 1, 2028 and ending December 31, 2032. The
program shall automatically sunset December 31, 2032 and terminate September 1, 2033. The
bill also establishes 4 "Designated geographic regions" (DGR) described as such: Region 1 is the
counties of Andrew, Bates, Benton, Buchanan, Cass, Clay, Clinton, DeKalb, Gentry, Henry,
Holt, Jackson, Johnson, Lafayette, Platte, Ray, and Worth; Region 2 is the counties of Franklin,
Jefferson, Lincoln, St. Charles, Warren, and St. Louis, and St. Louis City; Region 3 is all
counties north of the Missouri River not in Region 1 or 2; Region 4 is all counties south of the
Missouri River not in Region 1 or 2. During the first 6 months of each calendar year, MTC shall
equally distribute the total amount of tax credits available to each of the 4 DGR. During the last
6 months of the calendar year, any remaining tax credits allocated to any DGR may be awarded
by MTC to a qualified Missouri company located anywhere in the state.
B&P notes that the $6 million cap is shared between calendar years 2025 and 2026. Therefore, it
is possible that the full $6 million may be authorized and redeemed for calendar year 2026 (FY
27) leaving no credits remaining for calendar year 2027 (FY 28). B&P further notes that the 20%
annual increase to the tax credit cap is based on the amount of tax credits allowed in the previous
year. This could result in no adjustment being allowed to the credit limit for calendar year 2027
(20% x $0 tax year 2024 credits authorized), even if the full $6 million in credits is authorized
during the combined two year (2026 and 2027) period.
The following amounts may be allowed annually until the program ends after tax year 2031:
Calendar Year/(Fiscal Year) Cap
2026 & 2027/ (FY27 & FY28) $6,000,000
2028/ (FY29) Up to $7,200,000
2029/ (FY30) Up to $8,640,000
2030/ (FY31) Up to $10,368,000
2031/ (FY32) Up to $12,441,600
2032/ (FY33) Up to $14,929,920
Officials from the Department of Revenue (DOR) note: L.R. No. 0712H.01I
Bill No. HB 235
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March 12, 2025
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This creates the Angel Investment Incentive Act which is a tax credit program. Beginning
January 1, 2026, an investor who makes a cash investment in the qualified securities of a
qualified Missouri business shall receive a tax credit worth 40% of the cash investment unless
located in a rural county then the credit is 50% of the contribution. This credit is to stop on
December 31, 2032. The credit is not refundable but can be carried forward five years.
The Department of Economic Development (DED) and the Missouri Technology Corporation
(MTC) are responsible for administration of this credit. They are to make sure that no one
company gets more than $75,000 in credits per investor and that no investor receives more than
$300,000 annually. This program has a $6 million annual cap in tax years 2026 and 2027. Each
year thereafter the cap will be 20% greater than the actual amount issued in the previous year. If
all credits are issued annually, this could result in the following tax credit cap amounts in future
years.
Tax
Year
Fiscal Year
ClaimedCap
2026FY 2027($6,000,000)2027FY 2028($6,000,000)2028FY 2029($7,200,000)2029FY 2030($8,640,000)2030FY 2031($10,368,000)2031FY 2032($12,441,600)2032FY 2033($14,929,920)2033$0 program stopped
This proposal also allows any tax credits not issued in a year to be carried forward and given out
in a future year, as long as it is before December 31, 2033 (though the stop day of the program is
December 31, 2031). For the simplicity of the fiscal note, they will assume all credits are issued
in their first year. This will be a loss to general revenue of the cap amount annually.
This proposal will become effective on August 28, 2025, but is allowing the tax credit to start on
January 1, 2026. Therefore, the first tax returns filed reporting the credit will be received
starting on January 1, 2027.
These credits require the business to be an approve business by MTC. Additionally, MTC has to
approve the distribution of the credits. MTC will issue certificates that the taxpayer can attach to
the tax return to redeem the credit. MTC is allowed to charge a fee for the credits. They defer to
MTC for the impact on the fee.
This will be a new tax credit that has to be added to the MO-TC form ($2,200), the Department’s
website and the individual income tax computer system ($1,832). These changes are estimated
to cost $4,032. DOR’s existing tax credit staff is no longer able to take on any additional tax L.R. No. 0712H.01I
Bill No. HB 235
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March 12, 2025
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credits without additional resources. Due to the intensive knowledge of credits that is needed
DOR is not able to use temporary staff to help with processing these returns. This proposal
would require at least 1 FTE Associate Customer Service Rep at a salary of $37,020.
Oversight notes that this proposal allows for no one qualified company to obtain more than
$75,000 in credits per investor and no one investor, or entity investor, shall receive more than
$300,000 annually.
Oversight notes that the proposal, §§348.273.3. (3), requires that all the tax credits issued in
previous year must be utilized in order for the 20% increase to occur. Therefore, for purposes of
this fiscal note, Oversight will assume a continuous 20% increase occurring each year after FY
2029 (TY/CY 2028).
Oversight notes that the proposal, §§348.273.3. (3), allows for the unissued tax credits to be
carried over for issuance in any future year, but before December 31, 2032. (FY 2033)
Officials from the Department of Economic Development (DED) note:
Section 348.273. creates the Missouri Angel Investment Incentive Act. The tax credit program is
primarily administered by MTC (Missouri Technology Corporation). DED's role is to process
and issue tax credits.
The program requires annual qualification of Missouri business by the Missouri Technology
Corporation (MTC) to be eligible for the allocation of tax credits equal 50% of each investor’s
cash investment in that business. Such tax credits shall be allocated to those qualified Missouri
businesses that, as determined by MTC, are most likely to provide the greatest economic benefit
to the region, the state, or both. The MTC may allocate, and the department may issue, whole or
partial tax credits in accordance with the report issued to the director of the department based on
MTC's assessment of the qualified Missouri businesses.
Each year, tax credits shall be reserved for equal distribution among each geographic region
during the first 6 months of the year. Any unissued tax credits can be used for any region, after
the first 6 months.
Following allocation by MTC and the cash investment in a qualified security of a qualified
Missouri business by an investor, DED is authorized to issue tax credits to qualified investors in
such qualified Missouri businesses and may issue whole or partial tax credits in accordance with
MTC's assessment of the qualified Missouri businesses.
This program shall automatically sunset December 31, 2032.
Authorizing the tax credit program will likely reduce annual TSR by up to the annual cap in the
amount of $6,000,000 for January 1, 2026 to December 31, 2027 years. For each tax year
thereafter, the total amount of tax credits shall be increased by twenty percent, if exhausted the L.R. No. 0712H.01I
Bill No. HB 235
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previous year. The balance of unissued tax credits may be carried over for issuance in future
years before December 31, 2034. Qualification and award of projects will be administered by the
Missouri Technology Corporation. DED will need to hire 1.0 FTE to administer the program's
issuance of tax credits.
Oversight notes the DED assume the need for 1 FTE (Senior Economic Development Specialist
at $83,784 annually in the fiscal note beginning FY 2026 to properly administer the tax credit.
Oversight does not have any information to the contrary. Therefore, Oversight will reflect the
costs for 1 FTE impact in the fiscal note.
DED, in additional correspondence via a-mail, in response to the similar identical proposal, SB
1178 (3669S.01), states the MTC is a nonprofit created in statute and governed by a 15-member
board under §§348.275 RSMo. The MTC has a separate, private bank account, so the funds from
the application fee, as provided in §§348.273. 4 (5),would be collected by MTC into their private
account. The money collected in fees would not go into any state fund per the proposed
legislation.
Officials from the Oversight Division
pursuant to Section 23.253 RSMo; however, Oversight is able to absorb the cost with the current
budget authority.
Officials from the Joint Committee on Administrative Rules assume this proposal is not
anticipated to cause a fiscal impact beyond its current appropriation.
Officials from the Office of the Secretary of State (SOS) note many bills considered by the
General Assembly include provisions allowing or requiring agencies to submit rules and
regulations to implement the act. The SOS is provided with core funding to handle a certain
amount of normal activity resulting from each year's legislative session. The fiscal impact for
this fiscal note to the SOS for Administrative Rules is less than $5,000. The SOS recognizes that
this is a small amount and does not expect that additional funding would be required to meet
these costs. However, the SOS also recognizes that many such bills may be passed by the
General Assembly in a given year and that collectively the costs may be in excess of what the
office can sustain with its core budget. Therefore, the SOS reserves the right to request funding
for the cost of supporting administrative rules requirements should the need arise based on a
review of the finally approved bills signed by the governor. L.R. No. 0712H.01I
Bill No. HB 235
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FISCAL IMPACT – State
Government
FY 2026
(10 Mo.)
FY 2027FY 2028Fully
Implemented
(FY 2033)
GENERAL REVENUECost – Section 348.273 -
"Missouri Angel Investment
Incentive Act Tax Credit”$0
Up to
($6,000,000)
Up to
($6,000,000)
Up to
($14,929,920)
Costs – DED - Section 348.273
– Administrating the program
Personnel Service($69,820)($85,460)($87,169)($96,242) Fringe Benefits($41,144)($50,044)($50,729)($56,009) Expense & Equipment($18,479)($4,492)($4,582)($5,059)Total Costs – DED p.6($129,443)($139,996)($142,480)($157,309)FTE Change1 FTE1 FTE1 FTE1 FTECosts – DOR - Section 348.273
– processing of tax credit forms
Personnel Service($30,850)($37,760)($38,516)($42,525) Fringe Benefits($25,525)($30,926)($31,229)($34,479) Expense & Equipment($13,359)($570)($582)($643)Total Costs – DOR p.5($69,734)($69,256)($70,327)($77,647)FTE Change1 FTE1 FTE1 FTE1 FTEESTIMATED NET EFFECT
ON GENERAL REVENUE
Less than
($199,177)
Less than
($6,209,252)
Less than
($6,212,807)
Up to
($15,164,876)
Estimated Net FTE Change on
General Revenue2 FTE2 FTE2 FTE2 FTE
FISCAL IMPACT – Local
Government
FY 2026
(10 Mo.)
FY 2027FY 2028Fully
Implemented
(FY 2032)
$0$0$0$0 L.R. No. 0712H.01I
Bill No. HB 235
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FISCAL IMPACT – Small Business
A direct fiscal impact to small businesses would be expected as various businesses will be able to
apply for the tax credit.
FISCAL DESCRIPTION
This act establishes the Missouri Angel Investment Incentive Act.
For all tax years beginning on or after January 1, 2026, this bill allows an investor to claim a tax
credit in an amount equal to 40% of the investor’s investment in the qualified securities of a
qualified Missouri business, or 50% of the investor's investment if the qualified Missouri
business is located in a rural county. If the amount of the tax credit exceeds the investor’s tax
liability in any one tax year, the credit may be carried forward for up to five subsequent tax
years. No investor will receive more than $75,000 in tax credits in a single year for contributions
to a single qualified Missouri business, or receive more than $300,000 in tax credits in total in a
single tax year. A tax credit may be transferred by a qualified investor. The total amount of tax
credits authorized in a single tax year by the Missouri Technology Corporation (MTC) must not
exceed $6 million for the 2026 and 2027 calendar years. Thereafter, the maximum amount of tax
credits that may be authorized will be increased annually by 20%, provided that the maximum
amount of tax credits was authorized in the previous year.
To be designated as a qualified Missouri business, a business must apply to the MTC, as
specified in the bill. The designation of a business as a qualified Missouri business will be made
annually by the MTC. In addition to other requirements specified in the bill, a qualified Missouri
business must not have had annual gross revenues of more than $5 million in the most recent tax
year of the business, and the business must not have been in operation longer than five years if
the business is not a bioscience business, or longer than 10 years if the business is a bioscience
business. Each business that has been allocated tax credits by the MTC must submit a report
containing certain information to the MTC before the tax credits are issued.
The State of Missouri will not be held liable for any damages to an investor that makes an
investment in any qualified security of a qualified Missouri business, any business that applies to
be a qualified Missouri business but is turned down, or any investor that makes an investment in
a business that applies to be a qualified Missouri business but is turned down.
The MTC must annually review the activities undertaken by this bill to ensure compliance. If the
MTC determines that a business is not in substantial compliance, it may inform the business that
the business will lose its designation if it does not come into compliance within 120 days. If the
business does not come into compliance, the MTC may revoke its designation. If a business loses
its designation as a qualified Missouri business, it will beprecluded from being allocated any
additional tax credits. However, investors in such a business will be entitled to keep all of the tax
credits properly issued prior to the loss of designation by the business. L.R. No. 0712H.01I
Bill No. HB 235
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The MTC must report certain information annually to the Department of Economic
Development, the Governor, the President Pro Tem of the Senate, and the Speaker of the House
of Representatives. This act sunsets on December 31, 2032.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Economic Development
Department of Revenue
Office of Administration – Budget & Planning
Oversight Division
Office of the Secretary of State
Joint Committee on Administrative Rules
Julie MorffJessica HarrisDirectorAssistant DirectorMarch 12, 2025March 12, 2025