State Business Incentives
The following links contain information on programs that may offer incentives to qualifying businesses:
- Aircraft Manufacturer Tax Credits: Aircraft manufacturers located in a Colorado aviation development zone may qualify for a State income tax credit of $1,200 per new employee.
- Biotechnology Sales and Use Tax Refund: Qualified taxpayers may seek a refund every year for all Colorado sales and use taxes they paid on purchases of tangible personal property used directly and predominately in research and development of biotechnology.
- Colorado FIRST and Existing Job Training Assistance: Colorado First grants are for companies that are relocating to Colorado or existing companies that are undertaking a major expansion. Existing Industry grants are designed for Colorado companies that are implementing new technology to remain competitive and keep jobs in Colorado.
- Manufacturing Revenue Bonds: The Manufacturing Bonds Program favorable tax-exempt Private Activity Bond financing targeted to small manufacturers in Colorado.
- Enterprise Zone Tax Credits: Colorado's Enterprise Zone program provides tax incentives to encourage businesses to locate and expand in designated economically distressed areas of the State.
Browse through the list of following tax credits which apply to different businesses.
Contribution Tax Credit
This tax credit is available to a taxpayer who makes a contribution to certain eligible enterprise zone economic development projects including:
- Business assistance
- Job training
- Economic development
- Community development
- Homeless organization in zones
Investment Tax Credit
Businesses making investments in equipment used exclusively in an enterprise zone which would have qualified for the pre-1986 federal investment tax credit may claim a credit against their Colorado income taxes equal to 3% of the amount of the investment, subject to limitations on the amount which can be claimed in any one year. Investment which results from an in-state relocation is not eligible for the credit unless the new location qualifies as an expansion. Excess credits may be carried back three years and forward 12.
Job Training Credit
Employers who carry out a qualified job training program for the enterprise zone employees may claim an income tax credit of 10% of their eligible training costs.
Job Growth Incentive Tax Credit
The Job Growth Incentive Tax Credit provides a state income tax credit to businesses undertaking job creation projects that would not occur in Colorado without this program and that have not met certain requirements under the Economic Development Commission's (EDC) Job Growth Incentive Tax Credit Program.
New Business Facility (NBF) Jobs Credit
Businesses hiring new employees in connection with a "new business facility" located in an enterprise zone may claim a tax credit against state income taxes of $500 for each such employee. An expansion of an existing facility may be considered a "new business facility" if the expansion adds at least 10 employees or a 10% increase over the previous annual average, if it is at least $1 million in investment or, if less, at least doubles the original investment in the facility. The credit may be taken in subsequent years of the enterprise zone for each additional employee above the maximum number employed in any prior tax year. Excess credits may be carried forward five years.
Rural Enterprise Zone (EZ)
Beginning January 1, 2003, the NBF Jobs Credit offers an additional credit of $2,000 per new job for New Business Facilities located in a designated Rural Enterprise Zone. The total new job credit is $2,500.
New Business (NBF) Agricultural Processing Jobs Credit
An additional credit of $500 per new business facility employee may be claimed by businesses which add value to agricultural commodities through manufacturing or processing. Businesses that qualify for the NBF Agricultural Processing Jobs Credit also qualify for the NBF Jobs Credit, and can take the $500 NBF Agricultural Processing Jobs Credit in addition to the $500 NBF Jobs Credit for a total of $1,000.
In order to encourage employer-sponsored health insurance plans, a taxpayer with a qualifying new business facility is allowed a two-year, $200 tax credit for each new business facility employee who is insured under a qualifying employer-sponsored health insurance program.
R&D Increase Tax Credit
Taxpayers who make private expenditures on research and experimental activities (as defined in federal tax law) conducted in an enterprise zone qualify for an income tax credit. This credit equals 3% of the amount of the increase in the taxpayer's R&D expenditures within the zone for the current tax year above the average of R&D expenditures within the zone area in the previous two years. No more than one fourth of the allowable credit may be taken in any one tax year.
Vacant Building Rehabilitation Credit
Owners or tenants of commercial buildings in an enterprise zone which are at least 20 years old and which have been vacant for at least two years may claim a credit of 25% of the cost of rehabilitating each building. The credit is limited to $50,000.
Manufacturing and Mining Sales and Use Tax Credit
When machinery is used solely and exclusively in an enterprise zone, the standard statewide manufacturing / machinery exemption is broader:
- Machinery used solely and exclusively in a designated enterprise zone does not have to be capitalized to qualify for the exemption.
- Materials for construction or repair of machinery or machine tools are exempt from the State sales and use tax if the machinery is used exclusively in an enterprise zone.
- Mining operations are included in the definition of manufacturing when performed in an enterprise zone.