04.19.15 |
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Colorado Enterprise Zone Credit/Incentive Program

Colorado signThe state of Colorado offers the Colorado Enterprise Zone Tax Credit program[1] as an incentive for businesses to invest in designated enterprise zones, which are economically distressed areas marked by a high unemployment rate, low per capita income, or a low population growth rate.

This bulleted list outlines available credits within the program and their specific values:

  • Agricultural Processor New Employee Credit: Up to $500 per new job
  • Commercial Vehicle Investment Credit: Up to 1.5 percent of commercial vehicle purchases
  • Contribution Tax Credit: Up to 25 percent cash / 12.5 percent in‐kind on contributions to Enterprise Zone projects
  • Employer Sponsored Health Insurance Credit: Up to $1,000 per covered employee
  • Investment Tax Credit (Equipment): Up to 3 percent of equipment purchases
  • Job Training Tax Credit: Up to 12 percent of qualified training expenses
  • Manufacturing/Mining Sales and Use Tax Exemption: Expanded Sales and Use tax exemption in Enterprise Zones
  • New Employee Credit: Up to $1,100 per new job
  • R&D Increase Tax Credit: Up to 3 percent of increased R&D expenditures
  • Vacant Building Rehabilitation Tax Credit: Up to 25 percent of rehab expenditures (hard costs)

Which areas are eligible?

An area must meet one of the following criteria in order to qualify for approval to be designated as an Enterprise Zone[2]:

  • Have an unemployment rate of at least 25 percent above the state average
  • Have a per capita income of at least 25 percent below the state average
  • And/or have population growth of at least 25 percent below the state average (for rural areas)

In order for a business to qualify to receive Enterprise Zone credits or incentives, the business must be paying taxes and operating legally federal and state law.

Is it helping?

Based on the 2014 figures, private investment in Colorado’s Enterprise Zones has generated increased tax revenue for key areas of economic need, such as school districts, new employment, and job training at the city, county and state levels.[3]

The State of Colorado has also determined that Enterprise Zone credits/incentives are necessary in order to compete in the national economy.   Similar credits exist in 39 other states and Washington D.C.[4]

How to get started

The application for ongoing eligibility for Enterprise Zone credits is renewed on a yearly basis.  A business can become pre-certified for eligibility at the beginning of the year, but it must provide proof at the end of the year that it has accomplished the actions necessary to maintain eligibility for the credit or to continue applying for the incentive.

The application process can vary depending on the credit that a business is applying for, so it is beneficial to do research in advance on which incentives are available and applicable for your business to ensure the process is as smooth as possible.

The website for the Colorado Office of Economic Development and International Trade provides a convenient webpage listing the various Enterprise Zone tax credits currently available.  Consider learning more about how ADP® can help businesses identify and capture tax credits.

The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal, or tax advice.  The information and services ADP provides should not be deemed a substitute for the advice of any such professional.  Such information is by nature subject to revision and may not be the most current information available.
 

Learn More About ADP SmartCompliance® Tax Credits

 

[1] Article 30, Urban and Rural Enterprise Zone Act

[2] http://www.advancecolorado.com/sites/default/files/Enterprise_Zone/EZFactSheet15-02.pdf

[3] http://www.advancecolorado.com/funding-incentives/incentives/enterprise-zone-tax-credits

[4] Leeds School of Business in Boulder, CO

 


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