07.07.14 |
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Colorado Job Growth Incentive Tax Credit Enhanced

The State of Colorado offers the Job Growth Incentive Tax Credit (“the Credit”) to corporate taxpayers who create at least twenty (20) net new jobs in state via performance-based job creation projects.  The Credit’s value is equal to fifty percent (50%) of the FICA taxes incurred by a company and is specific to new jobs created during the pre-determined credit period. Eligibility is predicated on filing an application document with the Colorado Economic Development Commission.

ColoradoRecent enacted legislation has provided several enhancements to the Credit, including reduced wage requirements and revised modifications to various definitions, as discussed below.

A core condition for eligibility with respect to tax years beginning prior to 2014 was that the business would not undertake the project absent the availability of this Credit.  Recently enacted legislation relaxes this requirement beginning in 2014 by providing that the Credit must be a major factor in a company’s decision to locate or retain the project in the state of Colorado. The project also must be the object of a “competition” between Colorado and at least one other state to qualify for the Credit.

The recent amendment lengthens the “credit period”, defined as the time during which the credit may be claimed, from sixty (60) to ninety-six (96) consecutive months.  The legislation also provides that the new jobs must pay an average yearly wage of at least one hundred percent (100%) of the county average wage rate in the county of the taxpayer  location.  Prior to this law change, the minimum average yearly wage had to equal at least one hundred ten percent (110%) of the county average wage rate.  The same reduced percentage applies to projects located in designated Enhanced Rural Enterprise Zones.  Projects within these zones must bring a net job growth of at least five (5) new jobs to Colorado.


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