Are you a business owner looking to expand or establish your business in Denver, Colorado? If so, you may be eligible for special tax breaks and incentives offered by the state and local governments. Colorado's Business Zone (EZ) program offers tax incentives to encourage businesses to locate and expand in designated areas with economic difficulties. These incentives can help businesses save money and create jobs in the local economy.The Colorado Urban and Rural Business Zones Act and House Bill 02-1399 allow local governments to grant property tax credits or incentive payments (business incentive agreements (BIA)) depending on the amount of the increase in property taxes for new businesses that qualify in their jurisdictions. Businesses can also receive the tax credit for the job growth incentive and the location-neutral employment incentive (see below), a special type of incentive, for the same new net permanent jobs if the jobs are for remote workers in rural Colorado counties.
Business Zone Investment Tax Credit
Companies can obtain a state income tax credit for 3% of an investment in personal business property.
This credit is available to businesses located in designated business zones.
Research and Development Tax Credit
Companies can get a 3% tax credit if they increase their annual research and development expenses compared to what they spent the previous two years. This credit is available to businesses located in designated business zones.
Job Growth Incentive Tax Credit
The tax credit provides businesses with a Colorado state income tax credit equivalent to 50% of the FICA (Federal Insurance Contributions Act) tax that the company pays for each new net employment for each calendar year of the credit period. If your company takes longer than expected to create the new net jobs, the grant agreement document will remain in effect for the remaining years of the credit period.
Agricultural Processor Tax Credit
Businesses can get more tax credits if the company is an agricultural processor or is in an improved rural business area.
Transferring Unused Tax Credits
A company can transfer the unused tax credit and apply it in each of the next 10 income tax years.Low taxes, a fair and accessible regulatory environment, and low business costs make Denver, Colorado an attractive place to do business. The Colorado Department of Revenue reports on all the business zone tax credits claimed in its annual report.
If you're interested in taking advantage of these special tax breaks, there are three steps to applying for this tax credit:
- Determine if your business is located in a business zone.
- Submit a final application to Global Business Development.
- Wait for approval from the Colorado Economic Development Commission.