WHAT IS THE ENTERPRISE ZONE
The Enterprise Zone program provides the following incentives for businesses
located in designated zones, as well as for taxpayers making donations to
qualified non-profit projects in EZs.
ENTERPRISE ZONE TAX CREDITS AND INCENTIVES.
percent (3%) Investment Tax Credit (ITC).
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 percent (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 twelve.
Job Tax 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 percent 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 (applies to 3 and 4 below).
**Enhanced Rural EZ $2,000 Job Tax Credit**
Beginning January 1, 2003, there is an additional credit of $2,000 per new
job for New Business Facilities located in a designated Enhanced Rural Enterprise
Job Tax Credit for Agricultural Processing.
An additional credit of $500 per new business facility employee may be claimed
by businesses which add value to agricultural commodities through manufacturing
**Enhanced Rural Ag Processing EZ $500 Job Tax Credit**
Beginning January 1, 2003, there is an additional credit of $500 per new agricultural
processing job for New Business Facilities located in a designated Enhanced
Rural Enterprise Zone. This is in addition to the regular NBF jobs credits,
for a total credit of $3,500 per new ag processing job.
job tax credit for employer health insurance.
In order to encourage employer sponsored health insurance plans, a taxpayer
with a qualifying new business facility is allowed a two-year $1,000 tax credit
for each new business facility employee who is insured under a qualifying
employer sponsored health insurance program.
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 percent (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. Taxpayers claiming this credit must file Form DR0077,
"Certification of Qualified Enterprise Zone Research & Development Expenditures."
to rehabilitate vacant buildings.
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 2 years may
claim a credit of 25 percent (25%) of the cost of rehabilitating each building.
The credit is limited to $50,000. Taxpayers claiming this credit file Form
DR0076, "Certification of Qualified Nature of Enterprise Zone Rehabilitation
for contributions to zones.
A taxpayer who makes a contribution to certain eligible enterprise zone development
projects including business assistance, job training, economic development
marketing, community development and homeless organizations in zones may claim
a tax credit. To be eligible, a proposed project must be approved by the local
enterprise zone administrator and by the Colorado Economic Development Commission.
The amount of the credit is 25 percent (25%) of the value of the contribution, up
to $100,000 (12.5% for in-kind contributions up to $50,000 in credit).
percent (12%) Job Training Credit.
Employers who carry out a qualified job training program for their enterprise
zone employees may claim an income tax credit of 12 percent (12%) of their eligible
from state sales and use tax for manufacturing and mining equipment.
- Manufacturing Machinery
- Machine Tools and
- Machine Parts are exempt from the 2.9 percent state sales and use tax statewide,
regardless of where within the state the equipment is used.
When used solely within an enterprise zone this exemption may also
be claimed for purchases of:
- Mining Equipment
- Materials Used to Make Eligible Machinery
Eligible purchases used in an enterprise zone are exempt whether the purchases
are capitalized or expensed for accounting purposes.
government tax incentives.
Any city, county, or special district within an enterprise zone is authorized
to negotiate with individual taxpayers who have qualifying new business facilities
(a) an incentive payment or property tax credit equal to no more than the
amount of the increase in property tax liability over pre-enterprise zone
levels; and (b) a refund of local sales taxes on purchases of equipment, machinery,
machine tools, or supplies used in the taxpayer’s business in the enterprise
The local zone administrator is responsible for issuing certifications to
taxpayers wishing to claim EZ tax credits. For business tax credits, the taxpayer
must attach a copy of the "Enterprise Zone Certification of Qualified Business"
form, DR 0074, to its Colorado income tax return if the business is claiming
an enterprise zone investment tax credit of $450 or more, or other enterprise
zone tax credits. For EZ contribution tax credits, the recipient organization
or EZ will provide the donor with a Certification of Qualified EZ Contribution,
Advance Colorado.com (Enterprise Zone)
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