Enterprise Zones

An Enterprise Zone is defined as an economically lagging area of Colorado in which special tax incentives are offered to businesses that expand or locate in the zone. More information can be found through the Department of Revenue at www.taxcolorado.com. The purpose of the tax incentives is to encourage economic development in the zone. There are ten tax credits or exemptions which may be taken by businesses located within a zone, including:

1. The Investment Tax Credit for businesses located in a Colorado Enterprise Zone. A 3.0% tax credit is available for equipment used solely and exclusively in a designated enterprise zone. Request FYI Income 11 for more information.
2. New Business Facility Job Tax Credit is available for new or expanding businesses located in an enterprise zone that create new jobs. A $500 tax credit against state income taxes is available for each employee. Request FYI Income10 for more information.
3. New Business Facility Job Tax Credit for Agricultural Processing is available for new business facility employees for businesses which add value to agricultural commodities through manufacturing or processing. Request FYI Income 10 for more information. Businesses located in an enterprise zone in a county that has been designated as an Enhanced Rural Enterprise Zone can qualify for an additional credit of $2,000 per new job (for a total credit of $2,500 per new job), and an additional credit of $500 per new agricultural processing job (for a total credit of $3,500 per new job).
4. New Business Facility Job Tax Credit for Employer Health Insurance is also available for each new business facility employee who is insured under a qualifying employer-sponsored health insurance program. Request FYI Income10 for more information.
5. Research and Development Tax Credit for R&D carried on in an enterprise zone. Request FYI Income 22 for more information.
6. Tax Credit for Private Contributions to Enterprise Zone Administrators may be taken by any taxpayer who makes monetary or in-kind contributions to an enterprise zone administrator for the purpose of implementing the economic development plan of the zone. Request FYI Income 23 for more information.
7. Tax Credits are available for the Rehabilitation of Vacant Commercial Buildings located in an enterprise zone. Request FYI Income 24 for more information about this credit.
8. Job Training Credit will help employers who carry out a qualified job training program for their enterprise zone employees. Businesses may claim an income tax credit of 10 percent of their eligible training costs. Request FYI Income 31 for more information about this credit.
9. State Sales and Use Tax Exemption for Manufacturing and Mining Equipment used in an enterprise zone. This exemption is for equipment used directly in the manufacturing or mining process (including gas and oil). It applies to sales and use tax and state-collected local taxes. Request FYI Sales 10 for more information on manufacturing equipment. Request FYI Sales 10 for more information on the mining equipment exemption.
10. Local Government Tax Incentives may be negotiated by any city or county within an enterprise zone with individual taxpayers who have qualifying new business facilities: (a) an incentive payment or property tax credit equal to or not 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 zone. FYI’s can be found on the Department of Revenue’s website, http://www.colorado.gov/revenue.