Colorado Enterprise Zone Research and Development Increase Tax Credit

Program Overview

Colorado ties its research incentive to its Enterprise Zone program, which directs investment to economically distressed areas. Businesses that increase qualified research expenditures within a zone over the average of the prior two years may claim a credit equal to a percentage of the increase. The credit must be pre-certified with the local Enterprise Zone administrator before the activity begins and is claimed over multiple years rather than all at once. These requirements should be considered when evaluating the timing and utilization of the credit.

Eligibility

• Businesses conducting qualified research, as defined under IRC Section 41, may qualify.
• Qualified research activities must be conducted at a physical location within a Colorado Enterprise Zone.
• The business must obtain annual pre-certification from the applicable Enterprise Zone administrator.
• Additional eligibility and certification requirements may apply.

Benefits

• Provides a credit against Colorado income tax liability.
• The credit is claimed at 25% of the credit amount per year until the full credit is used.
• The multi-year utilization structure allows unused credit amounts to be claimed over multiple years, subject to applicable requirements.