Colorado’s Enterprise Zone program provides tax incentives to encourage businesses to locate and expand in designated economically distressed areas of the state.  The six counties and 18 communities of the San Luis Valley are designated as an Enterprise Zone.

Businesses located in the San Luis Valley Enterprise Zone may qualify for tax credits that encourage job creation and investment in the Enterprise Zone, and support non-profit organizations that assist with the needs of the community.  Local jurisdictions may have additional incentive opportunities in the Enterprise Zone.

More information about the Colorado Enterprise Zone program is available at Colorado Enterprise Zone Tax Credits.

We recommend reviewing and reading the Enterprise Zone Income Tax Credit Guide for future reference.

Available EZ tax credits:

• Enterprise Zone Job Training Tax Credit
  12% of eligible training costs
  Businesses can earn a state income tax credit for 12% of eligible job-training costs for employees working within the enterprise zone. This tax credit helps develop a skilled workforce in distressed communities. Even if the business leaves the community, the skilled workforce typically remains an asset to the local economy.
• Enterprise Zone New Employee Tax Credit
  $1,100­ or more per net new employee
  Businesses can earn a state income tax credit of $1,100 per net new employee. Businesses can earn more tax credits if the business is an agricultural processor or is in an enhanced rural enterprise zone. This tax credit encourages businesses to hire and expand employment opportunities, thus reducing unemployment rates. State and local governments benefit from income and sales tax revenue generated from these employees.
• Enterprise Zone Employer-Sponsored Health Insurance Tax Credit
  $1,000 per net new employee
  For the first two years that a business is in an enterprise zone, the business can earn $1,000 per net new employee insured under a qualified health plan for which the employer pays at least 50% of the cost. This tax credit encourages businesses to provide a qualified health insurance plan to employees, potentially improving community health, and reducing public health costs.
• Enterprise Zone Research and Development Tax Credit
  3% of an increase in research and development expenses
  Businesses can earn a 3% tax credit for an increase in annual research and development expenses compared to what they spent the prior two years. Investment in research and experimentation supports an innovative economy. A research and development focused business that sells products, services, or intellectual property will bring outside dollars to the local economy.
• Enterprise Zone Vacant Commercial Building Rehabilitation Tax Credit
  25% of rehabilitation costs (up to $50,000 in credits on $200,000 or more in costs)
  If a business rehabilitates a commercial building that is at least 20 years old and has been vacant for at least two years, the business can earn a state income tax credit for 25% of rehabilitation costs (up to $50,000 in credits on $200,000 or more on costs). This tax credit encourages the revitalization of dilapidated buildings and blighted areas, bringing new businesses and employees to the community. State and local governments gain tax revenue from new economic activity.
• Enterprise Zone Commercial Vehicle Investment Tax Credit
  1.5% of purchase price
  A taxpayer can earn a state income tax credit for 1.5% of the price of new commercial trucks, truck tractors, tractors, semi-trailers, and associated parts registered in Colorado and used in an enterprise zone. This tax credit encourages businesses to register new commercial vehicles in Colorado and pay Colorado licensing and registration fees.
• Enterprise Zone Investment Tax Credit
  3% of business personal property investment
  Businesses can earn a state income tax credit for 3% of an investment in business personal property. New business personal property increases a company’s capacity. The taxes a business pays on these purchases far exceed all tax credits under the enterprise zone program.
• Enterprise Zone Sales and Use Tax Exemption for Manufacturing and Mining
  Sales and use tax exemption
  The statewide sales and use tax exemption for purchases of manufacturing equipment is expanded to include non-capitalized equipment and parts if the business is located within a zone. The enterprise zone statutes also expand manufacturing to include mining.

Enterprise Zone Administrator
Speak with your local Enterprise Zone Administrator to learn more about the EZ Program, local conditions, and other local incentives. The zone administrator for the San Luis Valley Enterprise Zone is Sarah Stoeber. You may e-mail her at sstoeber@slvdrg.org, or call 719 589-6099.

To Apply For Enterprise Zone Business Tax Credits
Once you determine that your business is in an enterprise zone, there are three steps to claim this tax credit.

1. Complete the pre-certification application on the OEDIT application portal. You will need to pre-certify each business location. You will need to apply for pre-certification in advance of the activity that is eligible for the credit.

• Log in to your account or create a new account. To protect your personal information, we manually add new users to the portal, so it may take several days to activate your account. Review this Enterprise Zone Pre-certification How-To Guide.
• Pre-certify each year. You can pre-certify up to three months before the start of the business’ tax year. You can pre-certify at any time during the tax year; however the business is only eligible to earn enterprise zone tax credits for the period certified.
• The local enterprise zone administrator will review and approve your pre-certification application.

2. Complete the certification application on the OEDIT application portal.

• Log in to your account and fill out the certification application. Review this Enterprise Zone Certification How-To Guide.
• Activity conducted during the covered pre-certification period is eligible for enterprise zone tax credits.
• The local enterprise zone administrator will review and approve your certification application.

3. File Colorado income taxes and include certification documents.

• Once the certification application is approved by the local enterprise zone administrator, you will receive via email a tax credit certificate that you need to submit with your Colorado income tax return. You can also access the certificate in the OEDIT application portal. This certificate replaces Colorado Department of Revenue forms DR0074, DR0076, and DR0077.
• Complete and submit the Colorado Department of Revenue form DR1366 and the EZ Tax Credit Certificates with your Colorado income tax return.
• Partnerships need to also complete and submit the DR0078a for distribution of the credits.

Enhanced Rural Enterprise Zones
Rural enterprise zones can further qualify specific areas in the zone for enhanced rural enterprise zone (EREZ) status.
A rural enterprise zone may be a county, municipality, or unincorporated place (more than 10 miles from any municipality with a population greater than 50,000) with a population of fewer than 50,000.
Rural enterprise zone areas may receive enhanced rural status if they meet two of these criteria:

• County unemployment rate is greater than 50% of the state average
• County per capita income is fewer than 75% of the state average
• County population growth rate is fewer than 25% of the state average
• Total non-residential assessed value ranks in the lower half of all counties
• County population is fewer than 5,000

Every two years, OEDIT updates the list of eligible EREZ counties. When a county is removed from the EREZ list, taxpayers who have already committed to and appropriately documented future job creation plans in the county may request an extension of up to five years to continue claiming EREZ credits. Contact your local zone administrator to discuss eligibility for seeking an extension of benefits.
These counties are designated enhanced rural enterprise zones for calendar years 2021 and 2022:
Alamosa, Archuleta, Baca, Bent, Cheyenne, Conejos, Costilla, Crowley, Custer, Delta, Dolores, Fremont, Hinsdale, Huerfano, Jackson, Kiowa, Kit Carson, Lake, Lincoln, Mineral, Montezuma, Otero, Ouray, Phillips, Prowers, Rio Grande, Saguache, San Juan, Sedgwick, Washington, Yuma.

Click here to AMEND a submitted Pre-Certification or Certification application, or to make changes.

Click here, TRANSFER, to request a change in ownership of a Pre-Certification or Certification record or add a new contact.

Special Notes about Applying:

• Investment Tax Credits, Job Training, New Jobs, Health Insurance, Research and Development and Vacant Building Rehabilitation require pre-certification and certification to claim income tax credits.
• Taxpayers whose business involves marijuana, be advised that C.R.S. 39-30-103 (8) states that … only a taxpayer that is engaged in a business that is legal under both state and federal law is eligible to claim a credit…. Though an EZ Administrator may approve a pre-certification and/or certification for EZ tax credits, the onus is on the taxpayer to comply with the statutes.
• There is no ability to pre-date a Pre-certification Application. For each business income tax year, the business’s eligibility to claim EZ credits is from the point of approved pre-certification or the start of the income tax year, whichever is later, through the end of the income tax year entered by the user.
• Electronic filing of State Income Tax is generally required. The Certification form(s) and DR 1366 for EZ tax credits must be attached to the electronic filing. If one’s e-file software does not support these attachments, they may be submitted through Revenue Online using the E-Filer Attachment option. Failure to include form DR 1366 may result in the enterprise zone credits being denied. [39-30-111, C.R.S.] For an electronic filing hardship exception, call 303-238-7378.
• Businesses that completed activities normally eligible for EZ credits prior to 1/1/2012 may not file amended income tax returns to claim credits. Businesses with an approved Certification Form for EZ Credits earned prior to 1/1/2012 may request amendments to the form if amending their CO income tax filing.

Enterprise Zone Contribution Tax Credit
The Enterprise Zone Contribution Tax Credit provides a tax credit to Colorado taxpayers that contribute to targeted enterprise zone (EZ) projects. When taxpayers make a certified contribution, they can claim:

• 25% of a cash donation as a state income tax credit
• 12.5% of an in-kind donation as a state income tax credit

Learn more here.
The amount of this tax credit is capped at $100,000 per taxpayer per tax year. If you cannot use all of your credits in a given tax year, you can carry forward the balance up to five years.
San Luis Valley Enterprise Zone Contribution Projects are managed by the local Zone Administrator, Sarah Stoeber, to encourage public private partnerships to improve the economy for the benefit of the broader Enterprise Zone. Contribution Projects aim to focus community engagement on an economic issue or opportunity to elicit a shift and accomplish a targeted economic development goal within a defined time period.
Enterprise Zone Administrators are focused on managing this program with a strong ethic and focus on job creation/retention and business expansion in the Enterprise Zone.
The Colorado Economic Development Commission sets policies and review/approves all Contribution Projects within their authority under Colorado statutes. View program policies here.

Please contact Zone Administrator Sarah Stoeber to learn more about San Luis Valley Enterprise Zone objectives and to discuss Project opportunities.

• Colorado taxpayers may earn Colorado income tax credits by contributing to targeted efforts – certification of the contribution is required.
• EZ Contributions follow Federal Charitable Contribution rules, learn more from IRS Publication 526. See the “Recent Developments” section for information on the treatment of state tax credits for charitable contributions. IRS Publication 561 provides guidance on valuing in-kind donations.
• Donation must be made to an approved Enterprise Zone Contribution Project. Provide the charitable organization with your Colorado Account Number or the last four digits of your Social Security Number.
• The project will provide the taxpayer with a Certificate documenting their contribution. Contact the Project Organization or the Local Zone Administrator with questions.
• The taxpayer may claim the tax credit when filing state income taxes for the year in which the donation was made – review the Colorado Department of Revenue Form DR1366.

More resources and information:
EZ Legal References
EZ Reports & Data