Credit/Exemptions for Any Zone Business

Investment Tax Credit.  Businesses making investments in equipment used exclusively within the Enterprise Zone for at least one year may claim a credit against their Colorado income taxes equal to three percent (3%) of the amount of the investment. This credit is the most widely used of all Enterprise Zone credits.  For credits claimed for tax years beginning on or after January 1, 1997, no investment tax credit is allowed if the investment resulted from the relocation of a business operation from anywhere within Colorado to the Enterprise Zone; however, credits are still allowable if the relocation meets the New Business Facility requirements as a qualifying expansion.

Job Training Credits. Employers who carry out a qualified job training program for their Enterprise Zone employees may now claim an income tax credit of ten percent (10%) of their eligible training investment. On the job training is not a qualified job training program.

Research & Development Tax Credit.  Businesses involved in private expenditures on research and development activities in the Enterprise Zone qualify for an income tax credit.  This credit equals three percent (3%) of the amount of the increase in the taxpayer's R&D expenditures within the Enterprise Zone for the current tax year above the average of R&D expenditures within the Enterprise Zone during the previous two tax years. The total amount of the credit must be divided equally over a four-year period.  Qualified research must satisfy three criteria: it must be technological in nature, it must be useful in the development of a new or improved product or component of the business, and it must utilize the process of experimentation.

Vacant Building Rehabilitation Credit.  There is a credit of twenty-five percent (25%) of rehabilitation costs up to a maximum credit of $50,000 to rehabilitate buildings that are at least 20 years old and which have been completely vacant for at least two years. Qualified expenditures includes exterior, structural, mechanical, and electrical improvements.

Sales and Use Tax Exemption. Purchases of manufacturing machinery and machine tools, parts, and materials used in machinery and machine tools used in the Enterprise Zone are exempt from the three percent (3%) State and one percent (1%) County sales and use tax.

Manufacturers within the Enterprise Zone may claim this exemption whether the purchases are capitalized or expensed for accounting purposes.  Also, machinery and machine tools used directly in the mining process qualify for the tax exemption.  At the time of purchase, a "Purchases of Machinery and Machine Tools" form DR 1191 must be filed with the vendor from whom the item is purchased and with the Colorado Department of Revenue.