Colorado Tax Incentives for Your Businesses

If you’re a business owner in Colorado, there are a ton of great business tax credits you can take advantage of.

Keep reading for a complete list of state tax incentives—including Colorado solar tax incentives—and helpful links to state resources for business financing and grant programs.

Quick Links

The benefit of applying for tax credits

Tax credits—which give you a dollar-for-dollar reduction on the amount of tax you owe—are designed to incentivize you to make choices that support the environment, economy, and employees. In the process, you can end up growing your operations, bolstering your workforce, and saving a good chunk of money in taxes.

Federal, state, and local governments all offer tax incentives (check out these popular federal tax credits). Though many tax incentives apply to a wide range of businesses, some incentives are geared toward companies in specific industries. No matter the type of incentive, though, you still have to meet the eligibility requirements.

Colorado tax incentives for businesses

Advanced Industry Investment Tax Credit

The Advanced Industry Investment Tax Credit (AITC) is available to businesses and individual investors who invest in Colorado businesses in advanced industries. The Colorado Office of Economic Development and International Trade (OEDIT) evaluates businesses for “advanced industry” status based on factors like their intellectual property strategy, research and development activities, and percentage of employees in STEM-related fields.

If you’re approved for the AITC, you can earn a credit of 25% of your investment (up to a maximum of $100,000) on an investment of $10,000 or more. If the advanced industry business you’re investing in is located in a Colorado enterprise zone or rural county, your credit will be 35% of your investment.

For your business to qualify as an investor, it must meet the below criteria:

Be a corporation, partnership, LLC, or other business entity (individuals do not qualify)
Manufacture an advanced technology and influence one or more of Colorado’s advanced industries, which include advanced manufacturing, aerospace, bioscience, electronics, energy and natural resources, infrastructure engineering, and information technology
Be headquartered in Colorado or have at least 50% of employees based in Colorado
Be registered with the Colorado Secretary of State and be in good standing
Have received less than $10 million from third-party investors since the business was formed
Have annual revenues of less than $5 million or have been actively generating revenue for fewer than five years

For instructions on how to apply for the credit, visit OEDIT’s AITC resource page.

Job Growth Incentive Tax Credit

The Job Growth Incentive Tax Credit rewards eligible businesses for expanding operations within Colorado or relocating operations to Colorado. If you qualify, you can get a state income tax credit equal to 50% of the Federal Insurance Contributions Act (FICA).

To be eligible, you need to:

Create at least 20 net new jobs in Colorado in one year over the eight-year incentive term, and have an average annual wage of at least 100% of the county’s average annual wage where the project will be located
Consider at least one other state or international market for the project
Acknowledge receipt of the credit as major factor in its decision to locate in Colorado

Learn more about which projects qualify and how to apply.

Colorado enterprise zone tax credits

Colorado’s enterprise zone (EZ) program helps support economically distressed areas in the state. There are 16 EZs within Colorado, all of which deal with one or more of the following: high unemployment rates, low per capita income, or slow population growth.

There are a handful of helpful tax credits available for businesses that operate in a designated EZ. Use this map to see if you’re located in an EZ.

Enterprise Zone Job Training Tax Credit

The Enterprise Zone Job Training Tax Credit helps Colorado businesses in enterprise zones build out their workforce—and improve employee retention rates. The job training tax credit gives qualifying businesses a state income tax credit of 12% of eligible job training costs for their employees working in the enterprise zone.

To be eligible, your business needs to:

Be legal under Colorado and federal law (in other words, cannabis businesses—which aren’t legal under federal law—don’t qualify)
Develop a structured training program that you or another entity conducts and that improves your employees’ job skills
Pre-certify your business before you begin the training

Eligible job training expenses include equipment, supplies, temporary space rental, travel expenses, and training staff wages (among others); employee wages and on-the-job training costs don’t count as eligible expenses.

Visit this page for more information on how to pre-certify, apply for, and claim the credit.

Enterprise Zone New Employee Tax Credit

The Enterprise Zone New Employee Tax Credit rewards businesses in enterprise zones for hiring new employees. If your business is in an enterprise zone, you can get a state income tax credit of $1,100 per employee who works at a qualified enterprise zone business facility.

You can also get additional credits if your business is: in advanced processing or manufacturing ($500); an enhanced rural agricultural processor ($500); located in an enhanced rural enterprise zone ($2,000).

To be eligible, your business needs to:

Be located in an enterprise zone
Be legal under state and federal law
Be pre-certified in advance of the tax year
Have a business facility that’s a factory, mill, plant, refinery, warehouse, feedlot, or other building where you and your employees work and that houses equipment

Qualified new employees need to work at least 20 hours a week at the business facility. Find out how to apply for and claim the credit.

Enterprise Zone Employer-Sponsored Health Insurance Tax Credit

The Enterprise Zone Employer-Sponsored Health Insurance Tax Credit rewards businesses in enterprise zones that give their employees health coverage. If you offer employees a qualified health insurance plan and contribute at least 50% to the total cost of the plan, you can get a tax credit of $1,000 per employee for the first two income tax years your business is operating in an enterprise zone.

Learn how to claim the credit here.

Enterprise Zone Research and Development Tax Credit

The Enterprise Zone Research and Development Tax Credit gives businesses credit for investing in R&D activities, like product development and applied research. If your business takes on R&D projects, you can earn a state income tax credit for 3% of the increase in annual R&D expenses compared to what you spent on R&D in the previous two years.

To be eligible, your business has to:

Be located in the same enterprise zone for at least three years
Be legal under state and federal law
Conduct R&D activities that are technological in nature, require experimentation, and help develop or improve upon a new or existing product or component of the business

Find out how to calculate and claim the credit here.

Enterprise Zone Vacant Commercial Building Rehabilitation Tax Credit

The Enterprise Zone Vacant Commercial Building Rehabilitation Tax Credit gives eligible businesses support to renovate commercial property or rehabilitate vacant buildings. If you qualify, you can earn a state income tax credit for 25% of rehabilitation expenses, up to $50,000 in tax credit per building.

For a building to qualify for the credit, it needs to 1) have been vacant for at least two years prior to the remodeling and 2) not have been used for any income-producing activity.

Check here for a full list of qualified rehabilitation expenditures and instructions on how to claim the credit.

Enterprise Zone Commercial Vehicle Investment Tax Credit

With the Enterprise Zone Commercial Vehicle Investment Tax Credit (CVITC), qualified businesses can earn a state income tax credit for 1.5% of the costs of new commercial trucks, truck tractors, tractors, semi trailers, and associated parts when you register the vehicle in the state and use it in an enterprise zone for one year.

To qualify for the tax credit, your company must be recognized as a lawful business under federal and state law, be located in an enterprise zone, and have a purchase that meets these qualifying criteria:

Be a commercial truck, truck tractor, tractor, semi trailer, or associated parts

Be purchased as new on or after July 1, 2011
Be a model year 2010 or later
Have a gross vehicle weight rating of 54,000+ lbs
Be designated as Class A personal property
Be licensed and registered in Colorado
Be predominantly housed and based in the enterprise zone for 12 months after purchase

Learn how to claim the credit here.

Enterprise Zone Investment Tax Credit

The Enterprise Zone Investment Tax Credit gives eligible businesses a state income tax credit of 3% of the value of a qualified business personal property investment. To qualify, you need to use the investment in a Colorado enterprise zone for the first year of ownership.

Qualified investments include machinery, furniture, appliances, livestock, lodging, vehicles, elevators and escalators, research facilities, single-purpose agricultural or horticultural structures, and more.

For more limits and qualifications for the credit, review the details here.

CHIPS Zones Program

The CHIPS Zones Program gives eligible semiconductor and advanced manufacturing companies access to the above Enterprise Zone income tax credits. Learn more about how communities designate CHIPS zones and how to get pre-certified here.

Commercial Historic Preservation Tax Credit

The Commercial Historic Preservation Tax Credit awards up to $10 million total in tax credits to eligible businesses that rehabilitate historic, owner-occupied commercial properties. If you qualify, you could receive a 25% tax credit for expenses up to $2 million or a 20% tax credit for expenses of $2 million or more, up to $1 million in credits. Commercial properties in rural or disaster areas can get an even higher credit percentage.

To qualify for the tax credit, you need to be a tax-paying entity and be one of the following:

The owner of the historic commercial property (the property needs to produce income, be at least 50 years old, and be listed on the State Register of Historic Properties or landmarked by a certified local government)
A tenant with a lease of at least 39 years in an urban area or five years in a rural area
A holder with a property under contract

For the project to qualify for the tax credit, it has to meet the Secretary of the Interior’s standards for rehabilitation, along with specific remodeling criteria and timeliness requirements. Visit this page to learn more about qualified rehabilitation expenses and apply for the credit.

Employee Ownership Tax Credit

The Employee Ownership Tax Credit—which is available through 2026—gives eligible businesses credit to help offset the cost of creating an employee ownership program within the company. That includes employee stock ownership plans, worker-owned cooperatives, employee ownership trusts, restricted stock units, and the like.

If you qualify for the credit, you can get a credit for up to 50% of your conversion costs to employee ownership, up to $150,000. To be eligible for the program, you need to:

Be headquartered in and operate your business from Colorado for at least one year prior to starting your employee ownership program and applying for the tax credit (note that you need to apply for the tax credit prior to completing your employee ownership conversion program)
Convert to an entity type offering at least 20% equity in the business to employees (excluding founders)
Have at least three full-time employees
Be in good standing with the Secretary of State
Not have applied for this program more than once in a calendar year

Once you get a tax credit reservation, you have a year and a half to demonstrate that at least 20% of the total costs have been incurred. Those can include accounting services, business valuation services, legal services, succession planning services, and technical assistance.

Learn how to apply here.

Colorado solar tax incentives

There’s no Colorado state tax incentives for renewable energy. However, you can still take advantage of one of the two federal solar tax credits if you purchase a solar system for your commercial building. Here are your options:

The Investment Tax Credit (ITC) reduces your federal income tax liability for a percentage of the cost of a solar system installed in the tax year.
The Production Tax Credit (PTC) is a per-kilowatt tax credit for electricity generated by solar and other alternative energy technologies during the first 10 years of a system’s operations.

To qualify for the ITC or PTC, your solar system has to be located in the United States or its territories, use new and limited previously used equipment, and not be leased to a tax-exempt entity. Visit Energy.gov for a breakdown of the different base credit amounts and bonuses.

Local solar tax incentives

Many electric, solar panel, and utility companies in Colorado offer rebates and tax incentives to businesses. There are also a couple of Colorado cities that have their own renewable energy resources and tax programs. Here are some worth noting:

UGI Electric’s Commercial & Industrial Custom Incentive Program: Commercial customers of UGI Electric are eligible for incentives if they improve the energy efficiency of their equipment or business facility.
Fort Collins Utilities Commercial Solar Rebate Program: If you’re a commercial customer of Fort Collins Utilities, you could qualify for a rebate of up to $50,000 for installing a solar system.
Colorado Springs Utilities business rebates and incentives: If you’re a commercial customer of Colorado Springs Utilities, you could qualify for a few different rebate and incentive programs related to improving your business’s energy efficiency.
Property Tax and Sales and Use Tax Exemptions for Renewable Energy Systems: Certain Colorado counties and cities offer property tax rebates or credits, as well as sales and use tax rebates and credits, to commercial property owners who install renewable energy systems on their properties.
Xcel Energy Business Rebates: Xcel Energy, a utility company with services in Colorado and the Midwest, gives rebates to businesses for installing energy-efficient lighting and upgrading their HVAC efficiency. They also offer utility credits for using solar energy and other renewable energy.
Energy Smart Colorado: This nonprofit program offers rebates to businesses that make energy-efficiency improvements. Scroll down on this page to find opportunities in your area.
Boulder Solar Tax Rebates: The city of Boulder gives businesses tax rebates for installing solar electric or solar thermal systems in their facilities.
Denver Solar Funding Programs: The city of Denever has a handful of solar funding resources for businesses.
Black Hills Energy Colorado Solar Program: Commercial customers of Black Hills Energy electric can get money back for installing a solar system in their facilities.

To search for more green business rebates in your Colorado city or county, enter your zip code here.

Want more energy-efficiency tips for your business? Check out Gusto’s guide to becoming more sustainable.

Colorado tax incentives for electric cars

Innovative Motor Vehicle Credit

The Innovative Motor Vehicle Credit gives eligible business owners a state tax credit of $5,000 if they purchase or lease a qualifying EV on or after July 1, 2023. If you purchase an EV on or after January 1, 2024 and the MSRP is at least $35,000, you’re also eligible for an additional $2,500 tax credit. Learn more about eligibility requirements and how to claim the credit here.

Other Colorado EV incentives

Many utility and electric companies across Colorado offer rebates to businesses that purchase an EV. Scroll down here to find your electric company and see what they offer.

Local Colorado business tax incentives

Denver’s Business Investment Program

Denver’s Business Investment Program—which rewards businesses for expanding operations, buying new equipment, or hiring—gives eligible business owners a business personal property tax credit.

To qualify, you need to meet at least one of the below requirements for the 2023 tax year:

Your increased investment was at least $1 million in business expansion
Your increased investment was at least 100% of your prior business capital level
You increased by at least 10 employees over your preceding 12‐month average
You increased by at least 10% in employment over your preceding 12‐month average

The deadline to apply for this year is July 1, 2024. Apply here.

Boulder’s Flexible Rebate Incentive Program

If you do business in the city of Boulder, you might be eligible for the Flexible Rebate Incentive Program, which helps offset the cost expansion projects within the city. If you qualify, you can receive rebates for certain city taxes, permits, and sales and use taxes.

To be eligible, you need to generate 50% or more of your revenue from outside Boulder County (excluding hotels, motels, retailers, and food service facilities) and demonstrate a commitment to environmental, social, and community sustainability practices.

Applications for the current year are due December 13, 2024. For additional eligibility criteria and application instructions, check here.

Other city and county business incentives

Many counties and cities in Colorado have their own business tax incentives, including rebates or exemptions on sales and use tax for investing in certain types of equipment or purchases. To check if your area has local business tax incentives you’re eligible for, click on your county here, then search the website for more information.

Colorado business financing resources

If your business needs extra capital to get off the ground or invest in growth, check out our comprehensive list of Colorado business grants and loans.

Want more Colorado business resources? Revew Explore Gusto’s guide to hiring new employees in Colorado, or review Colorado registration and tax information.