The Denver Enterprise Zone is a State of Colorado tax credit program that allows businesses located within a specific geographic area to receive tax credits against their state tax liability. Businesses that move to or expand in the Denver Enterprise Zone have the potential to save on their Colorado business income taxes each year. Denver's Zone includes over 30 square miles commercially zoned real estate.
Note that the boundaries of the Denver Enterprise Zone have recently been changed. Always start by confirming the Zone staus of an exact business location here. A map for illustrative purposes is also provided below.
There are ten state tax credits available to businesses within the Zone and one state tax credit available to any taxpayer with a state tax liability. Scroll down for information on each (below the map).
If your business will perform an activity that will earn an EZ tax credit, the State requires that you pre-certify annually prior to beginning the activity that will earn the credit. Pre-certification can be requested year-round and must be approved prior to the commencement of the activity.
There is a limited opportunity for firms formerly located in the Denver Enterprise Zone, but no longer within its boundaries, to be 'grandfathered' in for future tax credits based on specific criteria. Details here.
Denver's business owners can get a business personal property tax credit offered through the Business Investment Program, designed to encourage business start-ups and reward existing businesses of all sizes that expand their operations here. This program incentivizes qualified businesses to expand their facilities, add new employees, and buy new equipment.
Full details on this program and the most recent application form is available here. While the window of opportunity to submit for investments made in 2014 has closed, a similar application will be required for investments made in 2015. For business personal property investments made in 2015, you will need to submit your application by mid-2016. Details will be available here soon.
The Business Incentive Fund is a significant and unique tool for Denver to provide support that directly sustains and grows the local economy. As a competitive incentive employed by OED, the fund is one of the city’s approaches to recruit and retain business activity that creates local jobs and/or revenue. This fund has existed in its present form for more than 12 years. In recent budgeting cycles, the City has allocated $1.2 million annually for this purpose through the General Fund.
On behalf of the City, OED will make a small number of strategic incentive investment offers a year. The Mayor and CFO are directly involved in final incentive decisions based on recommendations and calculations presented by OED, and City Council approval is sought for all contracts larger than $500,000.
Calculations are intentionally conservative and based only on direct economic and fiscal benefit, even though each project often brings significant indirect benefits to the economy; an important standard for Denver to extend such an incentive is that the direct fiscal benefit dollars can be estimated to return to the City on at least a 2:1 ratio over a defined period—generally not more than 10 years.
All funds are dispersed only on performance. Every negotiated incentive offer is unique and each has a defined criteria and payout terms, which link directly both to the business decisions and the direct fiscal benefit to the city. While job creation is a primary goal of such incentives, the nature of the business may dictate a different measurable factor upon which incentive funds are dispersed.
A business new to or an existing business expanding its employee base in the Denver Enterprise Zone may receive up to a $1,100 State tax credit for each new job created. For example, if a company in the Denver Enterprise Zone hires 50 full-time employees for a full fiscal year, taking advantage of the New Jobs Tax Credit of $1,100 for each employee could total a credit of $55,000.
Businesses located in the Denver Enterprise Zone making purchases of what the Federal government deems as Section 38 Property (equipment, computers, furniture, vehicles, etc.) used exclusively in the Enterprise Zone for at least one year may claim a tax credit equal to 3% of the investment amount. The credit cannot exceed 100% of the taxpayer's State income tax liability up to $5,000 and 50% of the tax liability above $5,000. The unused portion of the credit may be carried forward for 12 years and back three years.
Employers in the Denver Enterprise Zone who provide a qualified job training program for their Enterprise Zone employees may claim a tax credit of 12% of their eligible training "investment." A qualified job training program means a structured training or basic education program to improve the job skills of the taxpayer's employees.
Manufacturing businesses in the Denver Enterprise Zone are exempt from State sales and use tax on purchases of $500 or more of machinery, machine tools, or parts for either.
A Denver Enterprise Zone taxpayer who qualifies for the New Business Facility or Expansion Facility Jobs Tax Credit (see above) can also qualify for an additional credit of $1,000 for the first two full tax years of operation. The credit is available for each employee who is insured under a health insurance plan provided by the employer where the employer pays at least 50% of the insurance premium. This credit will carry forward five years. Please see the Department of Revenue's FYI Enterprise Zone New Business Facility Employee Credits, Income #10.
Businesses in the Denver Enterprise Zone are eligible for a 25% State tax credit if they rehabilitate a building that is at least 20 years old and has been vacant for at least two years. The credit is 25% (up to $50,000) of the business' hard costs to rehabilitate the building for commercial use.
An additional $500 State tax credit is available per New Business Facility or Business Expansion Facility employee to any taxpayer who operates a business within the Denver Enterprise Zone that manufactures or processes an agricultural commodity.
A 3% State tax credit is available for private expenditures on research and experimental activities (as defined in federal tax law) conducted in the Denver Enterprise Zone. Research must meet federal guidelines.
Commercial trucks, truck tractors, tractors, or semitrailers, as well as associated parts, purchased on or after July 1, 2011, are eligible for a State income tax credit equal to 1.5% of the qualified investment pending application and certification.
Any taxpayer who makes a monetary or in-kind contribution to a certified Denver Enterprise Zone Contribution Project may take a tax credit of up to 25% for cash contributions and 12.5% for in-kind contributions.
For more information on the Denver Enterprise Zone, please contact the Zone Administrator at:
Denver Office of Economic Development
Enterprise Zone Administrator
201 W. Colfax Avenue, Dept. 208
Denver, CO 80202