Advanced Industries Investment Tax Credit

The Advanced Industries Investment Tax Credit encourages investments in Colorado advanced industries businesses by incentivizing investors with state income tax credits. 

First, Colorado businesses in the advanced industry sectors apply to be certified as an advanced industry business. They then use that status to attract Colorado investors who can earn a state income tax credit by investing in certified advanced industry businesses.

Investors can earn a tax credit for 25% of their investment up to a maximum $50,000 credit on an investment of $200,000 or more. If the advanced industries business is in a Colorado enterprise zone or rural county, investors can earn a state income tax credit for 30% of their investment.

An investor can only earn a single tax credit per business, but individual investors can receive credits for investing in multiple certified businesses, and multiple investors can earn a credit for investing in the same business. OEDIT reviews the applications in the order they're received until $750,000 of credits have been awarded in a given calendar year. Once the credit pool is exhausted no more credits are awarded, so an investor is not guaranteed a tax credit when they make a qualified investment in a certified business.

Please read the drop-down tabs below for important information on qualification, timing, and the application process for businesses and investors. 
 

Eligible Advanced Industries companies              Remaining funds available          

Overview

Type: Tax credit

For: Investors and advanced industries businesses

Amount: 25% to 30% per investment up to $50,000

Application period: Rolling (until funds are gone)

OEDIT division: Business Funding and Incentives

Rates for tax credits vary depending on the property’s location. If the business receiving the investment operates in an enterprise zone or rural county, the tax credit to the investor is 30% of the qualified investment, up to the $50,000 maximum allowable tax credit amount per investment.

The business needs to get their Enterprise Zone Pre-Certification number to qualify for enterprise zone status. Businesses can become pre-certified for free by applying through the OEDIT application portal.

Location Rate Maximum allowable amount
Standard 25% $50,000
Enterprise zone or rural county 30% $50,000


The following are considered rural counties for the Advanced Industry Tax Credit program: Alamosa, Archuleta, Baca, Bent, Chaffee, Cheyenne, Clear Creek, Conejos, Costilla, Crowley, Custer, Delta, Dolores, Elbert, Gilpin, Grand, Gunnison, Hinsdale, Huerfano, Jackson, Kiowa, Kit Carson, La Plata, Lake, Las Animas, Lincoln, Logan, Mesa, Mineral, Moffat, Montezuma, Montrose, Morgan, Otero, Ouray, Park, Phillips, Pitkin, Prowers, Pueblo, Rio Blanco, Rio Grande, Routt, Saguache, San Juan, San Miguel, Sedgwick, Washington, and Yuma.

For a business to be an investee for this tax credit, it needs to:

  • 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
  • have headquarters in Colorado or have at least 50% of employees based in Colorado
  • be registered with the Colorado Secretary of State and in Good Standing
  • have received fewer than $10 million from third-party investors since the business was formed
  • have annual revenues of fewer than $5 million
  • have been actively operating and generating revenue for fewer than five years

If your business has less than 50% of its employees in Colorado, you will need to provide documentation on business letterhead, signed by the CEO or other officer with similar authority.

Such documentation must:

  • provide the titles and functions of all employees identifying where such positions are employed (Colorado or other state or country)
  • include the statement, “I attest that (Business Name) is headquartered in Colorado, and that (identify individuals) work in Colorado on behalf of the business and are responsible for executive orders and key policy decisions.”

When determining if a business is in an advanced industry, OEDIT will look at the following factors:

  • Is the company advancing the industry or advancing the state of the art?
  • What is the company’s intellectual property strategy?
  • Do they hold or are they applying for patents, or do they have trade secrets?
  • Does the company perform Research & Development?
  • What percent of employees are in STEM-related fields? 

To be eligible for this tax credit as an investor, you need to:

  • be an eligible entity type including individual, LLC, partnership, S-corp (C-corps are not eligible)
  • have a different federal employer identification number or taxpayer ID from the company accepting your investment
  • invest in common stock, preferred stock, interest in partnership, interest in LLC, equity security, or convertible debt instrument
  • invest at least $10,000
  • hold fewer than 30% voting power when combined with affiliates, immediately before investment and fewer than 50% voting power when combined with affiliates, immediately after investment
  • certify that the tax credit was an incentive for making the investment
  • apply for the credit within 90 days of date you invested
  • make sure all payments in tranches are within the 90 days and in the same calendar year

An affiliate is defined as any person or entity that controls, is controlled by, or is under common control with another person or entity. For individuals, affiliates include spouses, children, siblings, and parents.

Once an investor has received an Advanced Industry Tax Credit for investing in a given company, they cannot receive a second credit for investing in the same company. However, investors can receive credits for investing in multiple different companies. 

Both the business and the investor need to apply separately for this program. Businesses can apply at any time.

We encourage businesses to apply for this program even if you do not have an investor lined up.

Follow these steps to apply for this program.

1. Complete the Investee Pre-certification on the OEDIT application portal.

  • 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.
  • Complete the Advanced Industries Tax Credit Investee Pre-certification to prove eligibility.

2. Complete the Investee Certification on the OEDIT application portal.

  • After you receive your pre-certification, complete the Advanced Industries Tax Credit Investee Certification. You will be asked to include these documents:
    • statement of Good Standing with the Colorado Secretary of State
    • proof of business organization including articles of incorporation, certificate of partnership
    • most recent year-end balance sheet
    • all year-end income statements or income tax filings from formation or the three most recent years
    • Investment worksheet (XLS)
    • capitalization table
    • investment term sheet
  • We will email you after we approve your certification.

Both the business and the investor need to apply separately for this program. 

Follow these steps to apply for this program.

1. Complete the Advanced Industries Tax Credit Investor Eligibility Check on the OEDIT application portal.

  • Apply within 90 days of a qualified investment.
  • 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.
  • Complete the Advanced Industries Tax Credit Investor Eligibility Check to prove eligibility.
  • Review the Investor Pre-Qualification Guide for steps on how to apply in the application portal.

2. Complete the Advanced Industries Tax Credit Investor Application on the OEDIT application portal.

  • After you receive your eligibility check, complete the Advanced Industries Tax Credit Investor Application.
  • You will need to submit these documents in your application:
    • proof of funding in PDF format, such as a cancelled check, bank statement, and/or a screenshot of bank account activity. These documents should show the investor’s contact name, the business you invested in, and the date you sent funds to the business
    • the most recent capitalization table with investors’ names, investment amount, dates of investments, and percentage of voting power
    • term sheet for the funding round with dates of investments
  • We will email you after we approve your application.

3. File Colorado income taxes and include certification documents.

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