The Advanced Industry Investment Tax Credit (AITC) 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 of 25% of their investment up to a maximum $100,000 credit on an investment of $10,000 or more. If the advanced industries business is in a Colorado enterprise zone or rural county, investors can earn a state income tax credit of 35% 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 $4,000,000 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.
Type: Tax credit
For: Investors and advanced industries businesses
Amount: 25% to 35% per investment up to $100,000
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 35% of the qualified investment, up to the $100,000 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.
|Maximum allowable amount
|Enterprise zone or rural county
The following are considered rural counties for the Advanced Industry Investment Tax Credit program: Alamosa, Archuleta, Baca, Bent, Chaffee, Cheyenne, Clear Creek, Conejos, Costilla, Crowley, Custer, Delta, Dolores, Eagle, Elbert, Fremont, Garfield, 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, Summit, Teller, Washington, and Yuma.
For a business to be an investee in this tax credit program, 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 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 less than five years
If your business has less than 50% of its employees in Colorado, you will need to provide documentation to certify your business is eligible based on location.
Such documentation must:
- be on business letterhead, signed by the CEO or other officer with similar authority
- 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?
Please note - it is required of AITC-certified businesses to monitor their own eligibility. If/when a business surpasses the eligibility criteria, it will immediately become ineligible for AITC. For example, once a business has raised $10 million from third-party investors, it becomes ineligible. Or, once a business, when reviewing their year end financials, has surpassed $5 million in revenues and has generated revenues for 5 full years, it becomes ineligible.
Any investments made in a business after the business becomes ineligible will not qualify for a tax credit. Therefore, the business must keep the eligibility criteria in mind when conducting business and working with potential investors.
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. Trusts are typically not eligible, please contact OEDIT if you would like to invest through a Trust)
- Couples investing together and filing a joint tax return will be treated as a single taxpayer. Please submit the application using the name and SSN of the individual normally listed as the primary taxpayer.
- 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, SAFE, or convertible debt instrument
- invest at least $10,000
- hold less than 30% voting power when combined with affiliates, immediately before investment and less 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 the date you invested
- if an investment is made in tranches, payments must be made within a 90-day period and within 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.
Starting in 2023, investors a part of pass-through entities may allocate their earned tax credit among the entities' partners, shareholders, members, or other constituent qualified investors in any manner agreed to by such qualified investors. OEDIT will issue tax credit certificates to each constituent qualified investor for the appropriate amounts.
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 and we encourage businesses to apply even if an investor is not lined up yet.
Follow these steps to apply as an investee 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.
- Select "Advanced Industries Programs."
- Complete the AI Tax Credit Investee Pre-Certification to prove eligibility.
2. Complete the Investee Certification on the OEDIT application portal.
- If you receive preliminary approval on your pre-certification, you will receive access to complete the AI Tax Credit Investee Certification.
- You will be asked to upload these documents with your application:
- certificate of Good Standing from 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
- Investee Worksheet (XLS)
- investment term sheet
- You will receive an email once your certification has been approved.
Both the business and the investor need to apply separately for this program.
Investors may only apply after the business they'd like to invest in has submitted their AITC application and been certified as an eligible business.
Click on the "Remaining Funds Available" link to see how many tax credits are left available in this calendar year. Investors are awarded tax credits on a first come, first served basis and are not guaranteed credits. Once the credit pool is exhausted no more credits are awarded.
Follow these steps to apply as an investor for this program.
1. Complete the Investor Pre-Qualification 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 1-2 days to activate your account.
- Select "Advanced Industries Programs."
- Complete the AI Tax Credit Investor Pre-Qualification to prove eligibility.
2. Complete the Investor Application on the OEDIT application portal.
- If you receive preliminary approval on your Pre-Qualification, you will receive access to complete the AI Tax Credit Investor Application.
- Investors that are part of pass-through entities will apply differently based on how they choose to allocate their earned tax credit to awardees:
- If a qualified investor is a pass-through entity and will be allocating their earned tax credit pro rata, they may use the AI Tax Credit Investor Application to assign the full tax credit to the pass-through entity.
- If a qualified investor is a pass-through entity and will be allocating their earned tax credit non-pro rata, in addition to the AI Tax Credit Investor Application, they must use the AI Tax Credit Pass-Through Application to allocate the tax credit amongst awardees.
- If a qualified investor is a pass-through entity, will be allocating their earned tax credit non-pro rata, and has 20 or more tax credit awardees, in addition to the AI Tax Credit Investor Application that assigns the full tax credit to the pass-through entity, they must also complete an Awardee Allocation Spreadsheet to notify the office of how they plan to allocate their earned tax credit to awardees.
- You will be asked to upload these documents with 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, the date you sent funds to the business, and the funding amount.
- You will receive an email once your application has been approved.
3. File Colorado income taxes and include certification documents.
For additional support, review the Investor Application Guide for a step-by-step guide on how to apply within the application portal.