Advanced Industry Investment Tax Credit

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.

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, 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? 

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.
• Review the Investor Pre-Qualification Guide for steps on how to apply in the application portal.

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.
• 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.