The Enterprise Zone Contribution Tax Credit provides a tax credit to Colorado taxpayers that contribute to targeted enterprise zone projects. When taxpayers make a certified contribution, they can claim:
- 25% of a cash donation as a state income tax credit
- 12.5% of an in-kind donation as a state income tax credit
The amount of this tax credit is capped at $100,000 per taxpayer per tax year. If you cannot use all of your credits in a given tax year, you can carry forward the balance up to five years.
The Colorado legislature created the Enterprise Zone (EZ) Program to encourage development in economically distressed areas of the state. The 16 designated enterprise zones have high unemployment rates, low per capita income, or slow population growth.
Local enterprise zone administrators work with local partners on proposals for contribution projects with defined timelines that improve the economy, create and retain jobs, expand businesses, and have community support.
Local nonprofit organizations and government entities manage contribution projects, and Local enterprise zone administrators review and advise contribution projects. The Colorado Economic Development Commission sets enterprise zone policies and approves all contribution projects.
We recommend also reviewing the Enterprise Zone Income Tax Credit Guide for the complete eligibility requirements.
Type: Tax credit
For: Businesses located in enterprise zones and investors
Amount: 12.5% of an in-kind donation and 25% of a cash donation
Application deadline: Rolling
OEDIT division: Business Funding and Incentives
Both new and existing businesses located in enterprise zones may qualify for the credit. For businesses that open in the middle of a tax year, you will need to prorate the credit based on the number of full calendar months during the year that the business operated in the zone.
Businesses need to be legal under both state and federal law. For example, businesses in the marijuana industry do not qualify for this tax credit.
Any Colorado taxpayer can support an enterprise zone contribution project. You do not have to live or work in the enterprise zone to invest.
Eligible managing organizations
The enterprise zone administrator may engage with eligible entities engaged in improving economic conditions within enterprise zones. The organization managing the project needs to be a governmental entity or a nonprofit in Good Standing with the Colorado Secretary of State. Either an entire organization or a specific program/project of the organization may be eligible to manage an enterprise zone contribution project.
An enterprise zone contribution project needs to:
- support the documented economic development goals for the enterprise zone
- link to job creation and retention and/or business expansion in the broader enterprise zone (not only at the project organization)
- have support from the enterprise zone administrator and community
We've compiled a list of Active Contribution Projects to consider investing in.
Generally, contribution projects are either capital campaigns and operations projects. If a project does not match the types below, the project may still be eligible if it supports specific and documented economic development objectives for the enterprise zone.
Capital campaign projects
Capital campaign projects encourage public/private partnerships, raise money for a specific capital project to serve the broader community, and begin construction or implementation within five years. Capital campaign project categories are:
- community facilities
- workforce housing
- tourist attractions
Operations projects fund new economic activity in the enterprise zone to achieve near-term goals. Operations project categories are:
- business assistance
- economic development organizations
- job training programs
- visitor events/attractions
- homeless housing and employment services
Social services are not typically eligible for contribution project status because they do not achieve near-term economic development goals. These include:
- food subsidies and food banks
- child care and youth activities
- homeless prevention
- most human services
- animal shelters and humane societies
Follow these steps to contribute to and claim this tax credit.
- When you donate to an approved enterprise zone contribution project, give the project organization your Colorado Account Number or the last four digits of your Social Security Number.
- The project organization will submit your contribution to the local enterprise zone administrator for review to ensure that the contribution will be applied to the specific contribution project activities and objectives.
- The contributor will receive a tax credit certificate documenting their contribution.
- To claim the tax credit, the taxpayer needs to submit the tax credit certificate and form DR 1366 when they e-file their Colorado tax return.
Contact your local enterprise zone administrator with questions.
Other State Incentives for Charitable Contributions
Charitable Contribution Subtraction (PDF)
Anyone who claims the standard deduction on their federal income tax return (and cannot itemize charitable contributions on their federal return) can still subtract a portion of charitable contributions on their Colorado return.
Childcare Contribution Credit (PDF)
You can claim a 50% income tax credit on monetary contributions to certain child care facilities and programs in Colorado.
Gross Conservation Easement Credit
You can earn an income tax credit when you donate a perpetual conservation easement in gross on real property in Colorado.