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 manage their respective enterprise zones.
In designated enterprise zones:
- businesses are eligible for state income tax credits and sales and use tax exemptions for specific business investments
- economic development projects form by incentivizing taxpayers to contribute through state income tax credits
- taxpayers who contribute to enterprise zone projects may earn income tax credits
Enterprise zone areas within rural counties that meet additional economic distress criteria receive enhanced rural enterprise zone status. Businesses within enhanced rural enterprise zones earn additional tax credits when adding net new employees.
To use this map, type in your address in the top left-hand corner. You may need to scroll out to identify whether or not you are located within an enterprise zone. If your location is highlighted in a color, you are located in an enterprise zone. If your location is in a checkered colored area, it is located in an enhanced rural enterprise zone.
Colorado allows for 16 enterprise zones. All 16 zones are established, meaning no new enterprise zones can be created. Local governments can connect with the program manager or the zone administrator of the encompassing or contiguous area to discuss being included in an already established enterprise zone.
Colorado law defines population and economic distress measures for enterprise zones.
The population of a rural enterprise zone needs to be 150,000 or less. The population of an urban enterprise zone needs to be 115,000 or less.
Economic distress measures
All enterprise zones need to meet at least one of these economic distress criteria defined by U.S. Census Bureau’s American Community Survey (ACS) data and/or Colorado Department of Local Affairs (DOLA) data. We post eligibility data from the ACS 5-year survey data that is released each December covering the period ending the prior calendar year.
To qualify, areas need to meet these qualifications:
- population growth rate less than 25% of the state average
- unemployment rate greater than 25% of the state average
- per capita income less than 75% of the state average
|Population growth rate||Less than 1.60%|
|Unemployment rate||Greater than 5.88%|
|Per capita income||Less than $27,311.25|
The Current Enterprise Zone Eligibility Data (XLS) spreadsheet identifies the eligibility of areas including counties, places, census tracts, and block groups. You will need to know the GeoID for the area of interest to use this resource. This resource is intended for enterprise zone administrators and people looking for changes to a boundary.
If you would like to apply for a tax credit, please see each individual tax credit page for specific eligibility and application requirements. We recommend also reviewing the Enterprise Zone Income Tax Credit Guide for the complete eligibility requirements.
Enterprise Zone Job Training Tax Credit
12% of eligible training costs
Businesses can earn a state income tax credit for 12% of eligible job-training costs for employees working within the enterprise zone. This tax credit helps develop a skilled workforce in distressed communities. Even if the business leaves the community, the skilled workforce typically remains an asset to the local economy.
Enterprise Zone New Employee Tax Credit
$1,100 or more per net new employee
Businesses can earn a state income tax credit of $1,100 per net new employee. Businesses can earn more tax credits if the business is an agricultural processor or is in an enhanced rural enterprise zone. This tax credit encourages businesses to hire and expand employment opportunities, thus reducing unemployment rates. State and local governments benefit from income and sales tax revenue generated from these employees.
Enterprise Zone Employer-Sponsored Health Insurance Tax Credit
$1,000 per net new employee
For the first two years that a business is in an enterprise zone, the business can earn $1,000 per net new employee insured under a qualified health plan for which the employer pays at least 50% of the cost. This tax credit encourages businesses to provide a qualified health insurance plan to employees, potentially improving community health, and reducing public health costs.
Enterprise Zone Research and Development Tax Credit
3% of an increase in research and development expenses
Businesses can earn a 3% tax credit for an increase in annual research and development expenses compared to what they spent the prior two years. Investment in research and experimentation supports an innovative economy. A research and development focused business that sells products, services, or intellectual property will bring outside dollars to the local economy.
Enterprise Zone Vacant Commercial Building Rehabilitation Tax Credit
25% of rehabilitation costs (up to $50,000 in credits on $200,000 or more in costs)
If a business rehabilitates a commercial building that is at least 20 years old and has been vacant for at least two years, the business can earn a state income tax credit for 25% of rehabilitation costs (up to $50,000 in credits on $200,000 or more on costs). This tax credit encourages the revitalization of dilapidated buildings and blighted areas, bringing new businesses and employees to the community. State and local governments gain tax revenue from new economic activity.
Enterprise Zone Commercial Vehicle Investment Tax Credit
1.5% of purchase price
A taxpayer can earn a state income tax credit for 1.5% of the price of new commercial trucks, truck tractors, tractors, semi-trailers, and associated parts registered in Colorado and used in an enterprise zone. This tax credit encourages businesses to register new commercial vehicles in Colorado and pay Colorado licensing and registration fees.
Enterprise Zone Investment Tax Credit
3% of business personal property investment
Businesses can earn a state income tax credit for 3% of an investment in business personal property. New business personal property increases a company’s capacity. The taxes a business pays on these purchases far exceed all tax credits under the enterprise zone program.
Enterprise Zone Sales and Use Tax Exemption for Manufacturing and Mining
Sales and use tax exemption
The statewide sales and use tax exemption for purchases of manufacturing equipment is expanded to include non-capitalized equipment and parts if the business is located within a zone. The enterprise zone statutes also expand manufacturing to include mining.
Rural enterprise zones can further qualify specific areas in the zone for enhanced rural enterprise zone (EREZ) status.
A rural enterprise zone may be a county, municipality, or unincorporated place (more than 10 miles from any municipality with a population greater than 50,000) with a population of fewer than 50,000.
Rural enterprise zone areas may receive enhanced rural status if they meet two of these criteria:
- county unemployment rate is greater than 50% of the state average
- county per capita income is fewer than 75% of the state average
- county population growth rate is fewer than 25% of the state average
- total non-residential assessed value ranks in the lower half of all counties
- county population is fewer than 5,000
Every two years, OEDIT updates the list of eligible EREZ counties. When a county is removed from the EREZ list, taxpayers who have already committed to and appropriately documented future job creation plans in the county may request an extension of up to five years to continue claiming EREZ credits. Contact your local zone administrator to discuss eligibility for seeking an extension of benefits.
These counties are designated enhanced rural enterprise zones for calendar years 2019 and 2020:
Alamosa, Archuleta, Baca, Bent, Cheyenne, Conejos, Costilla, Crowley, Custer, Delta, Dolores, Fremont, Hinsdale, Huerfano, Jackson, Kiowa, Kit Carson, Lake, Las Animas, Lincoln, Mineral, Moffat, Otero, Ouray, Phillips, Prowers, Rio Grande, Saguache, San Juan, Sedgwick, Washington, Yuma.
We review enterprise zone designations every ten years. In 2014, we evaluated all areas in the state and designated zones for the tax year starting January 1, 2016. The next review process will begin in 2024.
Local enterprise zone administrators may propose modifications to the areas in their zones at any time. Any proposed area needs to meet the statutory criteria, including population limits for the zone. We encourage local government organizations to work with your local enterprise zone administrator as you evaluate qualifying data to determine if areas in the jurisdiction meet the economic distress criteria and are prime for focused economic development.
If you are interested in applying for an enterprise zone designation and your county is not currently in an enterprise zone, please contact the enterprise zone administrator of a neighboring county.
The Enterprise Zone Contribution Tax Credit provides a tax credit to Colorado taxpayers that contribute to targeted enterprise zone (EZ) 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 General Assembly created the Enterprise Zone Program in 1986. The program has been modified over the years.
1986 – Senate Bill 86-95 (Original Urban and Rural Enterprise Zone Act)
- provided for a pilot program of eight zones
- established eligibility criteria for zone designation including high unemployment, low per capita income, and slow population growth, as compared to the state average for each criteria
- original tax credits included an investment tax credit, new business facility employee credit, and a higher ceiling for manufacturing equipment sales and use tax exemption than the statewide limit in effect at the time
- program scheduled to sunset in 1990
1987 – Senate Bill 87-25
The bill extended the availability of the new business facility employee tax credit till the end of the 1994 fiscal year.
1987 – House Bill 87-1274
- amended statute to allow for an increase from 8 zones to 12 zones
- provided for additional tax credits and incentives, including a health insurance new employee credit, agricultural processing new employee credit, and authorized local governments to offer additional property and sales tax incentives
- extended program sunset to 1995
1988 – Senate Bill 88-31
The bill provided for an additional Research and Development Tax Credit.
1989 – House Bill 89-1349
- authorized credits for contributions made to economic development projects and for rehabilitating older, vacant buildings.
- extended the new business facility employee tax credit to expanding businesses.
- changed the program sunset to 1994
- completed the Enterprise Zone Program performance audit
1990 – House Bill 90-1171
- amended statute to allow for the designation of four additional zones (This brought the total allowable zones to 16.)
- extended program sunset to 1998
1990 – Senate Bill 90-161
The bill authorized tax credit for contributions to child care facilities.
1991 – Senate Bill 91-131
The bill extended the sales and use tax exemption for manufacturing machinery to mining equipment in enterprise zones.
1991 – House Bill 91-1005
The bill removed the sunset clause to encourage long-term business investments in enterprise zones. The Enterprise Zone Program became a permanent state economic development program.
1992 – House Bill 92-1026
The bill made the new business facility employee credit non-refundable and allowed the credit to carry forward for up to five years.
1994 – House Bill 94-1163
The bill treated commercial vehicle drivers based in enterprise zones as if they were working full time in a zone for purposes of calculating the new business facility employee credit.
1994 – Senate Bill 94-64
The bill authorized additional credit for contributions made to homeless employment support services programs.
1994 – Senate Bill 94-182
The bill authorized any county, city, or municipality to negotiate with any qualifying taxpayer for a tax credit or incentive payment.
1995 – House Bill 95-1028
The bill made purchases of machinery or tools for use in manufacturing in excess of $500 tax exempt.
1995 – Senate Bill 95-221
The bill authorized any county, city or municipality to negotiate with new or expanding businesses for any tax credit or incentive payment and a sales tax refund on new machinery or tools.
1996 – Senate Bill 96-193
- shifted authority over zone boundary changes from the Colorado Department of Local Affairs to the Colorado Economic Development Commission
- provided the Colorado Economic Development Commission with the authority to terminate non-qualifying zone areas
- expanded the maximum population allowed in each zone from 50,000 to 80,000.
- reduced the contribution tax credit from 50% of contribution to 25%
- required the Colorado Economic Development Commission to annually review all proposed contribution projects
- restricted contribution projects to those projects directly related to job creation or preservation
- authorized a new 10% credit for investments in employee job training programs located in zones and a 10% credit for enterprise zone employer school-to-work expenses
- extended the carry-forward periods for unused investment tax credits and the new business facility employee health insurance credits
- added a number of reporting requirements for local zone administrators and created transition mechanisms to phase out tax credits from taxpayers located in terminated areas and resulting from the reduction in the contribution credit
1997 – House Bill 97-1152
The bill made the 10% school-to-work credit available to employers statewide.
1998 – Senate Bill 98-7
The bill made the contribution credit to homeless employment support services programs permanent. The credit was originally intended to expire in 1998.
1998 – Senate Bill 98-154
The bill expanded the 25% credit for contributions to promote child care statewide.
1999 – Senate Bill 99-033 (Legislative Audit Committee Bill)
- established a minimum 5-year cycle for zone boundary review by the Colorado Economic Development Commission, beginning with the availability of 2000 Census socioeconomic data
- authorized the Colorado Economic Development Commission to only review new or modified proposals for designation as an enterprise zone contribution project, rather than annually re-approving all projects
- increased enterprise zone reporting requirements
- required the state auditor to review the Colorado Department of Local Affairs’ annual report to the General Assembly beginning September 1, 2001 and every two years thereafter
- required the state auditor to evaluate the implementation and effectiveness of the program at least every five years
2000 – Senate Bill 00-99 (Office of Economic Development Reorganization Bill)
- created the Colorado Office of Economic Development within the Governor’s Office
- transferred the rights, powers and functions of the Colorado Economic Development Commission, which was located within the Colorado Department of Local Affairs, to the Colorado Office of Economic Development
- created the Colorado Economic Development Commission within the Colorado Office of Economic Development
- authorized the Colorado Office of Economic Development to execute certain functions related to enterprise zone designation
2002 – House Bill 02-1161
- created enhanced rural enterprise zones
- authorized increased tax credits for the new business facility employee and agricultural new business facility employee credits for businesses located in counties within existing enterprise zones and meeting specified criteria
- increased maximum population limit within rural enterprise zones from 80,000 to 100,000
- added community development as a category of projects which are eligible for the contribution tax credit
- made enterprise zone certification forms completed by taxpayers public records
- created a new business tax credit for Enhanced Rural Enterprise Zones
2002 – House Bill 02-1399
- repealed the requirement that within 12 months after the release of 2000 Census socioeconomic data and every five years thereafter, that the Colorado Department of Local Affairs establish criteria, procedures, and a termination schedule for zones that no longer meet the criteria
- repealed the requirement that the Colorado Economic Development Commission terminate zones based on recommendations by the Colorado Department of Local Affairs
- extended maximum period that credits earned by taxpayers in terminated areas could be used to 10 years
2004 – Senate Bill 04-003
The bill removed the requirement that the Office of the State Auditor conduct a two-year review of the Colorado Department of Local Affairs’ annual report and added a requirement that the Colorado Department of Local Affairs makes an annual presentation to the Legislative Audit Committee reviewing and summarizing the information contained in the Colorado Department of Local Affairs’ annual report.
2005 – House Bill 05-1048
The bill limited a special district’s ability to enter into an agreement for rehabilitation of vacant buildings tax credit to instances when the taxpayer enters into such an agreement with the municipality.
2007 – House Bill 07- 1027
The bill made the economic development contribution tax credit available beginning January 1, 1989. The credit was formerly available beginning January 1, 2000.
2007 – House Bill 07-1312
The bill made the new business facility employee tax credit available to the business where the employee worked, even if an employee leasing company withheld the taxes from that employee’s paycheck.
2008 – Senate Bill 08-107
The bill removed the requirement that the state auditor has to perform an audit every five years.
2008 – House Bill 08-1305
The bill transferred the responsibility of administering the program from the Colorado Department of Local Affairs to the Colorado Office of Economic Development and International Trade.
2009 – Senate Bill 09-234
- directed the Colorado Economic Development Commission to recommend criteria for changes in boundaries or new zones
- required commission to submit a report to the general assembly with recommendations in regards to the enterprise zone program
2010 – Senate Bill 10-162
- increased population for urban enterprise zones to 115,000 people and 150,000 people for rural enterprise zones
- required a taxpayer to complete a pre-certification process prior to beginning activity for which a taxpayer could earn credits for starting in 2012
- required enterprise zone administrators to create a policy and have that policy approved by the Colorado Economic Development Commission to collect a fee for processing contributions for contribution projects
2010 – House Bill 10-1200
The bill established that a taxpayer may only claim the Investment Tax Credit (ITC) in the amount of $500,000 in one year for the 2011, 2012, and 2013 income tax years. A taxpayer is required to defer any ITC in excess of $500,000 for any tax year starting in 2014. Investment Tax Credits can now be carried forward for up to 12 years from the year the credit was earned.
2012 – House Bill 12-1241
The bill created a review task force for the effectiveness of the Enterprise Zone Program.
2013 – Senate Bill 13-286
The bill extended the carry forward period for investments in renewable energy generation to 22 years from the date of the investment.
2013 – House Bill 13-1142
- repealed the enterprise zone task force
- required that the Colorado Economic Development Commission review enterprise zone designations at least once every 10 years
- clarified that the amount a taxpayer may use against their tax liability in a single year does not limit the amount of tax credit an individual or entity can earn or carry forward
- allowed the taxpayer to appeal to the commissions for a credit in excess of the $750,000 limit
- required the Colorado Economic Development Commission to post information annually regarding certified investment tax credits on the Colorado Office of Economic Development’s website
- increased the net new employee tax credit from $550 to $1,100 starting on January 1, 2014
- increased the tax credit for employers who provide health insurance to their employees from $200 to $1,000
2013 – House Bill 13-1190
The bill allowed taxpayers to make the donation to an intermediary nonprofit organization if such organization is obligated to disburse the contribution as directed by the taxpayer to a recipient nonprofit organization.
2013 – House Bill 13-1265
The bill removed the requirement for companies to meet the “new business facility” definition to receive the New Business Employees Tax Credit.
2014 – House Bill 14-1163
- limited the amount of tax credits one can claim in a given tax year from the investment tax credit to $750,000
- allowed a carry forward period of 14 years from the year the tax credit was earned
2015 – House Bill 15-1219
The bill created an 80% cash refund for investments made in renewable energy generation for investments that have been fully installed by the end of 2020.
2017 – House Bill 17-1356
The bill allowed certain businesses that make a $100 million strategic capital investment to make some of their tax credits transferable. The tax credits that are transferable include the enterprise zone income, new employee, and research and development tax credits.
We provide a program report to the State legislature each November covering the recently ended state fiscal year (June to July). We report on tax credits certified based on information provided by the taxpayer.
Local enterprise zone administrators provide an annual narrative report documenting the economic issues and efforts made to address those. The Colorado Department of Revenue reports all of the enterprise zone tax credits claimed in their annual report.