The Job Growth Incentive Tax Credit is an eight-year job creation incentive to support competitive, multi-state, or country relocation and expansion projects. The tax credit gives businesses a Colorado state income tax credit equal to 50% of the FICA (Federal Insurance Contributions Act) tax paid by the business per net new job for each calendar year in the credit period.
The tax credit is performance-based. If a company underperforms in job creation or wages, the company will not receive the total credit amount.
If the issued tax credits exceed the business’s income tax liability for the tax year in which the credit is being claimed, the unused tax credit does not become a tax refund. A business may carry forward the unused tax credit and apply it in each of the 10 succeeding income tax years. The tax credit needs to be applied to the earliest tax return possible.
Your business may not start or announce the proposed project in Colorado until your business submits a final application to Global Business Development and the Colorado Economic Development Commission approves the application. You must wait to complete any of these activities including but not limited to:
- locating or expanding in the state
- signing a lease
- hiring employees related to this project
- making material expenditures for this project
All companies that receive a Job Growth Incentive Tax Credit are eligible for the Location Neutral Employment (LONE) Incentive, a cash incentive for all net new remote rural employees that support the urban project.
Type: Tax credit
For: Businesses considering interstate competitive expansion or relocation projects in Colorado
Amount: Up to 50% of FICA per net new job, subject to statutory considerations
Application deadline: Rolling
OEDIT division: Global Business Development
Companies need to:
- create at least 20 net new jobs in Colorado during the credit period (or at least 5 net new jobs if the project is in an Enhanced Rural Enterprise Zone)
- pay the net new employees an average annual wage of at least 100% of the average annual wage in the country where the project will be located
- maintain the net new jobs for at least one year
- consider at least one other state or international market for the project
- demonstrate that Colorado’s Job Growth Incentive Tax Credit is a major factor in the decision to locate in Colorado
The project needs to:
- be reasonably and efficiently able to locate outside of Colorado
- have a reduced chance of locating in Colorado without this incentive
- be actively considered in multiple states and/or countries, meaning Global Business Development staff may request additional qualitative and quantitative information that supports the competitiveness of the project
The minimum average annual wage is set when the project is approved and does not change for the term of the incentive and the credit period.
Average Annual Wage by County
Businesses already receiving a Strategic Fund Incentive for Job Growth may not receive a Job Growth Incentive Tax Credit for the same net new jobs. However, businesses may receive the Job Growth Incentive Tax Credit and the Location Neutral Employment Incentive (see below), a special type of incentive, for the same permanent net new jobs if the jobs are for remote workers in Colorado’s rural counties.
First, contact our Global Business Development (GBD) staff. GBD staff will assess each company’s eligibility before inviting a company to apply for the program.
The application process is below.
- Prove eligibility: Contact your designated Global Business Development Manager to schedule a discussion or meeting and first and to prove eligibility. Even if a project receives preliminary approval through this discussion or meeting, a project is not guaranteed to proceed to the Colorado Economic Development Commission. GBD staff may halt the application process at any point.
- Submit initial documents: If eligible, your company will submit these documents to GBD at least 41 days before your meeting with the Colorado Economic Development Commission:
- Colorado employment plan
- Cost differential analysis
- Three years of historical company financials
- Submit application: GBD staff will give your company access to the application in the OEDIT application portal. This application is due about 20 days before your meeting with the Colorado Economic Development Commission. GBD will notify your company of Colorado’s incentive offer about 14 days before your meeting with the Colorado Economic Development Commission.
- Full application review and approval: GBD will present the Colorado Incentive Application to the Colorado Economic Development Commission for final approval. If approved, the company has 18 months to start its job creation project.
Job Growth Incentive Tax Credit applications are approved by the Colorado Economic Development Commission (EDC). Global Business Development staff reviews each application and advances it to the EDC with these statutory criteria:
- economic health of the state
- economic viability of the proposed new jobs. To evaluate this, GBD performs a high-level financial review of each applicant company to assess if the company has the ability to create and maintain the proposed new jobs.
- economic benefits to the state of the new jobs. To evaluate this, GBD requires the company to submit an eight-year Colorado Employment Plan that forecasts the number, titles, hire dates ,and annual wages of the positions the company will create.
- maximum amount of the credit needed to attract the new jobs to Colorado
Not all projects are approved, even though an application may meet all of the program’s guidelines.
After the Colorado Economic Development Commission approves your application and you decide to move forward with your project:
- Global Business Development staff will connect you with Business Funding and Incentives (BF&I) staff for contracting and reporting.
- your company has 18 months to execute the conditional agreement and start the project.
- your company will report employment activities annually to BF&I. Using these reports, BF&I staff will calculate a tax credit amount each year for eight years.
If your business makes a major capital investment and earns a tax credit for it, you may be able to transfer the tax credit. The Transferable Tax Credit Program helps businesses sell certain income tax credits that normally are not transferable and could not be used unless the company had a state income tax liability.
Your business needs to pre-certify with the Colorado Economic Development Commission (EDC) before starting the investment project. The EDC can pre-certify large projects across multiple fiscal years as long as your business gets the first pre-certification before starting the project.
The state fiscal year runs July 1 through June 30. Each fiscal year starting July 1, 2017 and ending June 30, 2020, the EDC can pre-certify up to $10 million in credits for a total of $30 million for the life of the program. Amounts not allocated by the EDC do not roll over year over year. The EDC has discretion on how to allocate pre-certifications.
To be eligible for transferable tax credits, your business needs to make a capital investment of at least $100 million over ten consecutive income tax years. Those tax years start immediately after the date of your application’s pre-certification.
Contact Ken Jensen for next steps. You will be asked to describe in writing why your business wants to transfer tax credits. You may be asked to reference financial statements.
The Colorado Economic Development Commission will consider:
- overall economic impact to Colorado
- economic need of the region and geographic equity
- strategic impact of the project, including headquarters, supply chain, spillover benefits, and skill-based workforce practices such as job training and apprenticeships
- likelihood that the project will proceed
- time left during a given fiscal year
- likelihood of additional applications in that year
- number of jobs created
- amount of capital invested
- current market context
The Location Neutral Employment (LONE) Incentive is a cash payment for up to $300,000 for companies that create and maintain net new jobs for remote workers in Colorado’s rural counties outside the county where the Job Growth Incentive Tax Credit project is based for five years. The amount awarded will be based on the average number of net new rural jobs over the entire five-year period.
This incentive is a special type of Strategic Fund Job Growth Incentive, because it waives the local match usually required by the Strategic Fund Job Growth Incentive. Incentive levels vary based on the number of jobs created in rural areas.
|Location||LONE Worker Incentive cash per job|
|Rural Jump-Start county||$2,500|
|Just Transition Rural Jump-Start county||$5,000|
|Southern Ute Indian or Ute Mountain Ute Reservation lands||$5,000|
The LONE Worker incentive is a pilot program that started in 2019 and will run through December 31, 2021. Policies, programs, and rules will adapt as needed.
LONE Worker incentive eligibility
Your company needs to receive a Job Growth Incentive Tax Credit to receive the LONE Worker incentive.
Average annual wages for the jobs need to be at least 100% of the average annual wage in the county where the primary project will be located. For example, if the primary project is in Jefferson County and the remote worker is in Kiowa County, the remote worker's wage will be included in the total project's average. The average of all workers' wages needs to be at least 100% of the average annual wage in Jefferson County.
All net new remote rural jobs need to be full-time permanent positions and maintained for at least one year in each evaluation period. For employees to qualify as remote rural workers, they need to work remotely on average at least three days per week in a location eligible for the Rural Jump-Start Program. Remote rural jobs can be in any area eligible for the Rural Jump-Start Program. All remote workers don’t have to be in the same county.
Just Transition communities and areas in the Southern Ute and Ute Mountain Ute reservations receive $5,000 (instead of the standard $2,500) per net new job.
Rural Jump-Start counties include Alamosa, Archuleta, Baca, Bent, Chaffee, Cheyenne, Clear Creek, Conejos, Costilla, Crowley, Custer, Dolores, Fremont, Garfield, Grand, Hinsdale, Huerfano, Jackson, Kiowa, Kit Carson, Lake, Las Animas, Lincoln, Logan, Mesa, Mineral, Montezuma, Otero, Ouray, Park, Phillips, Prowers, Rio Grande, Saguache, San Juan, San Miguel, Sedgwick, Washington, and Yuma.
Just Transition communities are diversifying away from coal-dependent economic development strategies. Just Transition counties include Delta, Gunnison, Moffat, Montrose, Morgan, Pueblo, Rio Blanco, and Routt.
How to apply for the LONE Worker incentive
When you apply for the Job Growth Incentive Tax Credit, tell your Global Business Development contact that you want to apply for the LONE Worker incentive.
You may not request the incentive for past years. You can request the incentive for the remaining years once the minimum requirements have been met.
LONE Worker incentive conditions of funding
Each year during the five-year term, your company needs to file a report with Business Funding and Incentives.
If it takes your business longer than planned to create the net new jobs, the grant agreement document will stay in effect for the remaining years in the credit period.