The Rural Jump-Start Tax Credit helps new businesses start in or move into rural, economically distressed areas and hire new employees. In a designated rural jump-start zone, benefits include relief from:
- state income taxes for the new business
- state sales and use tax for the business
- 100% of county personal property taxes for the business
- municipal personal property taxes for the business (in participating municipalities)
- 100% of state income taxes for the employee
Local governments also sometimes provide additional tax relief from other county or municipal taxes.
Approved companies and their employees have four years of tax relief, with the possibility of extending it another four years. Your business may use rural jump-start tax credits only for each year you receive them. These tax credits do not carry forward to future years.
Each year, the Colorado Economic Development Commission (EDC) designates economically distressed counties.
These counties are currently rural jump-start zones: Archuleta, Clear Creek, Delta, Dolores, Las Animas, Logan, Mesa, Moffat, Montezuma, Montrose, Otero, Prowers, Rio Blanco, Routt, San Juan
These counties are designated as economically distressed. They are eligible to be rural jump-start zones, but they have not yet applied to the program: Alamosa, Baca, Bent, Cheyenne, Conejos, Costilla, Crowley, Cyster, Fremont, Hinsdale, Huerfano, Jackson, Kiowa, Kit Carson, Lake, Lincoln, Mineral, Morgan, Phillips, Pueblo, Rio Grande, Saguache, Sedgwick, Washington, Yuma
Your business needs to:
- form a relationship with a Designated Institute of Higher Education (see below) to align missions and benefit the community
- be in at least one rural jump-start zone
- not be operating in Colorado when you apply and meet one of these criteria:
- be a new startup company
- be based outside of Colorado or not currently operating in Colorado
- start a new joint venture between companies
- and/or creating a new and necessary division
- plan to hire at least five new positions (that are not existing jobs moving to the rural jump-start zone)
- not directly compete with the core function of a currently operating Colorado business in an adjacent county
- export goods and services outside the county
- add to the economic base of the rural jump-start zone
- adhere to the business plan submitted in your application
Eligible businesses can be at any of these stages:
- doing market research
- preparing for production (design, prototyping)
- filing business formation or registration
- manufacturing and testing a proof of concept, even if some revenue is associated with the activity
Your business may locate in multiple rural jump-start zones and receive benefits in each zone. You need to apply to each zone separately.
After the Colorado Economic Development Commission (EDC) approves your application, you need to fulfill hiring requirements to receive tax benefits. The table below outlines the hiring requirements for each year.
|First full calendar year after EDC approval||1 new hire|
|Second full calendar year after EDC approval||3 new hires|
|All years after||5 new hires|
Approved employees may claim the 100% tax credit for state income taxes on wages from new businesses in the rural jump-start zone. Generally, the Colorado Economic Development Commission (EDC) will approve up to 200 new hires per rural jump-start zone to claim the tax credit. In some cases, the EDC will raise the limit to 300 new hires per zone. Other than this zone limit, there is no limit on the number of new hires at a single business who can claim the tax credit.
To claim this tax credit, an employee needs to:
- receive a W-2 from the business
- be legally allowed to work in the United States
- be a resident of Colorado
- be designated as a new hire by the Rural Jump-Start Program
- work for at least six months in the rural jump-start zone
- work at least 35 hours per week
- have a higher salary (calculated as the sum of wages and benefits) than the county average annual wage
Employees who work in multiple locations will qualify only if they spend at least 80% of their non-travel time at the location inside the rural jump-start zone. Employees do not have to live in the rural jump-start zone.
To apply for this program, the new business needs to:
- work with a Designated Institute of Higher Education (DIHE)
- have a mission that supports the DIHE’s academic mission
Examples of new business and DIHE relationships include, but are not limited to, a business:
- leasing the property from the DIHE or locates on or adjacent to the campus
- licensing intellectual property from the DIHE
- funding or sponsors research at the DIHE that relates to the business’s product or service development or testing
- employing faculty, staff, students, or recent graduates of the DIHE as full- or part-time workers or consultants
- using specialized facilities at the DIHE in developing products or services
Interactive Map of Designated Institutes of Higher Education
To use this map, type in your address and it will direct you to the closest Designated Institute of Higher Education.
Businesses must apply through a Designated Institute of Higher Education (DIHE). A DIHE is associated with specific counties, and not every DIHE can work in every rural jump-start zone.
Complete these steps to apply for the program.
- Complete the qualifying questionnaire through 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.
- After completing your qualifying questionnaire, you will be able to complete the full application in the OEDIT application portal.
- The Designated Institute of Higher Education (DIHE) reviews the application, then sends it to us to review. The Colorado Economic Development Commission (EDC) has final approval on applications. The EDC meets on the third Thursday of every month.
- During a one-month waiting period, an existing Colorado business in an adjacent county may challenge your application if they believe your company would directly compete with the existing company’s core function.
- If no one challenges your application, your application will be reviewed by the EDC. If another business challenges your application, we review the challenge and make a decision as to whether or not to move forward with your application or deny your application.
- To claim the state credits, file Form 104CR (PDF) with the Colorado Department of Revenue.
You will need to submit these documents with your online application:
- PDF of your business plan, including:
- business description including customers and competitors in Colorado, how your business adds to the economic base, and your business plan to export outside the county
- pro-forma income statement for the next three years
- income statement and balance sheet for the last three years, if applicable
- a forecast of total employees and new hires at the end of each calendar year for the next five years
- percent of sales in Colorado, outside of Colorado in the U.S., and outside the U.S.
- articles of incorporation or organization
- statement of Good Standing from the Colorado Secretary of State
- business taxpayer ID number
- six-digit North American Industry Classification System (NAICS) code
- business contact information and mailing address
- type of ownership and subsequent list of owners
If you have an existing Colorado business and believe a Rural Jump-Start business applicant would directly compete with your company’s core function, you may challenge the application before the Colorado Economic Development Commission approves it. To challenge a business application, please contact the program manager.
Rural Jump-Start has received an application from a company that is designing and manufacturing a specialized insulated pack that would protect temperature-sensitive equipment in the outdoors. If you know of any company in Archuleta, Hinsdale, Mineral, Rio Grande, or Conejos counties that would compete with this applicant, email the program manager below.
Each year by the last day of February, your business needs to file an annual report for the previous year. Your annual report will include information on business performance such as:
- the number of new hires
- geographic areas of sales
- product updates
- how you support the Designated Institute of Higher Education’s mission
Late filing or failure to report
If your business does not file your annual report on time, we will send you a 60-day notice to send us information. If your business does not submit the annual report after the 60 days, your business will be suspended from the program for the year. Suspended businesses need to submit a plan for corrective action and the annual report to receive benefits in the next year.
If your business does not file an annual report after the 60-day notice of correction and does not respond to email and phone messages, we will send you a final written 30-day notice. If you do not respond to the 30-day notice, we will revoke your rural jump-start approval.
If your business files late annual reports for two years, then you will not keep your rural jump-start status. If this happens, you will need to re-apply to the program with a new application.
New employee compliance
We will analyze your company’s new hires each year after you file your annual report. If your annual report does not meet requirements, we will discuss the report with you to ensure it is accurate. If your business does not meet the new hire requirements, we will suspend your rural jump-start benefits for that year. Your company will submit a plan for how you will meet the requirements for the next year. If your company is suspended, it can only be reinstated after a subsequent year’s annual report.
If your business does not meet the requirements the next year, then you will not keep your rural jump-start status. If this happens, you will need to re-apply to the program with a new application.
Eligibility for other tax credits
Businesses that claim the Rural Jump-Start Tax Credit may not claim any other Colorado tax incentive for establishing the business, including tax incentives for hiring net new employees.