For: Businesses considering interstate competitive expansion or relocation projects in Colorado
Type: Tax credit
Amount: Up to 50% of FICA per net new job, subject to statutory considerations
Time period: 8 years
The Job Growth Incentive Tax Credit is an eight-year job creation incentive and provides a state income tax credit equal to 50% of the Federal Insurance Contributions Act (FICA). It is paid by the business on the net new job growth for each calendar year in the credit period.
This incentive supports competitive, multi-state or country relocation and expansion projects. It is performance-based, meaning companies that underperform in job creation or wages 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 amount of the unused tax credit will not be given as a refund. However, it may be carried forward and applied in each of the 10 succeeding income tax years. The tax credit must be applied to the earliest tax return possible.
All companies who receive this tax credit will also be eligible for the Location Neutral Employment (LONE) Incentive, which is a cash incentive for all net new remote rural employees that support the urban project.
Eligibility:
Companies need to:
- create at least 20 net new jobs in Colorado during the credit period with an average annual wage of at least 100% of the county’s average annual wage where the project will be located
- consider at least one other state or international market for the project
- acknowledge receipt of the credit as major factor in its decision to locate in Colorado
To qualify, the project needs to:
- be able to reasonably and efficiently locate the project outside of Colorado
- have a reduced probability of commencing in the state without this incentive
- be actively considered in multiple states and/or countries, meaning additional qualitative and quantitative information that supports the competitiveness of the project may be requested
A business may not start or announce the proposed project in Colorado, including locating or expanding in the state, hiring employees related to this project, executing a lease agreement, or making material expenditures for this project, until a final application has been submitted and approved by the Economic Development Commission (EDC).
Once approved for the tax credit:
- all net new jobs must be maintained for at least one year after the positions are hired
- minimum average annual wage will be set when the project is approved and does not change for the term of the incentive and credit period
Businesses already receiving a Strategic Fund Job Growth Incentive may not receive a Job Growth Incentive Tax Credit for the same permanent net new jobs.