The Colorado Economic Development Commission (EDC) has officially approved new boundaries for the state’s Enterprise Zone (EZ) Program, which will take effect January 1, 2026. Updated maps and data tables for each zone are now available and open to precertification. The updated map may be accessed at this link: Enterprise Zone Program | Colorado Office of Economic Development and International Trade.
The redesignation process, required every 10 years, evaluates whether each zone meets at least one of the state’s economic distress criteria:
- An unemployment rate at least 25% higher than the state average
- A per capita income less than 75% of the state average
- A population growth rate less than 25% of the state average
Businesses in an EZ may be eligible for a variety of nonrefundable state income tax credits:
- Investment Tax Credit: 3% of the cost of personal property purchased in the first year
- New Employee Tax Credit: $1,100 per net new employee
- Employer-Sponsored Health Insurance Tax Credit: $1,000 per year for two years per net new employee where at least 50% of the cost of health insurance is covered by the business
- Job Training Tax Credit: 12% of eligible job training costs
- Research and Development (R&D) Credit: 3% of the increase in R&D expenditures compared to the previous two years; leveraging an EZ is the only way businesses can obtain this credit in Colorado
To receive these credits, businesses must annually precertify—and subsequently certify—activity at each eligible site. If a business location was previously within an EZ, but is no longer eligible following the 2026 boundary redesignation, the EDC has a grandfathering provision. If businesses can demonstrate they have relied on EZ credits for future planned investments prior to the boundary redesignation, they can petition to retain access to the EZ credits for a 10-year period. This application must be submitted by December 31, 2025.
Businesses are encouraged to contact Ryan to find out more and for assistance navigating the opportunities and challenges presented by this redesignation. These changes may impact ongoing and new eligibility for EZ tax credits. Our team has deep experience supporting eligibility verification for these tax credits and ensuring ongoing compliance with updated requirements to maximize benefits.
TECHNICAL INFORMATION CONTACTS:
Melissa Munoz
Principal
Ryan
505.312.4665
melissa.munoz@ryan.com
Savannah Jermance
Director
Ryan
505.312.4411
savannah.jermance@ryan.com
Andrew Daffern
Senior Consultant
Ryan
505.375.1722
andrew.daffern@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.
- Sujet
- Melissa Munoz