The state of Colorado offers a robust number of state tax incentive programs designed to encourage companies contemplating expansion to do so within Colorado.
Such incentive programs can create a significant tax savings opportunity for companies who are considering expansion of operations and new jobs within the state. One of the key tax credit programs known as the, Job Growth Incentive Tax Program (JGITC), offers credits to Colorado companies who create at least 20 new full-time jobs in state jobs and retain the employees for at least one year. The JGITC offers a state income tax credit equal to 50% of FICA paid by the business on new employees annually. To help clients, prospects and others understand the incentive program and how it can benefit them, Hanson & Co has provided a summary overview of the program below.
What is the JGITC?
The JGITC is a performance based job incentive program that requires companies to create and sustain 20 or more new full time employees for at least one year before they receive the state tax credits. The incentive is available to those companies who are contemplating expansion in Colorado and at least one other state and JGITC must be a “major” factor in the company’s decision to select Colorado. The application and approval process must be completed before expansion plans are executed to claim the credit. Finally, if there is excess of credit that exceeds company expenses a refund is not available but the remaining credit maybe carried forward for a period of up to 10 years.
Which Companies are Eligible?
Below is a list of eligibility rules, including:
The tax credit request must be approved by the Colorado Economic Development Commission (EDC).
Businesses must create at least 20 net new jobs (full-time equivalents) in Colorado during the credit period which is defined as 60 consecutive months where the business may qualify for an annual tax credit. The average yearly wage of the job created must be at least 100% of the county average wage rate based on where the business is located.
Businesses located in the Enhanced Rural Enterprise Zone must create at least 5 net new jobs (full-time equivalents) in Colorado. The credit period terms and wage requirements are the same as the above.
The period for the tax credit claim is 96 consecutive months or 8 years.
All new jobs must be maintained for a minimum of one year, but those maintained for longer ensure the company can receive the credit for a longer period
Businesses receiving incentives from the EDC Strategic Fund may not receive incentive from the JGITC for the same net new full-time jobs
The application process can be difficult and challenging to navigate and has many layers of compliance and approval. In addition, the EDC has stated that just because an application meets all the program’s general guidelines it doesn’t not necessarily ensure it will be immediately approved. They reserve the right to approve, deny or delay approval at their sole discretion including budgetary constraints or for other administrative reasons.
The Job Growth Incentive Tax Credit Program is designed to award companies for investing in Colorado. Because the application and approval process can be complicated it’s important to work with a financial advisor that can guide you through the process. If you are considering expansion and would like to know more about the credit or need assistance with other tax planning needs, Hanson & Co can help. For additional information please call us at (303) 388-1010, or click here to contact us. We look forward to speaking with you soon.