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Colorado R&D Tax Credits

Colorado R&D Tax Credits

 

Find out if you qualify for state R&D credits in Colorado and recharge your business.

 

Colorado provides a research and development (R&D) credit for taxpayers located within an Enterprise Zone (EZ). An application is required; therefore, the taxpayer must pre-certify with their local Enterprise Zone Administrator to be eligible to claim the credit (See Form DR 0074). Pre-certified taxpayers who intend to claim an EZ R&D credit must complete a certification application (See Forms DD 0076 or DD 0077) and receive approval from the appropriate EZ Administrator.

Businesses engaged in research and experimental expenditures may earn a 3% tax credit on the increase in such spending compared to the prior two years (the Base Amount).

Learn more about Colorado's Enterprise Zones Tax Credits.

 

R&D Tax Credit Available:

Yes

 

Eligible Entities:

C-Corporation, S-Corporations, LLCs, Partnerships

 

Deadline for Tax Filing:

Due with Colorado Tax Return

 

Data Required to Compute Credit:

Claim Period Colorado Qualified R&D Expenses (QREs)

 

What Information is needed?

QREs for Prior 2 Years

 

Credit Carryforward:

4 Years

 

The Colorado state R&D tax credit equals:

  • 3% of the amount claim period QREs exceeds the average QREs from the prior two years;
  • In each tax year, the taxpayer may claim no more than 25% of the total credit (remainder to be carried forward) plus any applicable carryover amount from a prior year (up to 25% of the original credit) and
  • The credit is only available to taxpayers located within specific Enterprise Zones.

 

Specific Items to Note:

  • Pre-certification must be applied online or by submitting DR 0074, DR 0076, or DR 0077 certification forms to the EZ Administrator.
  • The total amount of credit must be divided equally over four years. The entity may claim that 25% of the credit expenditure was made and 25% in the following three years.
  • To the extent that the credit for any year exceeds the tax liability for such year after other credits have been claimed, the excess may be carried forward and claimed until it is used.

 

Ready to calculate your R&D tax credits?

To get an estimate of the potential value of your unclaimed R&D Tax Credits, try out our credit calculator.

 

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