Information on the Colorado R&D Tax Credit: 

The Colorado R&D credit is generated from qualified research activities (QRAs) performed within the state. Qualifying activities are defined in Section 41 of the Internal Revenue Code as “a new or improved function, performance, or reliability or quality.”

Process improvement activities include:

  • Identifying uncertainty concerning the development or improvement of a business component;
  • Identifying one or more alternatives intended to eliminate that uncertainty; and
  • Identifying and conducting a process of evaluating the alternatives (e.g., through modeling, simulation, or a systematic trial-and-error methodology).

The R&D Tax Credit is a credit that is available across various industries, such as:

  • Agriculture
  • Automotive
  • Aviation
  • Biotechnology
  • Engineering
  • Farming
  • Food and Beverage
  • Logistics
  • Manufacturing
  • Oil and Gas
  • Software
  • Transportation

State Credit Name: Research and Development Income Tax Credit for Enterprise Zones

Expiration Date: Permanent

Who Can Apply? Corporations and flow-through entities

Credit Carry Forward: Unlimited carry forward, but no carry back.

About the Credit:
The credit rate is 3% and the dollar limit that is imposed on the amount of expenses that can qualify is 25% of the amount of the credit. Taxpayers can claim the remaining 75% in 25% increments over the next 3 years. Unlike most state research credits, the qualifying research activities do not have to be performed within Colorado.

Notes: The Colorado research credit only adopts one of the requirements in the federal definition of qualified research activities, being that the expenses meet the definition of research and experimental expenditures. The credit does not require taxpayers to be able to currently deduct their R&E expenditures, which allows taxpayers to claim the credit for research activities that would not qualify for the federal research credit.

Click here to find out if you qualify for the federal research credit.

R&D Tax Credit Training for CO CPAs

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R&D Tax Credit Training for CO CPAs

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Upcoming Webinar


R&D Tax Credit Training for CO CPAs

directive for LBI taxpayers

Upcoming Webinar


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