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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 expenditures, as compared to that of the prior 2 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
To get an estimate of the potential value of your unclaimed R&D Tax Credits, try out our credit calculator.
Download our R&D Tax Credit Calculator for Android to see how much you can receive from your qualified R&D tax credit expenses.
Colorado does not offer a state-specific R&D tax credit, but businesses can claim the federal R&D tax credit, which provides up to 20% of qualified research expenses exceeding a base amount or 14% under the alternative simplified method.
Qualifying activities must be technological, aimed at developing or improving a business component, eliminate uncertainty, and involve a process of experimentation. Examples include product innovation, software development, and process improvements in industries like tech and manufacturing.
Yes, startups can claim the federal R&D credit, including a payroll tax offset of up to $500,000 annually for up to five years if gross receipts are under $5 million and no receipts for more than five years.
Maintain contemporaneous records such as project descriptions, time tracking, wage allocations, supply costs, and contract research agreements. For 2025, Form 6765 requires detailed business component information in Section G for claims over certain thresholds.
Attach Form 6765 to your federal tax return. In Colorado, report the federal credit on your state return if it impacts state taxes. With the 2025 OBBB Act, U.S. R&D costs are fully expensable under Section 174.
No state-specific changes, but federally, the OBBB Act restores immediate expensing for U.S. R&D under Section 174, and Form 6765 mandates Section G for business component details on most claims.