The R&D Tax Credit is back! Find out how the Big Beautiful Bill Act can fund your R&D. Learn More
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Colorado offers research and development tax incentives primarily through the Colorado Innovation Investment Tax Credit and the Colorado Enterprise Zone R&D Credit, both aimed at encouraging in-state innovation and technical advancement.
The most widely used for qualifying research activities is the Enterprise Zone R&D Credit, which provides a credit equal to 3% of increased research and experimental expenditures conducted in Colorado compared to the average of the previous two years. Colorado follows many of the same concepts as the federal credit under IRC §41, but only expenses for activities performed within Colorado qualify.
Eligible costs may include wages for in-state research employees, supplies used in qualified research, and a portion of contract research expenses. Businesses must first be located in a designated Enterprise Zone and obtain pre-certification from their local Enterprise Zone Administrator before beginning the tax year in which they plan to claim the credit.
To claim the credit, taxpayers file Form DR 0077, Enterprise Zone Credit Summary Form, and Form DR 0078, Credit Schedule for Increasing Research Activities, along with their Colorado income tax return. Unused credits may be carried forward for up to four years, but the credit is nonrefundable.
📄 Colorado Department of Revenue – Enterprise Zone Program
📄 Form DR 0078 + Instructions (PDF)
It’s important to note that the Colorado credit applies only to research conducted within approved Enterprise Zones, and businesses must meet both location and activity eligibility requirements. Strategic coordination with the federal credit can maximize total savings, and our team can help you determine eligibility, track expenses, and file with the proper state agencies to secure the highest allowable benefit.
Starting in tax year 2025, businesses can now immediately deduct domestic R&D expenses in the year they occur instead of spreading deductions over five years. The bill also offers refund opportunities for small businesses and faster deduction schedules for larger companies.
If your business has $31 million or less in annual gross receipts, you may be able to:
File amended returns for 2022–2024 to get cash refunds for previously capitalized R&D costs
Deduct remaining unamortized R&D expenses faster starting in 2025
Apply your R&D credit against payroll taxes—up to $500,000 per year for qualifying startups
Yes. Eligible small businesses can retroactively deduct R&D costs from 2022–2024 and claim refunds. Even larger companies can accelerate the deduction of past R&D costs over one or two years starting in 2025.
No. The 15-year amortization rule for foreign R&D remains in place. The new immediate expensing option only applies to U.S.-based research and development.
Savings vary, but many businesses may recover hundreds of thousands of dollars through a combination of:
Full expensing of domestic R&D costs
Retroactive refunds for 2022–2024
Annual R&D tax credits (often worth 5–10% of qualifying expenses)
Startups with less than $5 million in annual revenue can use the R&D credit to offset payroll taxes—up to $500,000 per year—resulting in quarterly cash refunds, even without taxable income.
Work with our expert team at TaxTaker. We help innovative companies like yours identify, document, and claim the maximum R&D tax credit available—while ensuring you stay fully compliant with IRS requirements. Our team specializes in both federal and state R&D tax credits, and we know how to uncover hidden value by reviewing past filings for potential refund opportunities. With the new 2025 rules in place, we’ll build a tailored strategy that maximizes your savings now and in the years ahead. That’s why businesses across the country trust TaxTaker to deliver results they can count on.
Working with TaxTaker is risk free. TaxTaker collects a success fee only if you qualify for a tax credit.
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