The state House voted 51-13 on Monday to pass House Bill 1014, introduced by House Minority Leader Brian DelGrosso, R-Loveland, and Tracy Kraft-Tharp, D-Arvada.
The bill expands the period of time that businesses can claim the job growth incentive tax credit from five to eight years. It also lowers the wage requirement to at least 100 percent of the average wage in the county from 110 percent of the county’s average wage.
Kraft-Tharp said that she wanted to improve the existing tax credit. The revamped credit, which has helped create 12,000 jobs since it was introduced in 2009, will target businesses considering a move to Colorado, or who are expanding a division or department of an existing Colorado business.
“We really want to incentivize people to bring their jobs here to Colorado,” she said. “This is an important tool to help us be seriously considered.”
The bill will require employers to submit paperwork showing that the credit played a major role in a firm’s decision to locate or retain employees in the state.
The tax credit is equal to one-half of the amount the employer is required to pay in federal Social Security and Medicare taxes on jobs created, according to the bill’s fiscal note. In most cases, that equals about 3.8 percent of a job’s annual wage. A firm would receive the tax credit each year the employer retains the job.
The tax credit will cost the state more than $30 million through fiscal 2028. It is scheduled to expire in 2029.
Companies within an enhanced rural enterprise zone must create at least five jobs and retain them for one year. Outside a rural enterprise zone, companies must create at least 20 jobs and keep them for one year.
Businesses must file an initial application to the Colorado Economic Development Commission to receive the credit. The bill is estimated to attract five more firms annually to Colorado than would have occurred under current law.