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Colorado Employee Ownership Office Launches Employee Ownership Tax Credit

The Employee Ownership Office, a division of the Colorado Office of Economic Development and International Trade (OEDIT), will launch the application process for the Employee Ownership Tax Credit on January 1, 2022. The tax credit will be available to Colorado-headquartered businesses that want to convert to an employee ownership model and will cover up to 50% of a qualified business’ conversion costs for use on their state income taxes.

Businesses converting to employee ownership between January 1, 2022 and January 1, 2027 may be eligible to apply. Eligible structures include employee stock ownership plans, employee ownership trusts and worker-owned cooperatives. Businesses must apply for this tax credit prior to completing their employee ownership conversion.

Governor Polis announced details of the Employee Ownership Tax Credit program today at Hercules Industries, a local employee-owned manufacturing company, to a room full of employee ownership supporters, advocates and activators.

“I’m incredibly excited to launch this new tax credit to save Colorado businesses money,” said Governor Jared Polis. “Employee ownership is a business model with limitless potential to boost employee morale, engagement and retention. We are hopeful that by covering up to 50 percent of the costs of converting, we will see more Colorado small businesses take advantage of this forward-looking business opportunity.”

Employee ownership is a proven mechanism to enhance business performance and increase broad-based profit sharing. Among its many benefits are guaranteed succession plan, more engaged workforce, ability to attract and retain top talent, economic resilience and higher quality of life for the employee owners.

“We are grateful to the legislature and Governor Polis for providing us with this tool to support employee ownership conversions,” said Patrick Meyers, Executive Director at OEDIT and Chief Economic Recovery Officer for Colorado. “Employee ownership is widely supported and the businesses we speak with that have made the conversion have inspiring stories of the transformation employee ownership has provided to their company culture and employee engagement. The Employee Ownership Tax Credit will allow us to create more of these stories across the state.”

The Employee Ownership Tax Credit will become available for pre-application on January 1, 2022 to assess a business’ eligibility for the program. Once qualified, the business can then reserve the tax credit, apply for tax credit issuance (anticipated to become available summer 2022) and claim the tax credit on the company’s Colorado income tax.

Learn more about the Employee Ownership Tax Credit: https://oedit.colorado.gov/employee-ownership-tax-credit

 

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