Tax Expenditure Adjustment

The bill adjusts several state tax expenditures as follows:

• Section 2 of the bill increases the amount of a company's total domestic workforce that must be in Colorado for a company to qualify for the insurance premium tax rate tax expenditure for a home office or regional home office allows an individual to present a copy of their federal tax return to be exempted from the medical marijuana registry application fee ;
• Section 3 requires insurance companies, when submitting certain filings with the division of insurance, to submit the total annual dollar amount of premiums collected or contracted for on policies or contracts of insurance covering property or risks in Colorado during the previous calendar year from entities that are exempt from taxation;
• Section 5 adds the amount of any overtime compensation excluded or deducted from a taxpayer's federal gross income to that taxpayer's federal taxable income for purposes of determining the taxpayer's state taxable income;
• Section 6 limits the existing tax deduction related to expenses, the deduction of which is disallowed by section 280C of the internal revenue code, so that a taxpayer may only claim the tax deduction for income tax years commencing before January 1, 2026 expands the definition of local government to include counties for purposes of the alternative transportation options tax credit;
• Section 10 , for income tax years commencing on and after January 1, 2026, creates a new tax deduction related to expenses, the deduction of which is disallowed by section 280C of the internal revenue code, so that a taxpayer may claim the deduction for any expenses that cannot be deducted under section 280C of the internal revenue code ;
• Section 7 limits the alternative minimum tax credit to income tax years commencing prior to January 1, 2025 modifies the tax credit for qualified costs incurred in preservation of historic structures by removing the 5% increase in the percentage of rehabilitation expenses incurred in a rehabilitation in a disaster area for the rehabilitation of a commercial structure that are applicable for the tax credit;
• Section 8 extends the tax credit for monetary contributions to promote child care, so that the tax credit is available through income tax years commencing before January 1, 2030, rather than January 1, 2028;
• Section 9 for income tax years commencing on and after January 1, 2026, creates an income tax credit for certain individuals who are 65 years of age or older in the income tax year, or who are a surviving spouse of that individual, and who were previously eligible to receive a grant for real property tax assistance and heat or fuel expenses assistance limits the existing business personal property tax credit so that a taxpayer may only claim the tax deduction for income tax years commencing before January 1, 2026;
• Section 20, beginning January 1, 2026, ends the availability of grants for real property tax assistance and heat or fuel expenses assistance ;
• Sections 4, 5, 14, 15, 21, 22, and 23 make conforming amendments for the changes made in sections 9 and 20 ;
• Section 11 expands the definition of local government to include counties for purposes of the alternative transportation options tax credit clarifies and modifies definitions for the qualified care worker tax credit;
• Section 12 limits the existing business personal property tax credit so that a taxpayer may only claim the tax deduction for income tax years commencing before January 1, 2026 allows the executive director of the department of revenue to direct employers who make payments of compensation other than wages to withhold an amount that approximates an employee's income tax due to the state from that employee's compensation;
• Section 13 modifies the tax credit for qualified costs incurred in preservation of historic structures by removing the 5% increase in the percentage of rehabilitation expenses incurred in a rehabilitation in a disaster area for the rehabilitation of a commercial structure that are applicable for the tax credit expands the definition of agricultural commodities to include products regulated under article 10 of title 44 for purposes of the pesticides, fertilizers, and spray adjuvants wholesale sales tax exemption;
• Section 16 modifies the downloaded software sales tax exemption so that all software that is available for repeated sale and license and governed by a nonnegotiable license agreement qualifies as tangible property and thus is subject to sales tax ;
• Section 17 14 ensures that, beginning July 1, 2025, interstate telephone and telegraph services are subject to state sales tax;
• Section 15 exempts the sale of medical marijuana to an individual who presents a valid electronic benefits transfer card or certain other identification from sales tax;
• Section 18 repeals, effective July 1, 2025, the special fuel excise tax reduction associated with bad debt and the payment of the special fuel excise tax; and
• Section 19 16 modifies the enterprise zone tax credit for income tax years beginning January 1, 2026, by limiting the total amount of the credit that may be claimed to $2 million, providing an exemption process for that limit, and prohibiting certain taxpayers from claiming that credit.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)