A Bill for an Act
Page 1, Line 101Concerning the adjustment of certain tax expenditures.
Bill Summary
(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov/.)
Legislative Oversight Committee Concerning Tax Policy. The bill adjusts several tax expenditures as follows:
- Section 1 of the bill disallows the income tax credit for unsalable alcohol after December 31, 2025, and repeals the credit on December 31, 2030;
- Currently, a taxpayer is allowed to deduct up to 2% of the taxable gallons of fuel removed from a fuel terminal to account for fuel that is lost in transit. Section 2 changes the allowance to 1% starting January 1, 2026.
- Currently, for income tax years commencing before January 1, 2025, a purchaser who installs an energy storage system in a residential dwelling may claim an income tax credit in an amount equal to 10% of the purchase price paid by the purchaser for the energy storage system. Section 3 extends the credit to include subsequent income tax years commencing before January 1, 2027, and extends the repeal of the credit from January 1, 2028, to January 1, 2030.
- Currently, the reducing emissions from lawn equipment income tax credit is available until the tax year beginning January 1, 2027, and the department of revenue is required to issue a report on the credit for each income tax year from January 1, 2025, through January 1, 2028. Section 4 extends the credit until the tax year beginning January 1, 2029, extends the reporting requirement through January 1, 2030, and extends the repeal date of the credit from December 31, 2033, to December 31, 2035.
- By amending a definition of "agricultural compounds" that is incorporated into the definition of "wholesale sale" used for purposes of the sales and use tax statutes, section 5 exempts from sales and use tax soil conditioners, plant amendments, plant growth regulators, mulches, compost, soil used for aboveground production of agricultural commodities, manure, fish for non-stocking purposes, fish embryos, and fish eggs beginning January 1, 2026;
- Section 6 states that the purpose of the insolvency assessments paid insurance premium tax credit is to offset the cost for an insurer paying required assessments into the life and health insurance protection association and that the credit's effectiveness is measured by how many eligible insurers claim the credit and the amount claimed relative to payments into the life and health insurance protection association;
- Sections 7 and 8 state that the purpose of the state refund income tax deduction is to avoid re-taxing a taxpayer's state income tax refund when a state refund is required to be included as income on the taxpayer's federal return pursuant to the internal revenue code and that the effectiveness of the deduction is measured by the number of taxpayers claiming the deduction and the total amount of state refunds claimed as deductions from Colorado taxable income;
- Section 9 states that the purpose of the dyed special fuels and off-road fuel tax excise tax exemption is to entirely exclude dyed diesel or kerosene from the special fuels excise tax where the dyed fuel is used for specified off-road purposes or by governmental entities and that the effectiveness of the exemption is measured by the number of taxpayers claiming the exemption and the amount of tax that would have been paid without the exemption;
- Section 10 states that the purpose of the off-road fuel use refund is to compensate taxpayers who buy and pay the tax on otherwise taxable fuels for the purpose of using the fuels for specified non-taxable purposes under federal law and that the effectiveness of the refund is measured by the number of taxpayers claiming a refund and the amount of tax that was already collected and is refunded; and
- Section 11 states that the purpose of the wholesale sales exemption from sales tax is to ensure that sales tax is levied and collected only on a final end sale to a retail consumer and not on wholesale sales and that the effectiveness of the wholesale exemption from sales tax is measured by the number of taxpayers claiming the wholesale exemption from tax and the amount of tax liability not paid.
Page 3, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 3, Line 2SECTION 1. In Colorado Revised Statutes, 44-3-503, amend (9) as follows:
Page 3, Line 344-3-503. Excise tax - records - rules - definition - repeal.
Page 3, Line 4(9) (a) The department shall make a refund or allow a credit to the
Page 3, Line 5manufacturer, the wholesaler, or the holder of a winery direct shipper's
Page 3, Line 6permit, as the case may be, of the amount of the excise tax paid on
Page 3, Line 7alcohol beverages sold in this state when, after payment of the excise tax,
Page 3, Line 8the alcohol beverages are rendered unsalable by reason of destruction or
Page 3, Line 9damage upon submission of evidence satisfactory to the state licensing
Page 3, Line 10authority that the excise tax has actually been paid. Such refund or credit
Page 3, Line 11shall be made by the department within sixty days after the submission of
Page 3, Line 12evidence satisfactory to the department. No refund or credit is allowed after December 31, 2025.
Page 4, Line 1(b) This subsection (9) is repealed, effective December 31, 2030.
Page 4, Line 3SECTION 2. In Colorado Revised Statutes, 39-22-546, amend (3)(a) and (7) as follows:
Page 4, Line 439-22-546. Credit against tax - residential energy storage
Page 4, Line 5systems - tax preference performance statement - legislative
Page 4, Line 6declaration - definition - repeal. (3) (a) For income tax years
Page 4, Line 7commencing on or after January 1, 2023, but before
January 1, 2025Page 4, Line 8January 1, 2027, any purchaser that installs an energy storage system in
Page 4, Line 9a residential dwelling in this state is allowed a credit against the tax
Page 4, Line 10imposed by this article 22 in an amount equal to ten percent of the purchase price paid by the purchaser for the energy storage system.
Page 4, Line 11(7) This section is repealed, effective
January 1, 2028Page 4, Line 13SECTION 3. In Colorado Revised Statutes, 39-26-102, amend
Page 4, Line 14(19)(c)(II) introductory portion and (19)(c)(II)(C); and add (19)(c)(II)(D) as follows:
Page 4, Line 1539-26-102. Definitions. As used in this article 26, unless the context otherwise requires:
Page 4, Line 16(19) (c) (II) For purposes of this
paragraph (c)Page 4, Line 17(C) Animal pharmaceuticals that have been approved by the food and drug administration; or
Page 4, Line 18(D) For income tax years commencing on or after January
Page 5, Line 11, 2026, soil conditioners, plant amendments, plant growth
Page 5, Line 2regulators, mulches, compost, soil used for aboveground
Page 5, Line 3production of agricultural commodities, manure, fish for non-stocking purposes, fish embryos, and fish eggs.
Page 5, Line 4SECTION 4. In Colorado Revised Statutes, 10-20-113, add (3) as follows:
Page 5, Line 510-20-113. Credits for assessments paid - tax offsets.
Page 5, Line 6(3) (a) The purpose of the credit authorized in subsection (1)(a)
Page 5, Line 7of this section is to offset the cost for an insurer paying
Page 5, Line 8required assessments into the life and health insurance protection association created in section 10-20-106 (1).
Page 5, Line 9(b) The effectiveness of the credit authorized in
Page 5, Line 10subsection (1)(a) of this section is measured by how many eligible
Page 5, Line 11insurers claim the credit and the amount claimed relative to
Page 5, Line 12payments into the life and health insurance protection association created in section 10-20-106 (1).
Page 5, Line 13SECTION 5. In Colorado Revised Statutes, 39-22-104, amend (4)(e) as follows:
Page 5, Line 1439-22-104. Income tax imposed on individuals, estates, and
Page 5, Line 15trusts - single rate - report - tax preference performance statement
Page 5, Line 16- legislative declaration - definitions - repeal. (4) There shall be subtracted from federal taxable income:
Page 5, Line 17(e) (I) The amount of any refund or credit for overpayment of
Page 5, Line 18income taxes imposed by this state or any other taxing jurisdiction to the
Page 5, Line 19extent included in gross income for federal income tax purposes but not previously allowed as a deduction for Colorado income tax purposes;
Page 5, Line 20(II) The purpose of the deduction authorized in this
Page 6, Line 1subsection (4)(e) is to avoid re-taxing a taxpayer's state income
Page 6, Line 2tax refund when a state refund is required to be included as
Page 6, Line 3income on the taxpayer's federal return pursuant to the internal revenue code;
Page 6, Line 4(III) The effectiveness of the deduction authorized in this
Page 6, Line 5subsection (4)(e) is measured by the number of taxpayers
Page 6, Line 6claiming the deduction and the total amount of state refunds claimed as deductions from Colorado taxable income;
Page 6, Line 7SECTION 6. In Colorado Revised Statutes, 39-22-304, amend (3)(f) as follows:
Page 6, Line 839-22-304. Net income of corporation - legislative declaration
Page 6, Line 9- definitions - repeal. (3) There shall be subtracted from federal taxable income:
Page 6, Line 10(f) (I) The amount of any refund or credit for overpayment of
Page 6, Line 11income taxes imposed by this state to the extent included in federal taxable income;
Page 6, Line 12(II) The purpose of the deduction authorized in this
Page 6, Line 13subsection (3)(f) is to avoid re-taxing a taxpayer's state income
Page 6, Line 14tax refund when a state refund is required to be included as
Page 6, Line 15income on the taxpayer's federal return pursuant to the internal revenue code; and
Page 6, Line 16(III) The effectiveness of the deduction authorized in this
Page 6, Line 17subsection (3)(f) is measured by the number of taxpayers
Page 6, Line 18claiming the deduction and the total amount of state refunds claimed as deductions from Colorado taxable income;
Page 6, Line 19SECTION 7. In Colorado Revised Statutes, 39-27-102.5, add
Page 6, Line 20(2.3) as follows:
Page 7, Line 139-27-102.5. Exemptions on tax imposed - ex-tax purchases -
Page 7, Line 2performance statement - definition - repeal. (2.3) (a) The purpose of
Page 7, Line 3the exemption authorized in subsections (1.5) and (2)(a) of this
Page 7, Line 4section is to entirely exclude dyed diesel or kerosene from the
Page 7, Line 5special fuels excise tax where the dyed fuel is used for specified off-road purposes or by governmental entities.
Page 7, Line 6(b) The effectiveness of the exemption authorized in
Page 7, Line 7subsections (1.5) and (2)(a) of this section is measured by the
Page 7, Line 8number of taxpayers claiming the exemption and the amount of tax that would have been paid without the exemption.
Page 7, Line 9SECTION 8. In Colorado Revised Statutes, 39-27-103, add (8) as follows:
Page 7, Line 1039-27-103. Refunds - penalties - checkoff - limits on collections
Page 7, Line 11- performance statement. (8) (a) The purpose of the refund
Page 7, Line 12authorized in subsections (2.7) and (3) of this section is to
Page 7, Line 13compensate taxpayers who buy and pay the tax on otherwise
Page 7, Line 14taxable fuels for the purpose of using the fuels for specified non-taxable purposes under federal law.
Page 7, Line 15(b) The effectiveness of the refund authorized in
Page 7, Line 16subsections (2.7) and (3) of this section is measured by the number
Page 7, Line 17of taxpayers claiming a refund and the amount of tax that was already collected and is refunded.
Page 7, Line 18SECTION 9. In Colorado Revised Statutes, 39-26-102, amend (19)(a) as follows:
Page 7, Line 1939-26-102. Performance statement - definitions. As used in this article 26, unless the context otherwise requires:
Page 7, Line 20(19) (a) (I) "Wholesale sale" means a sale by wholesalers to retail
Page 8, Line 1merchants, jobbers, dealers, or other wholesalers for resale and does not
Page 8, Line 2include a sale by wholesalers to users or consumers not for resale, and the
Page 8, Line 3latter sales shall be deemed retail sales and subject to the provisions of this
articlePage 8, Line 4(II) The purpose of the wholesale sale exemption from the
Page 8, Line 5tax levied pursuant to section 39-26-104 (1)(a) is to ensure that
Page 8, Line 6sales tax is levied and collected only on a final end sale to a
Page 8, Line 7retail consumer and not on wholesale sales to avoid a single
Page 8, Line 8product being taxed multiple times before it is sold to a consumer.
Page 8, Line 9(III) The effectiveness of the wholesale exemption from
Page 8, Line 10the tax levied pursuant to section 39-26-104 (1)(a) is measured by
Page 8, Line 11the number of taxpayers claiming the wholesale exemption from tax and the amount of tax liability not paid.
Page 8, Line 12SECTION 10. In Colorado Revised Statutes, 39-26-402, amend (1) as follows:
Page 8, Line 1339-26-402. Refund of state sales and use tax for biotechnology
Page 8, Line 14- application requirements and procedures. (1) For the calendar year
Page 8, Line 15commencing January 1, 1999, and for each calendar year thereafter prior
Page 8, Line 16to
January 1, 2026Page 8, Line 17taxpayer shall be allowed to claim a refund of all state sales and use tax
Page 8, Line 18paid by the qualified biotechnology taxpayer, pursuant to parts 1 and 2 of
Page 8, Line 19this article 26, on the sale, storage, use, or consumption of tangible
Page 8, Line 20personal property to be used in Colorado directly and predominately in research and development of biotechnology during that calendar year.
Page 8, Line 21SECTION 11. Act subject to petition - effective date. This act
Page 8, Line 22takes effect at 12:01 a.m. on the day following the expiration of the
Page 9, Line 1ninety-day period after final adjournment of the general assembly; except
Page 9, Line 2that, if a referendum petition is filed pursuant to section 1 (3) of article V
Page 9, Line 3of the state constitution against this act or an item, section, or part of this
Page 9, Line 4act within such period, then the act, item, section, or part will not take
Page 9, Line 5effect unless approved by the people at the general election to be held in
Page 9, Line 6November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.