House Bill 25-1012 Introduced

A Bill for an Act

• Page 1, Line 101Concerning income tax expenditures that benefit individuals

• Page 1, Line 102engaged in military service.

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 changes how income tax expenditures that benefit individuals engaged in military service are provided as follows:

• Beginning with income tax years commencing on or after January 1, 2027, section 2 of the bill eliminates the state income tax subtraction for an amount equal to any compensation received for active duty service in the armed forces of the United States by an individual who has reacquired residency in the state to the extent that the compensation is included in federal taxable income; and
• For income tax years commencing on or after January 1, 2027, but before January 1, 2032, section 3 allows a refundable income tax credit (credit) as a form of tuition assistance to an actively serving member of the Colorado National Guard who is eligible for tuition assistance (eligible member) under an existing statutorily-authorized program (program) administered by the department of veterans and military affairs (department).

To claim the credit, an eligible member must obtain a tax credit certificate issued by the department for each academic semester or quarter for which tuition assistance is awarded in the form of the credit.

The criteria for receiving a tax credit certificate are generally the same as the criteria for receiving other tuition assistance under the program; except that, to be eligible for a tax credit certificate, an eligible member must apply for all federal government tuition assistance that is not required to be repaid and that is generally made available to eligible members and not to the general population and must use all federal government tuition assistance received. The total amount of tuition assistance that an eligible member to whom the department has issued a tax credit certificate may obtain under the program, including the credit, is subject to existing program limits. In addition, the department may issue no more than $1 million in tax credit certificates for any income tax year.

Section 1 makes conforming amendments.

• Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:

• Page 2, Line 2SECTION 1.  In Colorado Revised Statutes, 23-7.4-302, amend

• Page 2, Line 3(2)(a.5), (2)(b) introductory portion, (2)(b)(II), (2)(b)(IV), (2)(c), (2)(d),

• Page 2, Line 4(5), (6), and (7) introductory portion as follows:

• Page 2, Line 523-7.4-302.  Tuition for members of the National Guard -

• Page 2, Line 6definitions. (2) (a.5)  A member is eligible for tuition assistance pursuant

• Page 2, Line 7to this section and section 39-22-571 to the extent that the sum of the

• Page 2, Line 8member's tuition assistance from all sources, including the federal

• Page 2, Line 9government, does not exceed one hundred percent of the cost of tuition.

• Page 3, Line 1(b)  In order to qualify for the tuition assistance authorized by this

• Page 3, Line 2section and section 39-22-571, a member:

• Page 3, Line 3(II)  Must not be drawing tuition from any other tuition assistance

• Page 3, Line 4program funded by a private employer that, when combined with the

• Page 3, Line 5tuition assistance in this section and section 39-22-571, would exceed

• Page 3, Line 6one hundred percent of the tuition costs;

• Page 3, Line 7(IV)  Must serve in the Colorado National Guard during the period

• Page 3, Line 8of time that the member is receiving tuition and fee assistance.

• Page 3, Line 9(c)  In providing the tuition assistance to members pursuant to

• Page 3, Line 10subsection (2)(a) of this section and section 39-22-571, the department

• Page 3, Line 11of military and veterans affairs is encouraged to consider providing

• Page 3, Line 12assistance on a priority basis to newly-enlisted members in their first term

• Page 3, Line 13of service and who enlist in those military specialties that are

• Page 3, Line 14experiencing shortages as determined by the department.

• Page 3, Line 15(d)  For purposes of this section:

• Page 3, Line 16(I)  "Member" means an enlisted member or officer of the National

• Page 3, Line 17Guard.

• Page 3, Line 18(II)  "Tuition assistance" includes both tuition assistance

• Page 3, Line 19awarded pursuant to this section and an income tax credit

• Page 3, Line 20allowed pursuant to section 39-22-571.

• Page 3, Line 21(5)  For each individual member of the Colorado National Guard

• Page 3, Line 22who is a continuing student and who is receiving tuition assistance as

• Page 3, Line 23provided in this section or in section 39-22-571, the department of

• Page 3, Line 24military and veterans affairs shall obtain certification from the designated

• Page 3, Line 25institution of higher education prior to the payment to the institution or

• Page 3, Line 26the issuance of a tax credit certificate pursuant to section

• Page 3, Line 2739-22-571 (5) attesting to the member's current satisfactory academic

• Page 4, Line 1standing at the designated institution of higher education, as determined

• Page 4, Line 2by military regulations promulgated pursuant to subsection (7) of this

• Page 4, Line 3section, for each semester or quarter for which tuition assistance is

• Page 4, Line 4requested. Tuition assistance shall not be granted without such

• Page 4, Line 5certification.

• Page 4, Line 6(6)  Any member who leaves the Colorado National Guard in

• Page 4, Line 7violation of the member's agreement under subsection (2) of this section

• Page 4, Line 8during an academic term for which the member is receiving tuition

• Page 4, Line 9assistance is required to repay to the department of military and veterans

• Page 4, Line 10affairs the amount of tuition assistance granted pursuant to this

• Page 4, Line 11section for that academic term and any and all collection fees incurred

• Page 4, Line 12by the department of military and veterans affairs. The repayment of such

• Page 4, Line 13tuition assistance shall must be credited to the Colorado National Guard

• Page 4, Line 14tuition fund created in subsection (9) of this section.

• Page 4, Line 15(7)  The department of military and veterans affairs shall

• Page 4, Line 16promulgate military regulations for the administration of tuition

• Page 4, Line 17assistance as provided in this section and section 39-22-571, including,

• Page 4, Line 18but not limited to, the following:

• Page 4, Line 19SECTION 2.  In Colorado Revised Statutes, 39-22-104, amend

• Page 4, Line 20(4)(u) as follows:

• Page 4, Line 2139-22-104.  Income tax imposed on individuals, estates, and

• Page 4, Line 22trusts - single rate - report - tax preference performance statement

• Page 4, Line 23- legislative declaration - definitions - repeal. (4)  There shall be

• Page 4, Line 24subtracted from federal taxable income:

• Page 4, Line 25(u) (I)  For income tax years commencing on or after January 1,

• Page 4, Line 262016, but before January 1, 2027, an amount equal to any

• Page 4, Line 27compensation received for active duty service in the armed forces of the

• Page 5, Line 1United States by an individual who has reacquired residency in the state

• Page 5, Line 2pursuant to section 39-22-110.5, to the extent that the compensation is

• Page 5, Line 3included in federal taxable income;

• Page 5, Line 4(II)  This subsection (4)(u) is repealed, effective December

• Page 5, Line 531, 2031.

• Page 5, Line 6SECTION 3.  In Colorado Revised Statutes, add 39-22-571 as

• Page 5, Line 7follows:

• Page 5, Line 839-22-571.  Income tax credit for tuition assistance for eligible

• Page 5, Line 9members of the Colorado National Guard - tax preference

• Page 5, Line 10performance statement - report - definitions - repeal. (1)  Tax

• Page 5, Line 11preference performance statement.In accordance with section

• Page 5, Line 1239-21-304 (1), which requires each bill that creates a new tax

• Page 5, Line 13expenditure to include a tax preference performance statement

• Page 5, Line 14as part of a statutory legislative declaration, the general

• Page 5, Line 15assembly finds and declares that:

• Page 5, Line 16(a)  The general legislative purpose of the tax credit

• Page 5, Line 17allowed by this section is to provide tax relief for certain

• Page 5, Line 18businesses or individuals;

• Page 5, Line 19(b)  The specific legislative purpose of the tax credit

• Page 5, Line 20allowed by this section is to provide tax relief for eligible

• Page 5, Line 21members of the Colorado National Guard who are pursuing

• Page 5, Line 22higher education by providing additional tuition assistance; and

• Page 5, Line 23(c)  The general assembly and the state auditor shall

• Page 5, Line 24measure the effectiveness of the tax credit in achieving the

• Page 5, Line 25purposes specified in subsections (1)(a) and (1)(b) of this section

• Page 5, Line 26based on the information required to be maintained and reported

• Page 5, Line 27by the administrator pursuant to subsection (8) of this section.

• Page 6, Line 1(2)  Definitions.As used in this section, unless the context

• Page 6, Line 2otherwise requires:

• Page 6, Line 3(a)  "Administrator" means the department of military and

• Page 6, Line 4veterans affairs.

• Page 6, Line 5(b)  "Department" means the department of revenue.

• Page 6, Line 6(c)  "Eligible member" means an enlisted member or officer

• Page 6, Line 7of the Colorado National Guard who is eligible for tuition

• Page 6, Line 8assistance pursuant to section 23-7.4-302.

• Page 6, Line 9(d)  "Qualified individual" means an eligible member to

• Page 6, Line 10whom the administrator issues a tax credit certificate.

• Page 6, Line 11(e)  "Rules" means the military regulations for the

• Page 6, Line 12administration of tuition assistance promulgated by the

• Page 6, Line 13administrator pursuant to section 23-7.4-302 (7).

• Page 6, Line 14(f)  "Tax credit" means the income tax credit allowed

• Page 6, Line 15pursuant to this section.

• Page 6, Line 16(g)  "Tax credit certificate" means a certificate issued by

• Page 6, Line 17the administrator to a qualified individual pursuant to

• Page 6, Line 18subsection (5) of this section.

• Page 6, Line 19(h)  "Tuition assistance" includes both tuition assistance

• Page 6, Line 20awarded pursuant to section 23-7.4-302 and a tax credit allowed

• Page 6, Line 21pursuant to this section.

• Page 6, Line 22(3) Tax credit allowed. (a)  For income tax years commencing

• Page 6, Line 23on or after January 1, 2027, but before January 1, 2032, a

• Page 6, Line 24qualified individual is allowed a credit against the income taxes

• Page 6, Line 25imposed by this article 22 in the amount set forth in the tax

• Page 6, Line 26credit certificate issued to the qualified individual.

• Page 6, Line 27(b)  To claim a tax credit, a qualified individual must file

• Page 7, Line 1a tax credit certificate with the qualified individual's income

• Page 7, Line 2tax return.

• Page 7, Line 3(4) Application submission and review. (a)  An eligible

• Page 7, Line 4member who intends to claim a tax credit must submit an

• Page 7, Line 5application to the administrator for tuition assistance in

• Page 7, Line 6accordance with the rules.

• Page 7, Line 7(b)  When reviewing an application for tuition assistance

• Page 7, Line 8filed by an eligible member, the administrator, taking into

• Page 7, Line 9account the factors set forth in section 23-7.4-302 (7)(a), the

• Page 7, Line 10requirement set forth in subsection (4)(c) of this section, and any

• Page 7, Line 11additional factors in the rules, shall determine how much total

• Page 7, Line 12tuition assistance, if any, to award to the eligible member and

• Page 7, Line 13the amounts of such tuition assistance to be awarded pursuant

• Page 7, Line 14to section 23-7.4-302 and as a tax credit.

• Page 7, Line 15(c)  To be eligible for a tax credit certificate, an eligible

• Page 7, Line 16member must apply for all federal government tuition

• Page 7, Line 17assistance that is not required to be repaid and that is

• Page 7, Line 18generally made available to members of the Colorado National

• Page 7, Line 19Guard and not to the general population and must use all

• Page 7, Line 20federal government tuition assistance received.

• Page 7, Line 21(5) Tax credit certificates. (a)  Subject to the limitations set

• Page 7, Line 22forth in subsection (5)(b) of this section, if the administrator

• Page 7, Line 23determines that an eligible member should receive tuition

• Page 7, Line 24assistance in the form of a tax credit, the administrator shall

• Page 7, Line 25issue to the eligible member a tax credit certificate for each

• Page 7, Line 26academic semester or quarter for which such tuition assistance

• Page 7, Line 27is being awarded that indicates the income tax year for which

• Page 8, Line 1such tuition assistance is being awarded and the amount of such

• Page 8, Line 2tuition assistance to be awarded.

• Page 8, Line 3(b)  The issuance of tax credit certificates pursuant to

• Page 8, Line 4subsection (5)(a) of this section is subject to the following

• Page 8, Line 5limitations:

• Page 8, Line 6(I)  The maximum aggregate amount of tax credit

• Page 8, Line 7certificates that the administrator may issue to all qualified

• Page 8, Line 8individuals for any income tax year is one million dollars;

• Page 8, Line 9(II)  A tax credit certificate must be issued for the income

• Page 8, Line 10tax year during which the semester or quarter for which the

• Page 8, Line 11tuition assistance in the form of a tax credit is awarded begins;

• Page 8, Line 12and

• Page 8, Line 13(III)  The maximum amount of a tax credit certificate

• Page 8, Line 14issued to a qualified individual is the maximum amount of tuition

• Page 8, Line 15assistance that the administrator may award to an eligible

• Page 8, Line 16member for an academic semester or quarter, as applicable,

• Page 8, Line 17pursuant to section 23-7.4-302 and is specifically subject to the

• Page 8, Line 18limitation set forth in section 23-7.4-302 (2)(a.5).

• Page 8, Line 19(6)  Refundability.If the amount of a tax credit exceeds the

• Page 8, Line 20amount of income taxes otherwise due on the income of a

• Page 8, Line 21qualified individual in the income tax year for which the tax

• Page 8, Line 22credit is claimed, the amount of the tax credit not used as an

• Page 8, Line 23offset against income taxes in the income tax year is refunded to

• Page 8, Line 24the qualified individual.

• Page 8, Line 25(7)  Revocation of tax credit certificate and recapture of tax

• Page 8, Line 26credit.If, in accordance with section 23-7.4-302 and the rules, a

• Page 8, Line 27qualified individual to whom the administrator has issued a tax

• Page 9, Line 1credit certificate subsequently fails to fulfill all requirements

• Page 9, Line 2for receiving the tuition assistance provided in the form of a tax

• Page 9, Line 3credit that is specified on the tax credit certificate, the

• Page 9, Line 4administrator shall revoke the tax credit certificate and

• Page 9, Line 5notify the qualified individual and the department of the

• Page 9, Line 6revocation and the tax credit is disallowed. If the tax credit

• Page 9, Line 7has already been allowed to the qualified individual before the

• Page 9, Line 8department receives notice of the revocation of the tax credit

• Page 9, Line 9certificate, the qualified individual shall add the full amount

• Page 9, Line 10of the tax credit that was actually used to offset the qualified

• Page 9, Line 11individual's income or refunded to the qualified individual to

• Page 9, Line 12the qualified individual's income tax return for the next income

• Page 9, Line 13tax year as a recaptured tax credit for the income tax year for

• Page 9, Line 14which the tax credit certificate is revoked pursuant to this

• Page 9, Line 15subsection (7).

• Page 9, Line 16(8) Reporting. (a)  No later than December 31, 2028, and,

• Page 9, Line 17notwithstanding the requirement in section 24-1-136 (11)(a)(I), no

• Page 9, Line 18later than December 31 of each year thereafter through 2032,

• Page 9, Line 19the administrator shall provide a written report to the general

• Page 9, Line 20assembly and shall further make the report available to the

• Page 9, Line 21public. In connection with tax credits, the report must include:

• Page 9, Line 22(I)  The number of tax credit certificates issued;

• Page 9, Line 23(II)  The aggregate amount of tuition assistance provided

• Page 9, Line 24through tax credits and the average amount of such tuition

• Page 9, Line 25assistance provided to each qualified individual to whom the

• Page 9, Line 26administrator has issued a tax credit certificate; and

• Page 9, Line 27(III)  The amount of any tax credit recaptured due to

• Page 10, Line 1revocation of a tax credit certificate pursuant to subsection (7)

• Page 10, Line 2of this section.

• Page 10, Line 3(b)  The administrator shall, in a sufficiently timely

• Page 10, Line 4manner to allow the department to process returns claiming

• Page 10, Line 5the credit, provide the department with an electronic report of

• Page 10, Line 6each qualified individual to whom the administrator issues one

• Page 10, Line 7or more tax credit certificates for the preceding income tax

• Page 10, Line 8year that includes the following information:

• Page 10, Line 9(I)  The qualified individual's name;

• Page 10, Line 10(II)  The total amount of the tax credit authorized to be

• Page 10, Line 11claimed by the qualified individual and, if multiple tax credit

• Page 10, Line 12certificates were issued to a qualified individual, the amount of

• Page 10, Line 13the tax credit authorized to be claimed by the qualified

• Page 10, Line 14individual that is specified on each tax credit certificate; and

• Page 10, Line 15(III)  The qualified individual's social security number or,

• Page 10, Line 16if the qualified individual is not a United States citizen, the

• Page 10, Line 17qualified individual's individual taxpayer identification number.

• Page 10, Line 18(9)  Repeal.This section is repealed, effective December 31,

• Page 10, Line 192036.

• Page 10, Line 20SECTION 4.  Act subject to petition - effective date. This act

• Page 10, Line 21takes effect at 12:01 a.m. on the day following the expiration of the

• Page 10, Line 22ninety-day period after final adjournment of the general assembly; except

• Page 10, Line 23that, if a referendum petition is filed pursuant to section 1 (3) of article V

• Page 10, Line 24of the state constitution against this act or an item, section, or part of this

• Page 10, Line 25act within such period, then the act, item, section, or part will not take

• Page 10, Line 26effect unless approved by the people at the general election to be held in

• Page 11, Line 1November 2026 and, in such case, will take effect on the date of the

• Page 11, Line 2official declaration of the vote thereon by the governor.