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 2SECTION 2. In Colorado Revised Statutes, 39-27-102, amend (1)(b)(I) as follows:
Page 4, Line 339-27-102. Tax imposed on gasoline and special fuel - deposits
Page 4, Line 4- penalties. (1) (b) (I) In the case of gasoline or special fuel removed
Page 4, Line 5from a terminal, the tax is imposed upon the person first receiving the
Page 4, Line 6gasoline or special fuel at the terminal even if such person is also the
Page 4, Line 7supplier. In the case of gasoline or special fuel removed from a terminal
Page 4, Line 8by a common carrier, the consignor who owns the gasoline or special fuel
Page 4, Line 9removed by the common carrier is deemed to be the remover and first
Page 4, Line 10recipient thereof. The amount of gasoline or special fuel removed is
Page 4, Line 11deemed to be the amount shipped from the terminal, measured in gallons,
Page 4, Line 12as shown by the terminal manifest; except that, for tax years
Page 4, Line 13commencing before January 1, 2026, an allowance of two percent of
Page 4, Line 14the total amount of gasoline or special fuel acquired during any calendar
Page 4, Line 15month, and, for tax years commencing on or after January 1,
Page 4, Line 162026, an allowance of one percent of the total amount of
Page 4, Line 17gasoline or special fuel acquired during any calendar month, as
Page 4, Line 18shown by terminal manifests, is deducted by the licensed distributor to
Page 4, Line 19cover losses in transit and in unloading the gasoline or special fuel but
Page 4, Line 20there is no allowance for liquefied petroleum gas or removal by bulk
Page 4, Line 21transfer. The
two percentPage 4, Line 22SECTION 3. In Colorado Revised Statutes, 39-22-546, amend
Page 4, Line 23(3)(a) and (7) as follows:
Page 5, Line 139-22-546. Credit against tax - residential energy storage
Page 5, Line 2systems - tax preference performance statement - legislative
Page 5, Line 3declaration - definition - repeal. (3) (a) For income tax years
Page 5, Line 4commencing on or after January 1, 2023, but before
January 1, 2025Page 5, Line 5January 1, 2027, any purchaser that installs an energy storage system in
Page 5, Line 6a residential dwelling in this state is allowed a credit against the tax
Page 5, Line 7imposed 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 5, Line 8(7) This section is repealed, effective
January 1, 2028Page 5, Line 9SECTION 4. In Colorado Revised Statutes, 39-22-550, amend (3)(a), (5), and (6) as follows:
Page 5, Line 1039-22-550. Tax credit for reducing emissions from certain
Page 5, Line 11lawn equipment - tax preference performance statement - legislative
Page 5, Line 12declaration - definitions - report - repeal. (3) (a) For income tax years
Page 5, Line 13commencing on or after January 1, 2024, but before
January 1, 2027Page 5, Line 14January 1, 2029, a retailer qualified pursuant to subsection (3)(e)(II) of
Page 5, Line 15this section is allowed a tax credit against the tax imposed pursuant to this
Page 5, Line 16article 22 in an amount equal to thirty-three percent of the aggregate
Page 5, Line 17purchase price for all retail sales of new, electric-powered lawn equipment that the qualified retailer sold in the state during the tax year.
Page 5, Line 18(5) Pursuant to section 39-21-304 (3), notwithstanding section
Page 5, Line 1924-1-136 (11)(a)(I), and for the purpose of providing data that allows the
Page 5, Line 20general assembly and the state auditor to measure the effectiveness of the
Page 5, Line 21tax credit created in subsection (3) of this section, the department of
Page 5, Line 22revenue, on or before January 1, 2025, and on or before January 1 of each
Page 5, Line 23year thereafter through
January 1, 2028Page 6, Line 1the general assembly and the state auditor a report detailing the sales of
Page 6, Line 2new, electric-powered lawn equipment, as reported by a qualified retailer
Page 6, Line 3claiming the tax credit authorized under subsection (3) of this section.
Page 6, Line 4The tax credit established in this section meets its purpose if sales of new,
Page 6, Line 5gasoline-powered lawn equipment are significantly reduced within five
Page 6, Line 6years after the tax credit becomes effective, as determined by the general assembly and the state auditor pursuant to section 39-21-304 (3).
Page 6, Line 7(6) This section is repealed, effective
December 31, 2033Page 6, Line 8SECTION 5. In Colorado Revised Statutes, 39-26-102, amend
Page 6, Line 9(19)(c)(II) introductory portion and (19)(c)(II)(C); and add (19)(c)(II)(D) as follows:
Page 6, Line 1039-26-102. Definitions. As used in this article 26, unless the context otherwise requires:
Page 6, Line 11(19) (c) (II) For purposes of this
paragraph (c)Page 6, Line 12(C) Animal pharmaceuticals that have been approved by the food and drug administration; or
Page 6, Line 13(D) For income tax years commencing on or after January
Page 6, Line 141, 2026, soil conditioners, plant amendments, plant growth
Page 6, Line 15regulators, mulches, compost, soil used for aboveground
Page 6, Line 16production of agricultural commodities, manure, fish for non-stocking purposes, fish embryos, and fish eggs.
Page 6, Line 17SECTION 6. In Colorado Revised Statutes, 10-20-113, add (3) as follows:
Page 6, Line 1810-20-113. Credits for assessments paid - tax offsets.
Page 6, Line 19(3) (a) The purpose of the credit authorized in subsection (1)(a)
Page 7, Line 1of this section is to offset the cost for an insurer paying
Page 7, Line 2required assessments into the life and health insurance protection association created in section 10-20-106 (1).
Page 7, Line 3(b) The effectiveness of the credit authorized in
Page 7, Line 4subsection (1)(a) of this section is measured by how many eligible
Page 7, Line 5insurers claim the credit and the amount claimed relative to
Page 7, Line 6payments into the life and health insurance protection association created in section 10-20-106 (1).
Page 7, Line 7SECTION 7. In Colorado Revised Statutes, 39-22-104, amend (4)(e) as follows:
Page 7, Line 839-22-104. Income tax imposed on individuals, estates, and
Page 7, Line 9trusts - single rate - report - tax preference performance statement
Page 7, Line 10- legislative declaration - definitions - repeal. (4) There shall be subtracted from federal taxable income:
Page 7, Line 11(e) (I) The amount of any refund or credit for overpayment of
Page 7, Line 12income taxes imposed by this state or any other taxing jurisdiction to the
Page 7, Line 13extent included in gross income for federal income tax purposes but not previously allowed as a deduction for Colorado income tax purposes;
Page 7, Line 14(II) The purpose of the deduction authorized in this
Page 7, Line 15subsection (4)(e) is to avoid re-taxing a taxpayer's state income
Page 7, Line 16tax refund when a state refund is required to be included as
Page 7, Line 17income on the taxpayer's federal return pursuant to the internal revenue code;
Page 7, Line 18(III) The effectiveness of the deduction authorized in this
Page 7, Line 19subsection (4)(e) is measured by the number of taxpayers
Page 7, Line 20claiming the deduction and the total amount of state refunds
Page 7, Line 21claimed as deductions from Colorado taxable income;
Page 8, Line 1SECTION 8. In Colorado Revised Statutes, 39-22-304, amend (3)(f) as follows:
Page 8, Line 239-22-304. Net income of corporation - legislative declaration
Page 8, Line 3- definitions - repeal. (3) There shall be subtracted from federal taxable income:
Page 8, Line 4(f) (I) The amount of any refund or credit for overpayment of
Page 8, Line 5income taxes imposed by this state to the extent included in federal taxable income;
Page 8, Line 6(II) The purpose of the deduction authorized in this
Page 8, Line 7subsection (3)(f) is to avoid re-taxing a taxpayer's state income
Page 8, Line 8tax refund when a state refund is required to be included as
Page 8, Line 9income on the taxpayer's federal return pursuant to the internal revenue code; and
Page 8, Line 10(III) The effectiveness of the deduction authorized in this
Page 8, Line 11subsection (3)(f) is measured by the number of taxpayers
Page 8, Line 12claiming the deduction and the total amount of state refunds claimed as deductions from Colorado taxable income;
Page 8, Line 13SECTION 9. In Colorado Revised Statutes, 39-27-102.5, add (2.3) as follows:
Page 8, Line 1439-27-102.5. Exemptions on tax imposed - ex-tax purchases -
Page 8, Line 15performance statement - definition - repeal. (2.3) (a) The purpose of
Page 8, Line 16the exemption authorized in subsections (1.5) and (2)(a) of this
Page 8, Line 17section is to entirely exclude dyed diesel or kerosene from the
Page 8, Line 18special fuels excise tax where the dyed fuel is used for specified off-road purposes or by governmental entities.
Page 8, Line 19(b) The effectiveness of the exemption authorized in
Page 8, Line 20subsections (1.5) and (2)(a) of this section is measured by the
Page 9, Line 1number of taxpayers claiming the exemption and the amount of tax that would have been paid without the exemption.
Page 9, Line 2SECTION 10. In Colorado Revised Statutes, 39-27-103, add (8) as follows:
Page 9, Line 339-27-103. Refunds - penalties - checkoff - limits on collections
Page 9, Line 4- performance statement. (8) (a) The purpose of the refund
Page 9, Line 5authorized in subsections (2.7) and (3) of this section is to
Page 9, Line 6compensate taxpayers who buy and pay the tax on otherwise
Page 9, Line 7taxable fuels for the purpose of using the fuels for specified non-taxable purposes under federal law.
Page 9, Line 8(b) The effectiveness of the refund authorized in
Page 9, Line 9subsections (2.7) and (3) of this section is measured by the number
Page 9, Line 10of taxpayers claiming a refund and the amount of tax that was already collected and is refunded.
Page 9, Line 11SECTION 11. In Colorado Revised Statutes, 39-26-102, amend (19)(a) as follows:
Page 9, Line 1239-26-102. Performance statement - definitions. As used in this article 26, unless the context otherwise requires:
Page 9, Line 13(19) (a) (I) "Wholesale sale" means a sale by wholesalers to retail
Page 9, Line 14merchants, jobbers, dealers, or other wholesalers for resale and does not
Page 9, Line 15include a sale by wholesalers to users or consumers not for resale, and the
Page 9, Line 16latter sales shall be deemed retail sales and subject to the provisions of this
articlePage 9, Line 17(II) The purpose of the wholesale sale exemption from the
Page 9, Line 18tax levied pursuant to section 39-26-104 (1)(a) is to ensure that
Page 9, Line 19sales tax is levied and collected only on a final end sale to a
Page 9, Line 20retail consumer and not on wholesale sales to avoid a single
Page 10, Line 1product being taxed multiple times before it is sold to a consumer.
Page 10, Line 2(III) The effectiveness of the wholesale exemption from
Page 10, Line 3the tax levied pursuant to section 39-26-104 (1)(a) is measured by
Page 10, Line 4the number of taxpayers claiming the wholesale exemption from tax and the amount of tax liability not paid.
Page 10, Line 5SECTION 12. Act subject to petition - effective date. This act
Page 10, Line 6takes effect at 12:01 a.m. on the day following the expiration of the
Page 10, Line 7ninety-day period after final adjournment of the general assembly; except
Page 10, Line 8that, if a referendum petition is filed pursuant to section 1 (3) of article V
Page 10, Line 9of the state constitution against this act or an item, section, or part of this
Page 10, Line 10act within such period, then the act, item, section, or part will not take
Page 10, Line 11effect unless approved by the people at the general election to be held in
Page 10, Line 12November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.