Senate Bill 25-319 Reengrossed

A Bill for an Act

• Page 1, Line 101Concerning the administration of the income tax incentive

• Page 1, Line 102for certain higher education costs incurred by eligible

• Page 1, Line 103students, and, in connection therewith, making an

• Page 1, Line 104appropriation.

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/.)

Joint Budget Committee. The state allows a student pursuing higher education who satisfies statutorily specified eligibility criteria to claim an income tax incentive for amounts paid for tuition and fees for qualifying academic semesters or terms that the student completes. The bill clarifies the statute that provides for the income tax incentives to improve the administration, including data tracking and reporting, of the incentive.

For the 2025-26 state fiscal year, $135,446 is appropriated to the department of revenue for use by the taxation business group to implement the bill.

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

• Page 2, Line 2SECTION 1.  In Colorado Revised Statutes, 39-22-570, amend

• Page 2, Line 3(2)(c), (3), (4)(a) introductory portion, (4)(b), (4)(c), and (6)(d); and add (2)(b.5), (2)(c.5), and (2)(d.5) as follows:

• Page 2, Line 439-22-570.  Tuition and fee tax incentive for qualifying

• Page 2, Line 5students - tax preference performance statement - report - legislative

• Page 2, Line 6declaration - definitions - repeal. (2)  As used in this section, unless the context otherwise requires:

• Page 2, Line 7(b.5)  "Dependent student" means a student who is not an independent student.

• Page 2, Line 8(c)  "Eligible student" means an individual who:

• Page 2, Line 9(I)  Has matriculated at a Colorado public institution of higher

• Page 2, Line 10education within two years of completion of Completed high school

• Page 2, Line 11graduation or an equivalent on or after January 1, 2024, or is currently enrolled as of fall 2024;

• Page 2, Line 12(I.5)  Has matriculated at a Colorado public institution of

• Page 2, Line 13higher education within two academic years after completion of high school graduation or an equivalent;

• Page 2, Line 14(II)  Is designated as a degree- or credential-seeking

• Page 2, Line 15undergraduate student at a Colorado public institution of higher education for the semester or term for which an incentive is claimed;

• Page 2, Line 16(III)  Qualifies for in-state tuition, as described in article 7 of title 23, for the semester or term for which the incentive is claimed; and

• Page 3, Line 1(IV)  Has completed a free application for federal student aid

• Page 3, Line 2(FAFSA) or Colorado application for state financial aid (CASFA) for the

• Page 3, Line 3semester or term for which an incentive is claimed; that indicates that the

• Page 3, Line 4student's household has an adjusted gross income that is ninety thousand dollars or less. and

• Page 3, Line 5(V)  Has a household adjusted gross income for the second

• Page 3, Line 6preceding income tax year that is ninety thousand dollars or less.

• Page 3, Line 7(c.5) (I)  "Household adjusted gross income" means:

• Page 3, Line 8(A)  In the case of a dependent student, the sum of the

• Page 3, Line 9student's and the parent's or parents', as applicable, adjusted

• Page 3, Line 10gross incomes to the extent that the parent's or parents' income is taken into account for purposes of 20 U.S.C. sec. 1087oo (f);

• Page 3, Line 11(B)  In the case of a single independent student, the student's adjusted gross income; and

• Page 3, Line 12(C)  Except as otherwise provided in subsection (2)(c.5)(II)

• Page 3, Line 13of this section, in the case of a married independent student, the sum of the student's and the spouse's adjusted gross incomes.

• Page 3, Line 14(II)  In the case of a student who is divorced or separated,

• Page 3, Line 15or whose spouse has died, the spouse's adjusted gross income is disregarded.

• Page 3, Line 16(d.5)  "Independent student" has the same meaning as set forth in 20 U.S.C. sec. 1087vv (d), as amended.

• Page 3, Line 17(3) (a) (I)  For each the income tax year commencing on or after

• Page 3, Line 18January 1, 2025, but prior to January 1, 2033 January 1, 2026, an

• Page 3, Line 19eligible student is allowed an incentive against the income taxes imposed

• Page 4, Line 1by this article 22 for every qualifying semester or term completed during

• Page 4, Line 2the academic year ending during the income tax year and any other

• Page 4, Line 3qualifying semester or term completed during the income tax year.

• Page 4, Line 4(II)  For each income tax year commencing on or after

• Page 4, Line 5January 1, 2026, but prior to January 1, 2033, an eligible student

• Page 4, Line 6is allowed an incentive against the income taxes imposed by this

• Page 4, Line 7article 22 for every qualifying semester or term completed during the income tax year.

• Page 4, Line 8(b)  The amount of incentive allowed to an eligible student for

• Page 4, Line 9each income tax year qualifying semester or term is equal to the

• Page 4, Line 10amount paid by or for the benefit of the eligible student in tuition and fees

• Page 4, Line 11to a Colorado public institution of higher education minus any

• Page 4, Line 12scholarships or grants for each the qualifying semester or term during the

• Page 4, Line 13academic year completed during the prior calendar year semesters or terms.

• Page 4, Line 14(c)  With regard to whether an individual is an eligible

• Page 4, Line 15student or whether a semester or term is a qualifying semester

• Page 4, Line 16or term, a Colorado public institution of higher education shall

• Page 4, Line 17take into account the facts and circumstances determined on or

• Page 4, Line 18before January 15 following the income tax year and shall

• Page 4, Line 19disregard any change in facts or circumstances occurring thereafter.

• Page 4, Line 20(4) (a)  Each Colorado public institution of higher education is

• Page 4, Line 21required by January 15 January 31, 2026, and every January 15

• Page 4, Line 22January 31 thereafter until 2033, to electronically report each eligible

• Page 4, Line 23student, unless prohibited by federal law, in which case each

• Page 5, Line 1Colorado public institution of higher education shall instead

• Page 5, Line 2report each student who satisfies the qualifications for being an

• Page 5, Line 3eligible student set forth in subsections (2)(c)(I) to (2)(c)(IV) of

• Page 5, Line 4this section without regard to whether the student's household

• Page 5, Line 5adjusted gross income exceeds the limit set forth in subsection

• Page 5, Line 6(2)(c)(V) of this section, for any qualifying semester or term completed

• Page 5, Line 7during the academic year completed during the for which an incentive

• Page 5, Line 8is allowed pursuant to this section for the prior calendar year to

• Page 5, Line 9the department of higher education in a format prescribed by the department of higher education that includes:

• Page 5, Line 10(b)  By January 31, 2026, and every January 31 thereafter through

• Page 5, Line 112033, the Colorado public institution of higher education shall provide

• Page 5, Line 12each eligible student, unless prohibited by federal law, in which

• Page 5, Line 13case each Colorado public institution of higher education shall

• Page 5, Line 14instead provide each student who satisfies the qualifications for

• Page 5, Line 15being an eligible student set forth in subsections (2)(c)(I) to

• Page 5, Line 16(2)(c)(IV) of this section without regard to whether the

• Page 5, Line 17student's household adjusted gross income exceeds the limit set

• Page 5, Line 18forth in subsection (2)(c)(V) of this section, with a statement

• Page 5, Line 19containing the information pertaining to that student's eligibility and the

• Page 5, Line 20amount reported to the department of higher education pursuant to

• Page 5, Line 21subsection (4)(a)(II) of this section. A Colorado public institution of

• Page 5, Line 22higher education may provide the statement electronically and is not required to provide it in physical form.

• Page 5, Line 23(c)  The department of higher education is required by January 31

• Page 5, Line 24February 15, 2026, and every January 31 February 15 thereafter

• Page 5, Line 25through 2034, to electronically report the information received pursuant

• Page 6, Line 1to subsection (4)(a) of this section along with any later corrections or

• Page 6, Line 2additions to the department of revenue in a format prescribed by the executive director.

• Page 6, Line 3(6) (d) (I)  On or before December 1, 2026, the department of

• Page 6, Line 4higher education, in consultation with the department of

• Page 6, Line 5revenue, shall submit a report to the joint budget committee and

• Page 6, Line 6the house of representatives and senate education committees,

• Page 6, Line 7or any successor committees, that describes the implementation

• Page 6, Line 8of the tax incentive and includes an estimate of the total

• Page 6, Line 9amount of tax incentives claimed pursuant to this section for income tax years that commence in 2025.

• Page 6, Line 10(II)  On or before June 30, 2027 December 1, 2027, and each year

• Page 6, Line 11thereafter until 2037, the department of higher education shall submit a

• Page 6, Line 12report to the joint budget committee and the house of representatives and

• Page 6, Line 13senate education committees, or any successor committees, including, for

• Page 6, Line 14each institution, the average percentage of state and institutional financial

• Page 6, Line 15aid allocated to the resident student population who have a family income

• Page 6, Line 16of ninety thousand dollars or less in the three academic years prior to the

• Page 6, Line 17academic year 2024-25, and in each academic year thereafter until 2034.

• Page 6, Line 18The department of higher education shall include in the report available

• Page 6, Line 19data on student enrollment information for incentive recipients,

• Page 6, Line 20eligible nonrecipients, and noneligible students, disaggregated by

• Page 6, Line 21income unless prohibited by federal law, and shall include, once the

• Page 6, Line 22date is data are available, disaggregated outcome measures by income,

• Page 6, Line 23unless prohibited by federal law, for incentive recipients, eligible

• Page 6, Line 24nonrecipients, and noneligible students, including but not limited to

• Page 6, Line 25student retention and rates, completion rates, and student loan debt.

• Page 7, Line 1Each Colorado public institution of higher education shall annually report

• Page 7, Line 2student level financial aid, tuition and fees, student eligibility, and

• Page 7, Line 3incentive eligibility information to the department of higher education

• Page 7, Line 4that the department of higher education deems necessary to calculate

• Page 7, Line 5the costs of the incentive, to provide to the department of revenue for incentive administration or for inclusion in the report.

• Page 7, Line 6(III)  To allow the department of higher education to

• Page 7, Line 7complete the report that it annually submits as required by

• Page 7, Line 8subsection (6)(d)(II) of this section, the department of revenue

• Page 7, Line 9shall annually provide to the department of higher education

• Page 7, Line 10data that indicates whether an eligible student has claimed the incentive.

• Page 7, Line 11SECTION 2.  In Colorado Revised Statutes, 39-21-113, add (37) as follows:

• Page 7, Line 1239-21-113.  Reports and returns - rule - repeal.

• Page 7, Line 13(37)  Notwithstanding the confidentiality requirements of this

• Page 7, Line 14section, the executive director may provide the department of

• Page 7, Line 15higher education with information obtained pursuant to this

• Page 7, Line 16section that indicates whether an eligible student, as defined in

• Page 7, Line 17section 39-22-570 (2)(c), has claimed the incentive, as defined in

• Page 7, Line 18section 39-22-570 (2)(d), allowed by section 39-22-570. Any

• Page 7, Line 19information provided to the department of higher education

• Page 7, Line 20pursuant to this subsection (37) remains confidential, and all

• Page 7, Line 21employees of the department of higher education are subject to

• Page 7, Line 22the limitations set forth in subsection (4) of this section and penalties specified in subsection (6) of this section.

• Page 7, Line 23SECTION 3.  Appropriation. (1)  For the 2025-26 state fiscal

• Page 8, Line 1year, $135,446 is appropriated to the department of revenue for use by the

• Page 8, Line 2taxation business group. This appropriation is from the general fund. To implement this act, the division may use this appropriation as follows:

• Page 8, Line 3(a)  $113,004 for personal services related to taxation services,

• Page 8, Line 4which amount is based on an assumption that the division will require an additional 1.9 FTE; and

• Page 8, Line 5(b)  $22,442 for operating expenses related to taxation services.

• Page 8, Line 6SECTION 4.  Safety clause. The general assembly finds,

• Page 8, Line 7determines, and declares that this act is necessary for the immediate

• Page 8, Line 8preservation of the public peace, health, or safety or for appropriations for

• Page 8, Line 9the support and maintenance of the departments of the state and state institutions.