A Bill for an Act
Page 1, Line 101Concerning extending the achieving a better life experience
Page 1, Line 102state income tax deduction.
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.)
Currently, the achieving a better life experience state income tax deduction (ABLE deduction) expires on December 31, 2025. The bill extends the ABLE deduction until December 31, 2030.
The bill specifies that the purposes of the ABLE deduction are to provide support to individuals with disabilities and their families and to provide an incentive for individuals with disabilities and their families to set aside money in an account to cover future disability-related expenses.
Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 2, Line 2SECTION 1. Legislative declaration. (1) The general assembly finds and declares that:
Page 2, Line 3(a) An individual with a disability often faces living a life
Page 2, Line 4burdened by significantly higher than average medical costs, housing costs, and transportation costs, among other costs;
Page 2, Line 5(b) This burden can create major financial hardship for individuals with disabilities and their families;
Page 2, Line 6(c) Current benefit systems make it difficult to live with a
Page 2, Line 7disability and have gainful employment, often depriving individuals who
Page 2, Line 8have a disability of the right to work, which negatively impacts the state by being deprived of a greater workforce;
Page 2, Line 9(d) An ABLE savings account, also known as a 529A account, is a tax-advantaged savings account for an individual with a disability;
Page 2, Line 10(e) An ABLE savings account allows an individual with a
Page 2, Line 11disability to save and invest money for disability-related expenses without
Page 2, Line 12facing challenges to eligibility for certain means-tested programs like medicaid and supplemental social security income;
Page 2, Line 13(f) A key feature of an ABLE account includes that the individual
Page 2, Line 14with a disability is the owner of the ABLE account, which can promote self-determination and independence;
Page 2, Line 15(g) ABLE accounts can hold a substantial amount of savings
Page 2, Line 16without impacting eligibility for these benefits, preventing a descent into poverty by creating a safety net; and
Page 2, Line 17(h) Qualified expenses for an ABLE account include education,
Page 3, Line 1housing, transportation, health care, assistive technology, and employment.
Page 3, Line 2(2) Therefore, it is the general assembly's intent to provide tax
Page 3, Line 3relief to help individuals with disabilities to have more means to cover
Page 3, Line 4life expenses and provide individuals with disabilities greater flexibility to enter the workforce.
Page 3, Line 5SECTION 2. In Colorado Revised Statutes, 39-22-104, amend
Page 3, Line 6(4)(i)(I)(B), (4)(i)(I)(C), (4)(i)(II)(B), (4)(i)(III.5) introductory portion,
Page 3, Line 7(4)(i)(III.5)(D), (4)(i)(IV)(D), (4)(i)(IV)(E), (4)(i)(IV.5); and add (4)(i)(VII) as follows:
Page 3, Line 839-22-104. Income tax imposed on individuals, estates, and
Page 3, Line 9trusts - single rate - report - tax preference performance statement
Page 3, Line 10- legislative declaration - definitions - repeal. (4) There shall be subtracted from federal taxable income:
Page 3, Line 11(i) (I) (B) Before
January 1, 2026Page 3, Line 12equal to the portion attributable to interest and other income of a
Page 3, Line 13distribution under a qualified ABLE program that is distributed for the
Page 3, Line 14purpose of meeting qualified disability expenses of a designated
Page 3, Line 15beneficiary, to the extent such amount is included in federal taxable income;
Page 3, Line 16(C) Subsection (4)(i)(I)(B) of this section and this subsection (4)(i)(I)(C) are repealed, effective
January 1, 2030Page 3, Line 17(II) (B) Except as provided in subsection (4)(i)(II)(C) of this
Page 3, Line 18section, for income tax years commencing on or after January 1, 2022, an
Page 3, Line 19amount equal to all payments or contributions, not to exceed twenty
Page 3, Line 20thousand dollars per taxpayer per beneficiary for a taxpayer who files a
Page 3, Line 21single return, or thirty thousand dollars per taxpayer per beneficiary for
Page 4, Line 1taxpayers who file a joint return, made during the taxable year under an
Page 4, Line 2advance payment contract, to a savings trust account, or otherwise in
Page 4, Line 3connection with a qualified state tuition program established by
Page 4, Line 4collegeinvest created in section 23-3.1-203, or to a qualified state tuition
Page 4, Line 5program that is affiliated with an educational institution in the state and
Page 4, Line 6that is established and maintained pursuant to section 529 of the internal
Page 4, Line 7revenue code or any successor section, or, before
January 1, 2026Page 4, Line 8January 1, 2031, in connection with a qualified ABLE program.
Page 4, Line 9Notwithstanding subsection (4)(i)(III)(D) of this section, collegeinvest
Page 4, Line 10may treat a change in beneficiary as a nonqualifying distribution if the
Page 4, Line 11change was made for the purpose of evading the limit in this subsection (4)(i)(II)(B).
Page 4, Line 12(III.5) No subtraction is allowed pursuant to this subsection (4)(i)
Page 4, Line 13to the extent that such payments or contributions are excluded from the
Page 4, Line 14taxpayer's federal taxable income for the taxable year. Before
January 1,Page 4, Line 15
2026Page 4, Line 16is added to the account holder's taxable income in the taxable year or
Page 4, Line 17years in which any distribution, refund, or any other withdrawal is made
Page 4, Line 18pursuant to an advance payment contract, from a savings trust account, or
Page 4, Line 19otherwise in connection with a qualified ABLE program for any reason other than:
Page 4, Line 20(D) This subsection (4)(i)(III.5) is repealed, effective
January 1, 2030Page 4, Line 21(IV) As used in this subsection (4)(i), unless the context otherwise requires:
Page 4, Line 22(D) "Qualified ABLE program", before
January 1, 2026Page 4, Line 231, 2031, means a qualified ABLE program as defined in section 529A (b) of the internal revenue code.
Page 5, Line 1(E) "Qualified disability expense", before
January 1, 2026Page 5, Line 2January 1, 2031, has the same meaning as defined in section 529A (e)(5) of the internal revenue code.
Page 5, Line 3(IV.5) Subsections (4)(i)(IV)(B) and (4)(i)(IV)(C) of this section
Page 5, Line 4and this subsection (4)(i)(IV.5) are repealed, effective
January 1, 2030Page 5, Line 5(VII) The purposes of the deduction authorized in
Page 5, Line 6subsection (4)(i)(I)(B) of this section are to provide support to
Page 5, Line 7individuals with disabilities and their families and to provide an
Page 5, Line 8incentive for individuals with disabilities and their families to
Page 5, Line 9set aside money in an account to cover future disability-related expenses.
Page 5, Line 10SECTION 3. Act subject to petition - effective date. This act
Page 5, Line 11takes effect at 12:01 a.m. on the day following the expiration of the
Page 5, Line 12ninety-day period after final adjournment of the general assembly; except
Page 5, Line 13that, if a referendum petition is filed pursuant to section 1 (3) of article V
Page 5, Line 14of the state constitution against this act or an item, section, or part of this
Page 5, Line 15act within such period, then the act, item, section, or part will not take
Page 5, Line 16effect unless approved by the people at the general election to be held in
Page 5, Line 17November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.