Senate Committee of Reference Report
Committee on Finance
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May 7, 2026
After consideration on the merits, the Committee recommends the following:
HB26-1223 be amended as follows, and as so amended, be referred to the Committee on Appropriations with favorable recommendation:
Page 1, Line 1Amend reengrossed bill, page 5, line 13, strike "income tax credit" and
Page 1, Line 2substitute "tax credits".
Page 1, Line 3Page 7, line 21, strike "January 1, 2026." and substitute "January 1,
Page 1, Line 42027.".
Page 1, Line 5Page 8, line 2, strike "January 1, 2026." and substitute "January 1,
Page 1, Line 62027.".
Page 1, Line 7Page 8, line 22, strike "family affordability tax".
Page 1, Line 8Page 14, after line 8 insert:
Page 1, Line 9"SECTION 4. In Colorado Revised Statutes, 39-26-102, add
Page 1, Line 10(21)(c) as follows:
Page 1, Line 1139-26-102. Performance statement - definitions - repeal.
Page 1, Line 12As used in this article 26, unless the context otherwise requires:
Page 1, Line 13(21) (c) (I) Beginning July 1, 2026, a retailer that sells
Page 1, Line 14food or drink as described in section 39-26-104 (1)(e) is deemed to
Page 1, Line 15use gas and electricity in the processing of prepared food as
Page 1, Line 16follows:
Page 1, Line 17(A) If the retailer's sales of prepared food exceed
Page 1, Line 18twenty-five percent of the retailer's total sales revenue, one
Page 1, Line 19hundred percent of the purchase price paid by the retailer for
Page 1, Line 20gas and electricity is exempt from taxation under the provisions
Page 1, Line 21of this part 1. The retailer may claim the exemption described in
Page 1, Line 22this subsection (21)(c)(I)(A) with the gas or electric service
Page 1, Line 23utility or as a credit against the tax collected by the retailer.
Page 1, Line 24(B) If the retailer's sales of prepared food are
Page 2, Line 1twenty-five percent or less of the retailer's total sales
Page 2, Line 2revenue, the retailer is allowed a credit against the tax
Page 2, Line 3collected by the retailer pursuant to this part 1 in an amount
Page 2, Line 4equal to one-half of one percent of a retailer's sales of
Page 2, Line 5prepared food.
Page 2, Line 6(II) A retailer who chooses to claim the credit allowed
Page 2, Line 7by this subsection (21)(c) must claim the credit for the previous
Page 2, Line 8calendar year on the sales tax return made for the month of
Page 2, Line 9January; except that a seasonal retailer must claim the credit
Page 2, Line 10on the sales tax return made for the month of June.
Page 2, Line 11SECTION 5. In Colorado Revised Statutes, 39-26-105, amend
Page 2, Line 12(1.3)(a)(V)(B), (1.3)(a)(V)(C), (1.3)(c), (1.3)(c.5), and (1.3)(f.7); and add
Page 2, Line 13(1.3)(a)(V)(D) and (1.3)(a)(V)(E) as follows:
Page 2, Line 14 39-26-105. Vendor liable for tax - definitions - repeal.
Page 2, Line 15(1.3) (a) As used in this subsection (1.3), unless the context
Page 2, Line 16otherwise requires:
Page 2, Line 17(V) (B) On and after June 14, 2021, but before June 3, 2022 but
Page 2, Line 18before the effective date of this subsection (1.3)(a)(V)(B), as
Page 2, Line 19amended, "specified sales tax period" means sales made in June 2021,
Page 2, Line 20July 2021, and August 2021, for which monthly returns must be filed
Page 2, Line 21pursuant to subsection (1)(b) of this section, on July 20, 2021, August 20,
Page 2, Line 222021, and September 20, 2021, respectively.
Page 2, Line 23(C) On and after June 3, 2022 On and after the effective date
Page 2, Line 24of this subsection (1.3)(a)(V)(C), as amended, "specified sales tax
Page 2, Line 25period" means sales made in July 2022, August 2022, and September
Page 2, Line 262022, for which monthly returns must be filed pursuant to subsection
Page 2, Line 27(1)(b) of this section, on August 20, 2022, September 20, 2022, and
Page 2, Line 28October 20, 2022, respectively.
Page 2, Line 29(D) On and after the effective date of this subsection
Page 2, Line 30(1.3)(a)(V)(D), as amended, "specified sales tax period" means
Page 2, Line 31sales made in July 2027, August 2027, November 2027, and
Page 2, Line 32December 2027, for which monthly returns must be filed
Page 2, Line 33pursuant to subsection (1)(b) of this section, on August 20, 2027,
Page 2, Line 34September 20, 2027, December 20, 2027, and January 20, 2028,
Page 2, Line 35respectively.
Page 2, Line 36(E) In addition to the definition in subsection (1.3)(a)(V)(D),
Page 2, Line 37on and after the effective date of this subsection (1.3)(a)(V)(E),
Page 2, Line 38as amended, "specified sales tax period" means sales made in July
Page 2, Line 392028, August 2028, November 2028, and December 2028, for which
Page 2, Line 40monthly returns must be filed pursuant to subsection (1)(b) of
Page 2, Line 41this section, on August 20, 2028, September 20, 2028, December 20,
Page 2, Line 422028, and January 20, 2029, respectively.
Page 2, Line 43(c) A qualifying retailer in the mobile food services industry may
Page 3, Line 1deduct from state net taxable sales the lesser of aggregate state net taxable
Page 3, Line 2sales for all sites or seventy thousand dollars fourteen thousand
Page 3, Line 3dollars per motorized vehicle or nonmotorized cart, not to exceed five
Page 3, Line 4motorized vehicles or nonmotorized carts, and retain the resulting state
Page 3, Line 5sales tax collected for each month in the specified sales tax period
Page 3, Line 6specified in subsection (1.3)(a)(V)(A) of this section.
Page 3, Line 7(c.5) A qualifying retailer in the catering industry may deduct
Page 3, Line 8from state net taxable sales the lesser of aggregate state net taxable sales
Page 3, Line 9for all events or seventy thousand dollars fourteen thousand dollars,
Page 3, Line 10and retain the resulting state sales tax collected for each month specified
Page 3, Line 11in subsection (1.3)(a)(V) of this section.
Page 3, Line 12(f.7) To the extent that information is available and without
Page 3, Line 13changing the sales tax return form, the department of revenue shall
Page 3, Line 14include a report to its committee of reference at a hearing held in January
Page 3, Line 152023 each year, pursuant to section 2-7-203 (2)(a) of the "State
Page 3, Line 16Measurement for Accountable, Responsive, and Transparent (SMART)
Page 3, Line 17Government Act" specifying:
Page 3, Line 18(I) The amount of sales tax revenue that the state did not collect
Page 3, Line 19in 2022 the previous calendar year as a result of the deduction
Page 3, Line 20allowed in this subsection (1.3); and
Page 3, Line 21(II) How many retailers elected to take advantage of the deduction
Page 3, Line 22allowed in this subsection (1.3) in 2022 the previous calendar year.".
Page 3, Line 23Renumber succeeding sections accordingly.
Page 3, Line 24Page 15, strike lines 11 through 13 and substitute "software is either
Page 3, Line 25governed by a negotiable license agreement or developed for
Page 3, Line 26use by a particular user.
Page 3, Line 27(a) For purposes of this article 26, "negotiated license
Page 3, Line 28agreement" means a written agreement or contract that is
Page 3, Line 29individually bargained between the licensor and licensee and
Page 3, Line 30that is signed in writing by authorized representatives of both
Page 3, Line 31the licensor and licensee prior to or contemporaneous with the
Page 3, Line 32licensee's access to or use of the software.
Page 3, Line 33(b) For purposes of this article 26, "individually bargained
Page 3, Line 34between the licensor and licensee" specifically excludes a
Page 3, Line 35standard, form, or boilerplate agreement that is offered by the
Page 3, Line 36licensor on a nonnegotiable or substantially nonnegotiable
Page 3, Line 37basis to multiple licensees, regardless of whether the
Page 3, Line 38agreement bears a handwritten or electronic signature, or the
Page 3, Line 39agreement is printed on, within, or affixed to the software
Page 3, Line 40packaging; embedded within the computer software itself; or
Page 3, Line 41presented as part of the terms and conditions of any website or
Page 4, Line 1application through which the software is acquired, accessed, or
Page 4, Line 2used.
Page 4, Line 3(c) For purposes of this article 26, "signed in writing by
Page 4, Line 4authorized representatives of both the licensor and licensee"
Page 4, Line 5specifically excludes an acceptance by the licensee on a
Page 4, Line 6click-through, browse-wrap, shrink-wrap, embedded signature,
Page 4, Line 7implied, account creation, or any other automated basis; except
Page 4, Line 8that "signed in writing by authorized representatives of both
Page 4, Line 9the licensor and licensee" may include a signature performed
Page 4, Line 10through an electronic signature method authorized pursuant
Page 4, Line 11to section 39-21-120 and department rules and specifically
Page 4, Line 12includes electronic signature methods such as docusign or a
Page 4, Line 13similar authenticated electronic signature.
Page 4, Line 14SECTION 8. In Colorado Revised Statutes, 39-26-715, add
Page 4, Line 15(2)(b)(IV) as follows:
Page 4, Line 1639-26-715. Fuel and oil - definitions.
Page 4, Line 17(2) The following are exempt from taxation under the provisions
Page 4, Line 18of part 2 of this article 26:
Page 4, Line 19(b) (IV) Beginning July 1, 2026, for purposes of this
Page 4, Line 20subsection (2)(b), the deemed usage rules set forth in section
Page 4, Line 2139-26-102 (21)(c)(I) apply.".
Page 4, Line 22Renumber succeeding sections accordingly.
Page 4, Line 23Page 17, strike lines 12 through 20 and substitute:
Page 4, Line 24"SECTION 12. Applicability. Sections 3 and 4 of this act apply
Page 4, Line 25to the sale, storage, use, and consumption of tangible personal property
Page 4, Line 26on or after January 1, 2027.
Page 4, Line 27SECTION 13. Act subject to petition - effective date.
Page 4, Line 28(1) Except as otherwise provided in this section, this act takes
Page 4, Line 29effect at 12:01 a.m. on the day following the expiration of the ninety-day
Page 4, Line 30period after final adjournment of the general assembly (August 12, 2026,
Page 4, Line 31if adjournment sine die is on May 13, 2026); except that, if a referendum
Page 4, Line 32petition is filed pursuant to section 1 (3) of article V of the state
Page 4, Line 33constitution against this act or an item, section, or part of this act within
Page 4, Line 34such period, then the act, item, section, or part will not take effect unless
Page 4, Line 35approved by the people at the general election to be held in November
Page 4, Line 362026 and, in such case, will take effect on the date of the official
Page 4, Line 37declaration of the vote thereon by the governor.
Page 4, Line 38(2) Section 2 of this act takes effect only if House Bill 26-1221 and
Page 4, Line 39House Bill 26-1222 do not become law.".
Page 4, Line 40