A Bill for an Act
Page 1, Line 101Concerning the requirement for certain taxpayers to add
Page 1, Line 102back an amount equal to their federal deduction for
Page 1, Line 103qualified business income allowed under section 199A
Page 1, Line 104of the federal"Internal Revenue Code of 1986" for
Page 1, Line 105purposes of determining their state taxable income.
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.)
The bill continues indefinitely the existing requirement that an amount equal to the federal qualified business income deduction allowed under section 199A of the federal "Internal Revenue Code of 1986" must be added back by certain taxpayers to their federal taxable income for purposes of determining their state taxable income.
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) The continuation of the qualified business income (QBI) deduction add-back is a continuation of existing tax policy;
Page 2, Line 4(b) In 2020, the general assembly enacted House Bill 20-1420,
Page 2, Line 5which included a provision that required certain taxpayers to add to their
Page 2, Line 6federal taxable income an amount equal to their federal QBI deduction for purposes of determining their state taxable income;
Page 2, Line 7(c) The provision initially applied to income tax years 2021 and 2022 and was later extended to apply to income tax years 2023 to 2025;
Page 2, Line 8(d) This corresponding, permanent continuation of the QBI
Page 2, Line 9deduction add-back is a continuation of existing tax policy and is not a
Page 2, Line 10"tax policy change" under section 20 (4)(a) of article X of the Colorado constitution; and
Page 2, Line 11(e) The continuation of the QBI deduction add-back will not cause
Page 2, Line 12any "net revenue gain" to the state under section 20 (4)(a) of article X of the Colorado constitution because it simply maintains the status quo.
Page 2, Line 13SECTION 2. In Colorado Revised Statutes, 39-22-104, amend (3)(o) as follows:
Page 2, Line 1439-22-104. Income tax imposed on individuals, estates, and
Page 2, Line 15trusts - single rate - report - tax preference performance statement
Page 2, Line 16- legislative declaration - definitions - repeal. (3) There shall be added
Page 2, Line 17to the federal taxable income:
Page 3, Line 1(o) For income tax years commencing on or after January 1, 2021,
Page 3, Line 2
but before January 1, 2026,Page 3, Line 3under section 199A of the internal revenue code for a taxpayer who files
Page 3, Line 4a single return and whose adjusted gross income is greater than five
Page 3, Line 5hundred thousand dollars, and for taxpayers who file a joint return and
Page 3, Line 6whose adjusted gross income is greater than one million dollars; except
Page 3, Line 7that this subsection (3)(o) does not apply to a taxpayer who is required to
Page 3, Line 8file a schedule F, profit or loss from farming, or successor form, as an
Page 3, Line 9attachment to a federal income tax return for the tax year in which the
Page 3, Line 10taxpayer claims the deduction allowed under section 199A of the internal revenue code.
Page 3, Line 11SECTION 3. Safety clause. The general assembly finds,
Page 3, Line 12determines, and declares that this act is necessary for the immediate
Page 3, Line 13preservation of the public peace, health, or safety or for appropriations for
Page 3, Line 14the support and maintenance of the departments of the state and state institutions.