Senate Bill 25b-009 Introduced

A Bill for an Act

• Page 1, Line 101Concerning the adjustment of certain income tax credits,

• Page 1, Line 102and, in connection therewith, authorizing the

• Page 1, Line 103department of revenue to sell certain income tax

• Page 1, Line 104credits to qualified taxpayers and temporarily

• Page 1, Line 105suspending or prorating income tax credits based on

• Page 1, Line 106revenue estimates.

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.)

Section 3 of the bill creates a mechanism for temporarily suspending or prorating all income tax credits, excluding the Colorado affordable housing tax credit and the earned income tax credits (income tax credits), based on estimates of the state's revenue. Beginning with the December 2025 quarterly revenue forecast, each quarterly revenue forecast in June, September, or December, and any interim revenue estimate given between quarterly forecasts, must include 2 estimates of the amount of excess state revenues in relation to the income tax credits available. Excess state revenues, for purposes of these estimates, means the total amount of revenue collected by the state during the state fiscal year in excess of the limitation on state fiscal year spending imposed by the Taxpayer's Bill of Rights that voters statewide have not authorized the state to retain and spend, less: The reimbursement to local governments to offset the reduction in property taxes resulting from property tax exemptions for qualifying seniors, veterans with disabilities, and spouses of veterans who died in the line of duty or as a result of a service-related injury or disease; the reimbursement to local governments to offset the reduction in property taxes resulting from the reduced valuation for assessment of qualified-senior primary residences; and any temporary income tax rate reduction in effect. These estimates are:

• An estimate of the amount of excess state revenues in the state fiscal year during which the income tax year begins, assuming all income tax credits are available in the following income tax year; and
• An estimate of the amount of excess state revenues in the state fiscal year during which the income tax year begins, assuming no income tax credits are available in the following income tax year.
• The estimate without income tax credits results in the least amount of excess revenue, then no income tax credits are available for the applicable income tax year; or
• The estimate with income tax credits results in the least amount of excess revenue, then all income tax credits are available for the applicable income tax year and are prorated so that the maximum total amount of each income tax credit claimed by all taxpayers claiming that credit does not exceed the amount equal to the estimated excess state revenues divided by the total number of income tax credits available during the applicable income tax year.
• The credit for the sale of new, electric-powered lawn equipment for income tax years commencing on or after January 1, 2024, but before January 1, 2027. Under existing law, this credit is allowed to qualified retailers who sell new, electric-powered lawn equipment and offer a discount on the purchase price (section 4);
• The credit for the installation of heat pump technology or a thermal energy network for income tax years commencing on or after January 1, 2024, but before January 1, 2033. Under existing law, this credit is allowed to eligible taxpayers who meet certain industry criteria and install heat pump technology or a thermal energy network, if the eligible taxpayer provides a discount from the amount charged for installation (section 5); and
• The credit for the sale of new qualified electric bicycles for income tax years commencing on or after January 1, 2024, but before January 1, 2033. Under existing law, this credit is allowed to qualified retailers who sell a qualified electric bicycle and offer a discount on the bicycle purchase price (section 6).

The availability of income tax credits for the applicable income tax year is determined by which of these estimates results in the least amount of excess revenue. If the most recent quarterly June, September, or December revenue forecast, or the most recent interim revenue estimate, shows that:

The bill also makes the family affordability tax credit nonrefundable beginning in income tax year 2025 (section 2).

Lastly, the bill alters the following refundable income tax credits:

The bill modifies the 3 income tax credits so that income tax year 2025 is the last tax year that each credit can be claimed as it currently exists and allows the department of revenue (department) to sell the income tax credits in state fiscal year 2025-26 to taxpayers who meet the existing eligibility requirements (qualified taxpayers). In state fiscal year 2025-26, the department is authorized to issue up to $40 million in income tax credit certificates to qualified taxpayers, subject to procedures established by the department. The proceeds of these sales are credited to the general fund. A qualified taxpayer may claim the full amount of tax credit against its income tax liability in income tax year 2030; except that the amount of the credit claimed cannot exceed the taxpayer's income tax liability for a given year. The unused amount of the credit carries forward and may be claimed in subsequent years; except that a credit cannot be carried over to any taxable year that begins after December 31, 2050.

• Page 3, Line 1Be it enacted by the General Assembly of the State of Colorado:

• Page 3, Line 2SECTION 1.  Legislative declaration. (1)  The general assembly finds and declares that:

• Page 3, Line 3(a)  The Taxpayer's Bill of Rights (TABOR) is a critical

• Page 3, Line 4constitutional safeguard that ensures Colorado taxpayers are protected

• Page 4, Line 1from excessive taxation and that government revenue remains within responsible limits;

• Page 4, Line 2(b)  TABOR imposes strict limitations on the ability of the state

• Page 4, Line 3and local governments to raise taxes, requires voter approval for any new

• Page 4, Line 4tax or tax increase, and ensures that revenue is not collected in excess of the state's allowed cap;

• Page 4, Line 5(c)  Colorado's government is committed to maintaining the

• Page 4, Line 6principles of fiscal responsibility and transparency, ensuring that taxpayer dollars are spent efficiently and effectively;

• Page 4, Line 7(d)  Pausing tax credits is allowable up to the constitutional

• Page 4, Line 8mandated cap and may constitute a temporary reduction in expenditures

• Page 4, Line 9rather than an increase in taxes, as most tax credits are considered a form

• Page 4, Line 10of expenditure by the state, reducing the amount of tax revenue that would otherwise be collected; and

• Page 4, Line 11(e)  Such a pause in tax credits does not increase the overall tax

• Page 4, Line 12burden on taxpayers and does not require voter approval under TABOR,

• Page 4, Line 13as it is consistent with the constitutional intent to limit state spending rather than to impose new taxes or tax increases.

• Page 4, Line 14(2)  Therefore, the general assembly finds and declares that the

• Page 4, Line 15temporary suspension or reduction of tax credits is within the legal

• Page 4, Line 16authority of the general assembly and does not constitute a violation of

• Page 4, Line 17TABOR, as it represents a reduction in state expenditures rather than an increase in taxes.

• Page 4, Line 18SECTION 2.  In Colorado Revised Statutes, 39-22-130, amend (10) as follows:

• Page 4, Line 1939-22-130.  Family affordability tax credit - tax preference

• Page 4, Line 20performance statement - legislative declaration - definitions - repeal.

• Page 5, Line 1(10) (a) (I)  The For the income tax year commencing on or after

• Page 5, Line 2January 1, 2024, but before January 1, 2025, the amount of the

• Page 5, Line 3credit allowed under this section that exceeds the resident individual's income taxes due is refunded to the individual.

• Page 5, Line 4(II)  This subsection (10)(a) is repealed, effective January 1, 2027.

• Page 5, Line 5(b)  For income tax years commencing on or after January

• Page 5, Line 61, 2025, but before January 1, 2034, the amount of the credit

• Page 5, Line 7allowed under this section that exceeds the resident individual's income taxes due is not refunded to the individual.

• Page 5, Line 8SECTION 3.  In Colorado Revised Statutes, add 39-22-131 as follows:

• Page 5, Line 939-22-131.  Temporary tax credit suspension - prorating -

• Page 5, Line 10insufficient revenues - rules - definitions. (1)  As used in this section, unless the context otherwise requires:

• Page 5, Line 11(a)  "Applicable income tax year" means the income tax

• Page 5, Line 12year following the June, September, and December revenue

• Page 5, Line 13forecasts prepared by the legislative council staff and the

• Page 5, Line 14office of state planning and budgeting and any interim revenue estimate.

• Page 5, Line 15(b)  "Excess state revenues" means the total amount of

• Page 5, Line 16revenue collected by the state during the state fiscal year in

• Page 5, Line 17excess of the limitation on state fiscal year spending imposed by

• Page 5, Line 18section 20 (7)(a) of article X of the state constitution that

• Page 5, Line 19voters statewide have not authorized the state to retain and

• Page 5, Line 20spend and that the state is required to refund under section 20

• Page 5, Line 21(7)(d) of article X of the state constitution, including any

• Page 6, Line 1adjustment for amounts specified in section 24-77-103.7 or

• Page 6, Line 224-77-103.8, less the maximum amounts that may be refunded

• Page 6, Line 3pursuant to sections 39-1-104.6, 39-3-209, and 39-22-627 for the

• Page 6, Line 4property tax and income tax years that commenced during the state fiscal year.

• Page 6, Line 5(c)  "Income tax credit" means any credit allowed to a

• Page 6, Line 6taxpayer against the income taxes imposed by this article 22. "Income tax credit" does not include:

• Page 6, Line 7(I)  The Colorado affordable housing tax credit allowed in part 21 of this article 22; and

• Page 6, Line 8(II)  The earned income tax credits allowed in sections 39-22-123 and 39-22-123.5.

• Page 6, Line 9(d)  "Interim revenue estimate" means an updated revenue

• Page 6, Line 10estimate in the time between two estimates made by the

• Page 6, Line 11governor pursuant to section 24-75-201.3 (2), which interim

• Page 6, Line 12estimate is prepared by the governor, designated by the

• Page 6, Line 13governor as an interim revenue estimate that is an update to the

• Page 6, Line 14most recent prior revenue estimate, and transmitted to the general assembly.

• Page 6, Line 15(e)  "State revenue estimate with full income tax credits"

• Page 6, Line 16means an estimate of the amount of excess state revenues in the

• Page 6, Line 17state fiscal year during which the income tax year begins,

• Page 6, Line 18assuming that all income tax credits are fully available for the applicable income tax year.

• Page 6, Line 19(f)  "State revenue estimate without income tax credits"

• Page 6, Line 20means an estimate of the amount of excess state revenues in the

• Page 6, Line 21state fiscal year during which the income tax year begins,

• Page 7, Line 1assuming that no income tax credits are available for the applicable income tax year.

• Page 7, Line 2(2) (a)  Beginning with the quarterly December 2025

• Page 7, Line 3forecast, and each quarterly June, September, or December

• Page 7, Line 4revenue forecast thereafter, the legislative council staff and

• Page 7, Line 5the office of state planning and budgeting shall include a state

• Page 7, Line 6revenue estimate with complete income tax credits and a state revenue estimate without income tax credits.

• Page 7, Line 7(b)  The governor shall include in each interim revenue

• Page 7, Line 8estimate a state revenue estimate with complete income tax credits and a state revenue estimate without income tax credits.

• Page 7, Line 9(3)  Notwithstanding any provision of law to the

• Page 7, Line 10contrary, the availability of income tax credits for the

• Page 7, Line 11applicable income tax year is determined by which income tax

• Page 7, Line 12credit estimate required by subsection (2) of this section results

• Page 7, Line 13in the least amount of excess state revenue. If the most recent

• Page 7, Line 14quarterly June, September, or December revenue forecast, as

• Page 7, Line 15prepared by the legislative council staff and the office of state

• Page 7, Line 16planning and budgeting, or the most recent interim revenue estimate, shows that:

• Page 7, Line 17(a)  The state revenue estimate without income tax credits

• Page 7, Line 18results in the least amount of excess state revenue of the

• Page 7, Line 19income tax credit estimates, then no income tax credits are available for the applicable income tax year; or

• Page 7, Line 20(b)  The state revenue estimate with full income tax

• Page 7, Line 21credits results in the least amount of excess state revenue of

• Page 7, Line 22the income tax credit estimates, then all income tax credits are

• Page 8, Line 1available for the applicable income tax year and are prorated

• Page 8, Line 2so that the maximum total amount of each income tax credit

• Page 8, Line 3claimed by all taxpayers claiming that credit does not exceed

• Page 8, Line 4the amount equal to the estimated excess state revenue divided

• Page 8, Line 5by the total number of income tax credits available during the applicable income tax year or the amount.

• Page 8, Line 6SECTION 4.  In Colorado Revised Statutes, 39-22-550, amend (3)(a), (4), (5), and (6); and add (4.3) and (4.5) as follows:

• Page 8, Line 739-22-550.  Tax credit for reducing emissions from certain

• Page 8, Line 8lawn equipment - sale of tax credits - authorization to issue - tax

• Page 8, Line 9preference performance statement - legislative declaration -

• Page 8, Line 10definitions - report - repeal. (3) (a)  For income tax years commencing

• Page 8, Line 11on or after January 1, 2024, but before January 1, 2027 January 1, 2026,

• Page 8, Line 12a retailer qualified pursuant to subsection (3)(e)(II) of this section is

• Page 8, Line 13allowed a tax credit against the tax imposed pursuant to this article 22 in

• Page 8, Line 14an amount equal to thirty-three percent of the aggregate purchase price

• Page 8, Line 15for all retail sales of new, electric-powered lawn equipment that the qualified retailer sold in the state during the tax year.

• Page 8, Line 16(4)  If a credit authorized by subsection (3) of this section

• Page 8, Line 17exceeds the income tax due on the income of the qualified retailer for the

• Page 8, Line 18taxable year, the excess credit may not be carried forward and must be refunded to the qualified retailer.

• Page 8, Line 19(4.3)  The general assembly finds and declares that:

• Page 8, Line 20(a)  The tax credits authorized by subsection (4.5) of this

• Page 8, Line 21section as a method to provide money to the general fund are

• Page 8, Line 22available only to qualified retailers that incur income tax

• Page 8, Line 23liability in the state;

• Page 9, Line 1(b)  The tax credits can only be used by a qualified

• Page 9, Line 2retailer to offset income tax liability actually incurred by the retailer;

• Page 9, Line 3(c)  The tax credits are not refundable and do not impose an obligation of payment in any future year upon the state;

• Page 9, Line 4(d)  The use of proceeds from the sale of the tax credits

• Page 9, Line 5for the general fund allows the state to augment the general fund through the use of future tax expenditures and therefore:

• Page 9, Line 6(I)  Does not require the state to borrow money, extend or

• Page 9, Line 7pledge the state's credit, or obligate the state to make future payments from state revenues; and

• Page 9, Line 8(II)  Does not otherwise create any multiple fiscal year

• Page 9, Line 9direct or indirect district debt or other financial obligation

• Page 9, Line 10whatsoever for purposes of section 20 (4)(a) of article X of the state constitution.

• Page 9, Line 11(4.5) (a)  A qualified retailer may purchase tax credits

• Page 9, Line 12from the department in accordance with this section and may

• Page 9, Line 13apply the tax credits against its liability for the tax imposed

• Page 9, Line 14pursuant to this article 22, in accordance with this subsection (4.5).

• Page 9, Line 15(b) (I)  The department is authorized to issue tax credit

• Page 9, Line 16certificates to qualified retailers equal to the lesser of a total

• Page 9, Line 17face value of up to forty million dollars or total sales proceeds of up to thirty million dollars in fiscal year 2025-26.

• Page 9, Line 18(II)  The department may contract with an independent

• Page 9, Line 19third party to conduct or consult on a bidding process among

• Page 9, Line 20qualified retailers to purchase the tax credits.

• Page 10, Line 1(c)  A qualified retailer seeking to purchase tax credits

• Page 10, Line 2must apply to the department in the manner prescribed by the department.

• Page 10, Line 3(d)  Using procedures adopted by the department or, if

• Page 10, Line 4applicable, by an independent third party, each qualified

• Page 10, Line 5retailer that submits an application shall make a timely and

• Page 10, Line 6irrevocable offer, contingent only upon the department's

• Page 10, Line 7issuance to the qualified retailer of the tax credit certificates,

• Page 10, Line 8to make a specified purchase payment amount to the department

• Page 10, Line 9on dates specified by the department. The offer must include the following:

• Page 10, Line 10(I)  The requested amount of tax credits, which must not

• Page 10, Line 11be less than any minimum amount established in procedures by the department or, if applicable, the independent third party;

• Page 10, Line 12(II)  The qualified retailer's proposed tax credit purchase

• Page 10, Line 13amount for each tax credit dollar requested. The minimum proposed tax credit purchase amount must be either:

• Page 10, Line 14(A)  The percentage of the requested dollar amount of tax

• Page 10, Line 15credits that the department or, if applicable, the independent

• Page 10, Line 16third party determines to be consistent with market conditions as of the offer date; or

• Page 10, Line 17(B)  If no amount is established by the department or the

• Page 10, Line 18independent third party pursuant to subsection (4.5)(d)(II)(A) of

• Page 10, Line 19this section, seventy-five percent of the requested dollar amount of tax credits; and

• Page 10, Line 20(III)  Any other information that the department or, if

• Page 10, Line 21applicable, the independent third party requires.

• Page 11, Line 1(e)  The department shall provide written notice to each

• Page 11, Line 2qualified retailer that submits an application indicating

• Page 11, Line 3whether or not the qualified retailer has been approved as a

• Page 11, Line 4purchaser of tax credits and, if so, the amount of tax credits

• Page 11, Line 5allocated and the date by which payment of the tax credit sale proceeds must be made.

• Page 11, Line 6(f)  On receipt of payment of the sale proceeds, the

• Page 11, Line 7department shall issue to each qualified retailer a tax credit certificate. The tax credit certificate must state the following:

• Page 11, Line 8(I)  The total amount of tax credits that the qualified retailer may claim;

• Page 11, Line 9(II)  The amount that the qualified retailer has paid or

• Page 11, Line 10agreed to pay in return for the issuance of the tax credit certificates and the date of the payment;

• Page 11, Line 11(III)  The dates on which the tax credits will be available for use by the qualified retailer;

• Page 11, Line 12(IV)  Any penalties or other remedies for noncompliance;

• (V)  The serial number of the tax credit certificate; and

• Page 11, Line 13(VI)  Any other requirements deemed necessary by the department as a condition of issuing the tax credit certificate.

• Page 11, Line 14(g) (I)  The department shall not issue a tax credit

• Page 11, Line 15certificate to any qualified retailer that fails to provide the

• Page 11, Line 16tax credit sale proceeds within the time specified by the department.

• Page 11, Line 17(II)  A qualified retailer that fails to provide the tax

• Page 11, Line 18credit sale proceeds within the time specified by the department

• Page 11, Line 19is subject to a penalty equal to ten percent of the amount of the

• Page 12, Line 1purchase price that remains unpaid. The penalty must be paid to the department within thirty days after demand.

• Page 12, Line 2(III)  The department may offer to reallocate the

• Page 12, Line 3defaulted tax credits among other qualified retailers so that

• Page 12, Line 4the result after reallocation is the same as if the initial

• Page 12, Line 5allocation had been performed without considering the tax credit allocation to the defaulting qualified retailer.

• Page 12, Line 6(IV)  If the reallocation of tax credits under subsection

• Page 12, Line 7(4.5)(g)(III) of this section results in the payment by another

• Page 12, Line 8qualified retailer of the amount of tax credit sale proceeds not

• Page 12, Line 9paid by the defaulting qualified retailer, the department may

• Page 12, Line 10waive the penalty imposed under subsection (4.5)(g)(II) of this section.

• Page 12, Line 11(V)  A qualified retailer that fails to pay the tax credit

• Page 12, Line 12sale proceeds within the time specified by the department may

• Page 12, Line 13avoid the imposition of the penalty by transferring the

• Page 12, Line 14allocation of tax credits to a new or existing qualified retailer

• Page 12, Line 15within thirty days after the due date of the defaulted

• Page 12, Line 16installment. Any transferee of an allocation of tax credits of

• Page 12, Line 17a defaulting qualified retailer under this subsection (4.5)(g)

• Page 12, Line 18shall agree to pay the tax credit sale proceeds within five days after the date of the transfer.

• Page 12, Line 19(h)  For a tax credit certificate issued in fiscal year

• Page 12, Line 202025-26, the qualified retailer may claim up to the full amount

• Page 12, Line 21of the credit against its income tax liability incurred for a

• Page 12, Line 22taxable year that begins on or after January 1, 2030; except

• Page 12, Line 23that a qualified retailer may not reduce its estimated tax payments in proportion to such credit prior to July 1, 2030.

• Page 13, Line 1(i) (I)  The total credit to be applied by a qualified retailer

• Page 13, Line 2in any one year must not exceed the income tax liability of the

• Page 13, Line 3qualified retailer for the taxable year. If the qualified retailer

• Page 13, Line 4cannot use the entire amount of the tax credit for the taxable

• Page 13, Line 5year in which the qualified retailer is eligible for the credit, the

• Page 13, Line 6excess may be carried over to succeeding taxable years and

• Page 13, Line 7used as a credit against the income tax liability of the qualified

• Page 13, Line 8retailer for those taxable years; except that, for a credit

• Page 13, Line 9issued in fiscal year 2025-26, the credit may not be carried over to any taxable year that begins after December 31, 2050.

• Page 13, Line 10(II)  Any amount of the credit that is not timely claimed expires and is not refundable.

• Page 13, Line 11(j)  A qualified retailer claiming a credit under this

• Page 13, Line 12subsection (4.5) shall submit the tax credit certificate with its tax return.

• Page 13, Line 13(k)  A qualified retailer claiming a credit under this

• Page 13, Line 14subsection (4.5) shall not be required to pay any additional or retaliatory tax as a result of claiming the credit.

• Page 13, Line 15(l)  If a qualified retailer holding an unclaimed tax credit

• Page 13, Line 16is part of a merger, acquisition, or line of business divestiture

• Page 13, Line 17transaction, the tax credit may be transferred to and assumed

• Page 13, Line 18by the resulting entity if the resulting entity is a retailer

• Page 13, Line 19authorized to do business in Colorado that has income tax

• Page 13, Line 20liability. The qualified retailer that originally purchased the

• Page 13, Line 21credit and the resulting entity shall notify the department in

• Page 13, Line 22writing of the transfer or assumption of the credit in

• Page 14, Line 1accordance with procedures adopted by the department. The

• Page 14, Line 2department shall maintain a record of the transfer or

• Page 14, Line 3assumption of the tax credit. The transfer or assumption of the

• Page 14, Line 4tax credit does not affect the time schedule for claiming the tax credit as provided in this subsection (4.5).

• Page 14, Line 5(5)  Pursuant to section 39-21-304 (3), notwithstanding section

• Page 14, Line 624-1-136 (11)(a)(I), and for the purpose of providing data that allows the

• Page 14, Line 7general assembly and the state auditor to measure the effectiveness of the

• Page 14, Line 8tax credit created in subsection (3) of this section, the department of

• Page 14, Line 9revenue, on or before January 1, 2025, and on or before January 1 of each

• Page 14, Line 10year thereafter through January 1, 2028, shall submit to the general

• Page 14, Line 11assembly and the state auditor a report detailing the sales of new,

• Page 14, Line 12electric-powered lawn equipment, as reported by a qualified retailer

• Page 14, Line 13claiming the tax credit authorized under subsection (3) of this section or

• Page 14, Line 14a qualified retailer who has received a tax credit certificate

• Page 14, Line 15pursuant to subsection (4.5) of this section. The tax credit

• Page 14, Line 16established in this section meets its purpose if sales of new,

• Page 14, Line 17gasoline-powered lawn equipment are significantly reduced within five

• Page 14, Line 18years after the tax credit becomes effective, as determined by the general assembly and the state auditor pursuant to section 39-21-304 (3).

• Page 14, Line 19(6)  This section is repealed, effective December 31, 2033 December 31, 2055.

• Page 14, Line 20SECTION 5.  In Colorado Revised Statutes, 39-22-554, amend

• Page 14, Line 21(3)(a), (3)(c), (4), (8), and (9); repeal (3)(f); and add (4.3) and (4.5) as follows:

• Page 14, Line 2239-22-554.  Heat pump technology and thermal energy

• Page 14, Line 23network tax credit - sale of tax credits - authorization to issue - tax

• Page 15, Line 1preference performance statement - legislative declaration -

• Page 15, Line 2definitions - repeal. (3) (a)  For income tax years commencing on or

• Page 15, Line 3after January 1, 2024, but before January 1, 2033 January 1, 2026, an

• Page 15, Line 4eligible taxpayer that installs heat pump technology in a building in the

• Page 15, Line 5state, on a campus in the state, or develops, through purchase and

• Page 15, Line 6installation of necessary equipment, a thermal energy network in the state

• Page 15, Line 7is allowed a credit against the tax imposed under this article 22 in an

• Page 15, Line 8amount set forth in subsection (3)(c) of this section in the tax year that the heat pump technology or thermal energy network is placed into service.

• Page 15, Line 9(c)  Subject to the modifications set forth in subsection (3)(d) of

• Page 15, Line 10this section and the annual review required pursuant to subsection (3)(e)

• Page 15, Line 11of this section, and except as otherwise provided in subsection (3)(f) of

• Page 15, Line 12this section, the amount of the credit allowed pursuant to this section is calculated as follows:

• Page 15, Line 13(I)  For the installation of an air-source heat pump system or for a variable refrigerant flow heat pump system,

• Page 15, Line 14(A) for tax years commencing on or after January 1, 2024, but before January 1, 2026, one thousand five hundred dollars;

• Page 15, Line 15(B)  For tax years commencing on or after January 1, 2026, but before January 1, 2029, one thousand dollars; and

• Page 15, Line 16(C)  For tax years commencing on or after January 1, 2029, but before January 1, 2033, five hundred dollars;

• Page 15, Line 17(II)  For the installation of a ground-source heat pump system,

• Page 15, Line 18water-source heat pump system, a combined air-source and ground-source

• Page 15, Line 19heat pump system, a combined water-source and ground-source heat

• Page 15, Line 20pump system, a combined variable refrigerant flow and ground-source

• Page 15, Line 21heat pump system, or a combined variable refrigerant flow and water-source heat pump system,

• Page 16, Line 1(A)   for tax years commencing on or after January 1, 2024, but before January 1, 2026, three thousand dollars; and

• Page 16, Line 2(B)  For tax years commencing on or after January 1, 2026, but before January 1, 2029, two thousand dollars; and

• Page 16, Line 3(C)  For tax years commencing on or after January 1, 2029, but before January 1, 2033, one thousand dollars; and

• Page 16, Line 4(III)  For the installation of a heat pump water heater,

• Page 16, Line 5(A)   for tax years commencing on or after January 1, 2024, but before January 1, 2026, five hundred dollars. and

• Page 16, Line 6(B)  For tax years commencing on or after January 1, 2026, but before January 1, 2033, two hundred fifty dollars.

• Page 16, Line 7(f)  If the June 2025 revenue forecast, and each June revenue

• Page 16, Line 8forecast through the June 2031 revenue forecast as prepared by either

• Page 16, Line 9legislative council staff or the office of state planning and budgeting,

• Page 16, Line 10projects that state revenues, as defined in section 24-77-103.6 (6)(c), will

• Page 16, Line 11not increase by at least four percent for the next fiscal year, the amount

• Page 16, Line 12of the credit allowed pursuant to subsection (3)(c)(I)(B), (3)(c)(I)(C),

• Page 16, Line 13(3)(c)(II)(B), (3)(c)(II)(C), or (3)(c)(III)(B) of this section, as may be

• Page 16, Line 14modified by subsections (3)(d) and (3)(e) of this section, for any tax year

• Page 16, Line 15commencing in the calendar year that begins during said next fiscal year

• Page 16, Line 16is reduced by fifty percent if the heat pump technology is installed at an

• Page 16, Line 17existing residential or nonresidential building; except that if the amount

• Page 16, Line 18of the reduced credit is equal to or less than two hundred fifty dollars, then no credit is available for such a tax year.

• Page 16, Line 19(4)  An eligible taxpayer may retain an applicable percentage of

• Page 16, Line 20the amount of the tax credit allowed under subsection (3)(c) of this

• Page 17, Line 1section to support the industry-wide adoption and deployment of heat

• Page 17, Line 2pump technologies in the state. The office shall annually determine the

• Page 17, Line 3applicable percentage, which must be the same for each eligible taxpayer,

• Page 17, Line 4pursuant to guidelines established by the office. The office shall maintain

• Page 17, Line 5the current applicable percentage on its website and shall provide the

• Page 17, Line 6applicable percentage in writing to the department no later than December

• Page 17, Line 731, 2023, and each December 31 thereafter through December 31, 2031 December 31, 2024.

• Page 17, Line 8(4.3)  The general assembly finds and declares that:

• Page 17, Line 9(a)  The tax credits authorized by subsection (4.5) of this

• Page 17, Line 10section as a method to provide money to the general fund are

• Page 17, Line 11available only to eligible taxpayers that incur income tax liability in the state;

• Page 17, Line 12(b)  The tax credits can only be used by an eligible

• Page 17, Line 13taxpayer to offset income tax liability actually incurred by the taxpayer;

• Page 17, Line 14(c)  The tax credits are not refundable and do not impose an obligation of payment in any future year upon the state;

• Page 17, Line 15(d)  The use of proceeds from the sale of the tax credits

• Page 17, Line 16for the general fund allows the state to augment the general fund through the use of future tax expenditures and therefore:

• Page 17, Line 17(I)  Does not require the state to borrow money, extend or

• Page 17, Line 18pledge the state's credit, or obligate the state to make future payments from state revenues; and

• Page 17, Line 19(II)  Does not otherwise create any multiple fiscal year

• Page 17, Line 20direct or indirect district debt or other financial obligation

• Page 17, Line 21whatsoever for purposes of section 20 (4)(a) of article X of the state constitution.

• Page 18, Line 1(4.5) (a)  An eligible taxpayer may purchase tax credits

• Page 18, Line 2from the department in accordance with this section and may

• Page 18, Line 3apply the tax credits against its liability for the tax imposed

• Page 18, Line 4pursuant to this article 22, in accordance with this subsection (4.5).

• Page 18, Line 5(b) (I)  The department is authorized to issue tax credit

• Page 18, Line 6certificates to eligible taxpayers equal to the lesser of a total

• Page 18, Line 7face value of up to forty million dollars or total sales proceeds of up to thirty million dollars in fiscal year 2025-26.

• Page 18, Line 8(II)  The department may contract with an independent

• Page 18, Line 9third party to conduct or consult on a bidding process among eligible taxpayers to purchase the tax credits.

• Page 18, Line 10(III)  The department shall consult with the office in

• Page 18, Line 11advance of issuing any tax credits in accordance with this subsection (4.5).

• Page 18, Line 12(c)  An eligible taxpayer seeking to purchase tax credits

• Page 18, Line 13must apply to the department in the manner prescribed by the department.

• Page 18, Line 14(d)  Using procedures adopted by the department or, if

• Page 18, Line 15applicable, by an independent third party, each eligible taxpayer

• Page 18, Line 16that submits an application shall make a timely and irrevocable

• Page 18, Line 17offer, contingent only upon the department's issuance to the

• Page 18, Line 18eligible taxpayer of the tax credit certificates, to make a

• Page 18, Line 19specified purchase payment amount to the department on dates

• Page 18, Line 20specified by the department. The offer must include the

• Page 18, Line 21following:

• Page 19, Line 1(I)  The requested amount of tax credits, which must not

• Page 19, Line 2be less than any minimum amount established in procedures by the department or, if applicable, the independent third party;

• Page 19, Line 3(II)  The eligible taxpayer's proposed tax credit purchase

• Page 19, Line 4amount for each tax credit dollar requested. The minimum proposed tax credit purchase amount must be either:

• Page 19, Line 5(A)  The percentage of the requested dollar amount of tax

• Page 19, Line 6credits that the department or, if applicable, the independent

• Page 19, Line 7third party determines to be consistent with market conditions as of the offer date; or

• Page 19, Line 8(B)  If no amount is established by the department or the

• Page 19, Line 9independent third party pursuant to subsection (4.5)(d)(II)(A) of

• Page 19, Line 10this section, seventy-five percent of the requested dollar amount of tax credits; and

• Page 19, Line 11(III)  Any other information that the department or, if applicable, the independent third party requires.

• Page 19, Line 12(e)  The department shall provide written notice to each

• Page 19, Line 13eligible taxpayer that submits an application indicating whether

• Page 19, Line 14or not the eligible taxpayer has been approved as a purchaser of

• Page 19, Line 15tax credits and, if so, the amount of tax credits allocated and

• Page 19, Line 16the date by which payment of the tax credit sale proceeds must be made.

• Page 19, Line 17(f)  On receipt of payment of the sale proceeds, the

• Page 19, Line 18department shall issue to each eligible taxpayer a tax credit certificate. The tax credit certificate must state the following:

• Page 19, Line 19(I)  The total amount of tax credits that the eligible

• Page 19, Line 20taxpayer may claim;

• Page 20, Line 1(II)  The amount that the eligible taxpayer has paid or

• Page 20, Line 2agreed to pay in return for the issuance of the tax credit certificates and the date of the payment;

• Page 20, Line 3(III)  The dates on which the tax credits will be available for use by the eligible taxpayer;

• Page 20, Line 4(IV)  Any penalties or other remedies for noncompliance;

• (V)  The serial number of the tax credit certificate; and

• Page 20, Line 5(VI)  Any other requirements deemed necessary by the department as a condition of issuing the tax credit certificate.

• Page 20, Line 6(g) (I)  The department shall not issue a tax credit

• Page 20, Line 7certificate to any eligible taxpayer that fails to provide the tax credit sale proceeds within the time specified by the department.

• Page 20, Line 8(II)  An eligible taxpayer that fails to provide the tax

• Page 20, Line 9credit sale proceeds within the time specified by the department

• Page 20, Line 10is subject to a penalty equal to ten percent of the amount of the

• Page 20, Line 11purchase price that remains unpaid. The penalty must be paid to the department within thirty days after demand.

• Page 20, Line 12(III)  The department may offer to reallocate the

• Page 20, Line 13defaulted tax credits among other eligible taxpayer so that the

• Page 20, Line 14result after reallocation is the same as if the initial allocation

• Page 20, Line 15had been performed without considering the tax credit allocation to the defaulting eligible taxpayer.

• Page 20, Line 16(IV)  If the reallocation of tax credits under subsection

• Page 20, Line 17(4.5)(g)(III) of this section results in the payment by another

• Page 20, Line 18eligible taxpayer of the amount of tax credit sale proceeds not

• Page 20, Line 19paid by the defaulting eligible taxpayer, the department may

• Page 20, Line 20waive the penalty imposed under subsection (4.5)(g)(II) of this section.

• Page 21, Line 1(V)  An eligible taxpayer that fails to pay the tax credit

• Page 21, Line 2sale proceeds within the time specified by the department may

• Page 21, Line 3avoid the imposition of the penalty by transferring the

• Page 21, Line 4allocation of tax credits to a new or existing eligible taxpayer

• Page 21, Line 5within thirty days after the due date of the defaulted

• Page 21, Line 6installment. Any transferee of an allocation of tax credits of

• Page 21, Line 7a defaulting eligible taxpayer under this subsection (4.5)(g)

• Page 21, Line 8shall agree to pay the tax credit sale proceeds within five days after the date of the transfer.

• Page 21, Line 9(h)  For a tax credit certificate issued in fiscal year

• Page 21, Line 102025-26, the eligible taxpayer may claim up to the full amount

• Page 21, Line 11of the credit against its income tax liability incurred for a

• Page 21, Line 12taxable year that begins on or after January 1, 2030; except

• Page 21, Line 13that a taxpayer may not reduce its estimated tax payments in proportion to such credit prior to July 1, 2030.

• Page 21, Line 14(i) (I)  The total credit to be applied by an eligible

• Page 21, Line 15taxpayer in any one year must not exceed the income tax

• Page 21, Line 16liability of the taxpayer for the taxable year. If the eligible

• Page 21, Line 17taxpayer cannot use the entire amount of the tax credit for the

• Page 21, Line 18taxable year in which the taxpayer is eligible for the credit, the

• Page 21, Line 19excess may be carried over to succeeding taxable years and

• Page 21, Line 20used as a credit against the income tax liability of the eligible

• Page 21, Line 21taxpayer for those taxable years; except that, for a credit

• Page 21, Line 22issued in fiscal year 2025-26, the credit may not be carried over to any taxable year that begins after December 31, 2050.

• Page 21, Line 23(II)  Any amount of the credit that is not timely claimed expires and is not refundable.

• Page 22, Line 1(j)  An eligible taxpayer claiming a credit under this

• Page 22, Line 2subsection (4.5) shall submit the tax credit certificate with its tax return.

• Page 22, Line 3(k)  An eligible taxpayer claiming a credit under this

• Page 22, Line 4subsection (4.5) shall not be required to pay any additional or retaliatory tax as a result of claiming the credit.

• Page 22, Line 5(l)  If an eligible taxpayer holding an unclaimed tax credit

• Page 22, Line 6is part of a merger, acquisition, or line of business divestiture

• Page 22, Line 7transaction, the tax credit may be transferred to and assumed

• Page 22, Line 8by the resulting entity if the resulting entity is an eligible

• Page 22, Line 9taxpayer that has income tax liability. The eligible taxpayer

• Page 22, Line 10that originally purchased the credit and the resulting entity

• Page 22, Line 11shall notify the department in writing of the transfer or

• Page 22, Line 12assumption of the credit in accordance with procedures adopted

• Page 22, Line 13by the department. The department shall maintain a record of

• Page 22, Line 14the transfer or assumption of the tax credit. The transfer or

• Page 22, Line 15assumption of the tax credit does not affect the time schedule for claiming the tax credit as provided in this subsection (4.5).

• Page 22, Line 16(8)  If a credit authorized by subsection (3) of this section

• Page 22, Line 17exceeds the income tax due on the income of the eligible taxpayer for the

• Page 22, Line 18taxable year, the excess credit may not be carried forward and must be refunded to the eligible taxpayer or the installer.

• Page 22, Line 19(9)  This section is repealed, effective December 31, 2038 December 31, 2055.

• Page 22, Line 20SECTION 6.  In Colorado Revised Statutes, 39-22-555, amend

• Page 22, Line 21(3)(a), (3)(e)(II), (5), and (8); repeal (6); and add (5.3) and (5.5) as follows:

• Page 23, Line 139-22-555.  Electric bicycle tax credit - sale of tax credits -

• Page 23, Line 2authorization to issue - tax preference performance statement -

• Page 23, Line 3legislative declaration - definitions - repeal. (3) (a)  Except as otherwise

• Page 23, Line 4provided in subsection (6) of this section, For income tax years

• Page 23, Line 5commencing on or after January 1, 2024, but before January 1, 2033

• Page 23, Line 6January 1, 2026, a qualified retailer is allowed a credit against the tax

• Page 23, Line 7imposed pursuant to this article 22 in an amount equal to five hundred

• Page 23, Line 8dollars for each retail sale of new qualified electric bicycles sold in the

• Page 23, Line 9state during the income tax year to a qualified purchaser; except that for

• Page 23, Line 10the income tax year commencing on January 1, 2024, the credit is allowed

• Page 23, Line 11only for retail sales made on or after April 1, 2024, but on or before December 31, 2024.

• Page 23, Line 12(e) (II)  For the income tax years year commencing on or after

• Page 23, Line 13January 1, 2025, but before January 1, 2026, the qualified retailer may

• Page 23, Line 14elect advance payments of the credit allowed pursuant to this section as specified in section 39-22-629.

• Page 23, Line 15(5)  If a credit authorized by subsection (3) of this section

• Page 23, Line 16exceeds the income tax due on the income of the qualified retailer for the

• Page 23, Line 17taxable year, the excess credit may not be carried forward and must be refunded to the qualified retailer.

• Page 23, Line 18(5.3)  The general assembly finds and declares that:

• Page 23, Line 19(a)  The tax credits authorized by subsection (5.5) of this

• Page 23, Line 20section as a method to provide money to the general fund are

• Page 23, Line 21available only to qualified retailers that incur income tax liability in the state;

• Page 23, Line 22(b)  The tax credits can only be used by a qualified

• Page 24, Line 1retailer to offset income tax liability actually incurred by the retailer;

• Page 24, Line 2(c)  The tax credits are not refundable and do not impose an obligation of payment in any future year upon the state;

• Page 24, Line 3(d)  The use of proceeds from the sale of the tax credits

• Page 24, Line 4for the general fund allows the state to augment the general fund through the use of future tax expenditures and therefore:

• Page 24, Line 5(I)  Does not require the state to borrow money, extend or

• Page 24, Line 6pledge the state's credit, or obligate the state to make future payments from state revenues; and

• Page 24, Line 7(II)  Does not otherwise create any multiple fiscal year

• Page 24, Line 8direct or indirect district debt or other financial obligation

• Page 24, Line 9whatsoever for purposes of section 20 (4)(a) of article X of the state constitution.

• Page 24, Line 10(5.5) (a)  A qualified retailer may purchase tax credits

• Page 24, Line 11from the department in accordance with this section and may

• Page 24, Line 12apply the tax credits against its liability for the tax imposed

• Page 24, Line 13pursuant to this article 22, in accordance with this subsection (5.5).

• Page 24, Line 14(b) (I)  The department is authorized to issue tax credit

• Page 24, Line 15certificates to qualified retailers equal to the lesser of a total

• Page 24, Line 16face value of up to forty million dollars or total sales proceeds of up to thirty million dollars in fiscal year 2025-26.

• Page 24, Line 17(II)  The department may contract with an independent

• Page 24, Line 18third party to conduct or consult on a bidding process among qualified retailers to purchase the tax credits.

• Page 24, Line 19(III)  The department shall consult with the office in

• Page 25, Line 1advance of issuing any tax credits in accordance with this subsection (5.5).

• Page 25, Line 2(c)  A qualified retailer seeking to purchase tax credits

• Page 25, Line 3must apply to the department in the manner prescribed by the department.

• Page 25, Line 4(d)  Using procedures adopted by the department or, if

• Page 25, Line 5applicable, by an independent third party, each qualified

• Page 25, Line 6retailer that submits an application shall make a timely and

• Page 25, Line 7irrevocable offer, contingent only upon the department's

• Page 25, Line 8issuance to the qualified retailer of the tax credit certificates,

• Page 25, Line 9to make a specified purchase payment amount to the department

• Page 25, Line 10on dates specified by the department. The offer must include the following:

• Page 25, Line 11(I)  The requested amount of tax credits, which must not

• Page 25, Line 12be less than any minimum amount established in procedures by the department or, if applicable, the independent third party;

• Page 25, Line 13(II)  The qualified retailer's proposed tax credit purchase

• Page 25, Line 14amount for each tax credit dollar requested. The minimum proposed tax credit purchase amount must be either:

• Page 25, Line 15(A)  The percentage of the requested dollar amount of tax

• Page 25, Line 16credits that the department or, if applicable, the independent

• Page 25, Line 17third party determines to be consistent with market conditions as of the offer date; or

• Page 25, Line 18(B)  If no amount is established by the department or the

• Page 25, Line 19independent third party pursuant to subsection (5.5)(d)(II)(A) of

• Page 25, Line 20this section, seventy-five percent of the requested dollar

• Page 25, Line 21amount of tax credits; and

• Page 26, Line 1(III)  Any other information that the department or, if applicable, the independent third party requires.

• Page 26, Line 2(e)  The department shall provide written notice to each

• Page 26, Line 3qualified retailer that submits an application indicating

• Page 26, Line 4whether or not the qualified retailer has been approved as a

• Page 26, Line 5purchaser of tax credits and, if so, the amount of tax credits

• Page 26, Line 6allocated and the date by which payment of the tax credit sale proceeds must be made.

• Page 26, Line 7(f)  On receipt of payment of the sale proceeds, the

• Page 26, Line 8department shall issue to each qualified retailer a tax credit certificate. The tax credit certificate must state the following:

• Page 26, Line 9(I)  The total amount of tax credits that the qualified retailer may claim;

• Page 26, Line 10(II)  The amount that the qualified retailer has paid or

• Page 26, Line 11agreed to pay in return for the issuance of the tax credit certificates and the date of the payment;

• Page 26, Line 12(III)  The dates on which the tax credits will be available for use by the qualified retailer;

• Page 26, Line 13(IV)  Any penalties or other remedies for noncompliance;

• (V)  The serial number of the tax credit certificate; and

• Page 26, Line 14(VI)  Any other requirements deemed necessary by the department as a condition of issuing the tax credit certificate.

• Page 26, Line 15(g) (I)  The department shall not issue a tax credit

• Page 26, Line 16certificate to any qualified retailer that fails to provide the

• Page 26, Line 17tax credit sale proceeds within the time specified by the department.

• Page 26, Line 18(II)  A qualified retailer that fails to provide the tax

• Page 27, Line 1credit sale proceeds within the time specified by the department

• Page 27, Line 2is subject to a penalty equal to ten percent of the amount of the

• Page 27, Line 3purchase price that remains unpaid. The penalty must be paid to the department within thirty days after demand.

• Page 27, Line 4(III)  The department may offer to reallocate the

• Page 27, Line 5defaulted tax credits among other qualified retailers so that

• Page 27, Line 6the result after reallocation is the same as if the initial

• Page 27, Line 7allocation had been performed without considering the tax credit allocation to the defaulting qualified retailer.

• Page 27, Line 8(IV)  If the reallocation of tax credits under subsection

• Page 27, Line 9(5.5)(g)(III) of this section results in the payment by another

• Page 27, Line 10qualified retailer of the amount of tax credit sale proceeds not

• Page 27, Line 11paid by the defaulting qualified retailer, the department may

• Page 27, Line 12waive the penalty imposed under subsection (5.5)(g)(II) of this section.

• Page 27, Line 13(V)  A qualified retailer that fails to pay the tax credit

• Page 27, Line 14sale proceeds within the time specified by the department may

• Page 27, Line 15avoid the imposition of the penalty by transferring the

• Page 27, Line 16allocation of tax credits to a new or existing qualified retailer

• Page 27, Line 17within thirty days after the due date of the defaulted

• Page 27, Line 18installment. Any transferee of an allocation of tax credits of

• Page 27, Line 19a defaulting qualified retailer under this subsection (5.5)(g)

• Page 27, Line 20shall agree to pay the tax credit sale proceeds within five days after the date of the transfer.

• Page 27, Line 21(h)  For a tax credit certificate issued in fiscal year

• Page 27, Line 222025-26, the qualified retailer may claim up to the full amount

• Page 27, Line 23of the credit against its income tax liability incurred for a

• Page 28, Line 1taxable year that begins on or after January 1, 2030; except

• Page 28, Line 2that a qualified retailer may not reduce its estimated tax payments in proportion to such credit prior to July 1, 2030.

• Page 28, Line 3(i) (I)  The total credit to be applied by a qualified retailer

• Page 28, Line 4in any one year must not exceed the income tax liability of the

• Page 28, Line 5qualified retailer for the taxable year. If the qualified retailer

• Page 28, Line 6cannot use the entire amount of the tax credit for the taxable

• Page 28, Line 7year in which the qualified retailer is eligible for the credit, the

• Page 28, Line 8excess may be carried over to succeeding taxable years and

• Page 28, Line 9used as a credit against the income tax liability of the qualified

• Page 28, Line 10retailer for those taxable years; except that, for a credit

• Page 28, Line 11issued in fiscal year 2025-26, the credit may not be carried over to any taxable year that begins after December 31, 2050.

• Page 28, Line 12(II)  Any amount of the credit that is not timely claimed expires and is not refundable.

• Page 28, Line 13(j)  A qualified retailer claiming a credit under this

• Page 28, Line 14subsection (5.5) shall submit the tax credit certificate with its tax return.

• Page 28, Line 15(k)  A qualified retailer claiming a credit under this

• Page 28, Line 16subsection (5.5) shall not be required to pay any additional or retaliatory tax as a result of claiming the credit.

• Page 28, Line 17(l)  If a qualified retailer holding an unclaimed tax credit

• Page 28, Line 18is part of a merger, acquisition, or line of business divestiture

• Page 28, Line 19transaction, the tax credit may be transferred to and assumed

• Page 28, Line 20by the resulting entity if the resulting entity is an retailer

• Page 28, Line 21authorized to do business in Colorado that has income tax

• Page 28, Line 22liability. The qualified retailer that originally purchased the

• Page 29, Line 1credit and the resulting entity shall notify the department in

• Page 29, Line 2writing of the transfer or assumption of the credit in

• Page 29, Line 3accordance with procedures adopted by the department. The

• Page 29, Line 4department shall maintain a record of the transfer or

• Page 29, Line 5assumption of the tax credit. The transfer or assumption of the

• Page 29, Line 6tax credit does not affect the time schedule for claiming the tax credit as provided in this subsection (5.5).

• Page 29, Line 7(6)  If the June 2025 revenue forecast, and each June revenue

• Page 29, Line 8forecast through the June 2031 revenue forecast as prepared by either

• Page 29, Line 9legislative council staff or the office of state planning and budgeting,

• Page 29, Line 10projects that state revenues, as defined in section 24-77-103.6 (6)(c), will

• Page 29, Line 11not increase by at least four percent for the next fiscal year, the amount

• Page 29, Line 12of the credit allowed pursuant to this section, the discount required

• Page 29, Line 13pursuant to subsection (3)(b) of this section, and the administrative fee

• Page 29, Line 14allowed pursuant to subsection (3)(d) of this section for any tax year

• Page 29, Line 15commencing in the calendar year that begins during said next fiscal year, is reduced by fifty percent.

• Page 29, Line 16(8)  This section is repealed, effective December 31, 2038 December 31, 2055.

• Page 29, Line 17SECTION 7.  Safety clause. The general assembly finds,

• Page 29, Line 18determines, and declares that this act is necessary for the immediate

• Page 29, Line 19preservation of the public peace, health, or safety or for appropriations for

• Page 29, Line 20the support and maintenance of the departments of the state and state institutions.