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--- version:Reengrossed+++ version:(document, no version)@@ -1,609 +1,9 @@-Second Regular Session-Seventy-fifth General Assembly-STATE OF COLORADO-REENGROSSED-This Version Includes All Amendments-Adopted in the House of Introduction-LLS NO. 26-0464.01 Pierce Lively x2059 HOUSE BILL 26-1222-House Committees Senate Committees-Finance-Appropriations-A BILL FOR AN ACT-CONCERNING THE MODIFICATION OF TAX EXPENDITURES , AND , IN101-CONNECTION THEREWITH , MAKING ADDITIONS TO THE102-DEFINITION OF FEDERAL TAXABLE INCOME FOR TAX YEARS103-COMMENCING ON OR AFTER JANUARY 1, 2027, AND CREATING104-THE FAMILY AFFORDABILITY CREDIT.105-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-.)-Recent changes to the federal income tax code significantly-increased the amount of business-related expenses that may be deducted-HOUSE-3rd Reading Unamended-May 4, 2026-HOUSE-Amended 2nd Reading-May 1, 2026-HOUSE SPONSORSHIP-Garcia and McCormick, Bacon, Boesenecker, Brown, Clifford, Duran, Froelich, Hamrick,-Jackson, Lindsay, Lukens, Mabrey, McCluskie, Nguyen, Rutinel, Rydin, Sirota, Smith, Story,-Titone, Velasco, Woodrow, Zokaie-SENATE SPONSORSHIP-Kipp,-Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.-Capital letters or bold & italic numbers indicate new material to be added to existing law.-Dashes through the words or numbers indicate deletions from existing law.-for federal income tax purposes as follows:-! Expanded the business interest deduction limitation-pursuant to section 163 (j) of the internal revenue code-(IRC) by adding back depreciation, amortization, and-depletion for calculation of adjusted taxable income and-determination of the deduction base, resulting in many-taxpayers, especially capital intensive businesses, being-able to deduct a larger portion of their business interest-expense;-! Expanded the bonus depreciation deduction pursuant to-section 168 (k) of the IRC by permanently restoring the-100% first-year bonus depreciation deduction for "qualified-property" acquired and placed in service on or after January-20, 2025;-! Created an elective 100% depreciation deduction in section-168 (n) of the IRC for "qualified production property",-which is property largely tied to manufacturing, production,-or refining facilities and that would not otherwise qualify-for section 168 (k) bonus depreciation; and-! Created a new section 174A of the IRC that allows-taxpayers to immediately deduct domestic research and-experimental expenditures paid or incurred during the-taxable year, rather than requiring such costs to be-capitalized and amortized over time.-Because the state income tax is imposed on federal taxable-income, these changes to the definition of federal income also exclude-these business-related expenses from state income taxation. The bill-reverses these changes to the federal tax code for purposes of the state-income tax code and creates a new tax credit using the resulting revenue.-Sections 2 and 4 of the bill provide, for income tax years-commencing on or after January 1, 2027, that individual and corporate-state income taxpayers must add the following to their federal taxable-income for purposes of applying the state income tax:-! An amount equal to the federal deduction claimed by the-taxpayer for business interest pursuant to the limitation in-section 163 (j) of the IRC to the extent the amount exceeds-the amount the taxpayer would have been allowed to claim-before the limitation was changed as described above;-! An amount equal to the federal deduction claimed by the-taxpayer for qualified property depreciation pursuant to-section 168 (k) of the IRC to the extent the amount claimed-exceeds the amount the taxpayer would have been allowed-to claim under section 168 (k) prior to the change described-above; except that, the taxpayer may reduce the amount-required to be added back by the amount of depreciation-1222--2--the taxpayer would have been allowed to claim for the-taxable year with respect to the same property pursuant to-any section other than section 168 (k) of the IRC prior to-the recent federal changes;-! An amount equal to the federal deduction claimed by the-taxpayer for qualified production property depreciation-pursuant to section 168 (n) of the IRC; except that, the-taxpayer may reduce the amount required to be added back-by the amount of depreciation the taxpayer would have-been allowed to claim for the taxable year with respect to-the same property pursuant to any section other than-section 168 (k) of the IRC prior to the recent federal-change; and-! An amount equal to the federal deduction claimed by the-taxpayer for the income tax year for domestic research and-experimental expenditures pursuant to section 174A of the-IRC; except that, the taxpayer may reduce the amount-required to be added back by the amount of the deduction-the taxpayer would have been allowed to claim for the-taxable year with respect to the same research and-experimental expenditures pursuant to section 174 of the-IRC prior to the recent federal changes.-Sections 2 and 4 allow taxpayers who are required to make-additions to their federal taxable income pursuant to the new provisions-to subtract the amounts of their disallowed federal deductions over time,-using time periods that reflect how the property or expense would have-been treated prior to the recent changes to the federal tax code.-Section 3 creates a new tax credit. The new tax credit allows-taxpayers to claim a refundable tax credit, in addition to the child tax-credit and the family affordability tax credit, in an amount determined by-the amount and age of the taxpayer's children and the taxpayer's income.-The total amount of the new tax credit is adjusted annually based on-legislative council staff projections, such that the total amount of the new-tax credit claimed in an income tax year is projected to be the same as the-amount of revenue raised in sections 2 and 4.-Be it enacted by the General Assembly of the State of Colorado:1-SECTION 1. Legislative declaration.2-(1) The general assembly finds and declares that:3-(a) The general assembly has an ongoing responsibility to review,4-evaluate, and update the state tax code within constitutional limitations5-1222-3--to ensure that the state code is effective, equitable, and aligned with1-Colorado's priorities;2-(b) (I) Recent changes in the federal tax code materially expanded3-certain business-related deductions, including deductions related to4-business interest expense, bonus depreciation, qualified production5-property, and domestic research and experimental expenditures (business6-deductions).7-(II) The business deductions significantly reduce federal taxable8-income without regard to a taxpayer's ability to pay or connection to9-household economic security.10-(c) (I) Colorado state income tax is determined based on the11-amount of a person's federal taxable income.12-(II) The material expansion of the federal business deductions13-modified the computation of federal taxable income and so impacted14-Colorado state income tax revenue.15-(III) The net impact of the recent federal tax code modification to16-the computation of federal taxable income was a reduction in state17-income tax revenue.18-(IV) The amount and availability of the family affordability tax19-credit is determined in part by the amount of state income tax revenue.20-(V) Therefore, by modifying the computation of federal taxable21-income, the expansion of the business deductions impacted the amount22-and availability of the family affordability tax credit.23-(VI) At least in part due to the enactment of recent changes to the24-federal tax code, the family affordability tax credit will not be available25-for the 2026 state income tax year and will be available in a reduced26-amount for income tax years 2027 and 2028.27-1222-4--(d) (I) In establishing the family affordability tax credit, the1-general assembly found and declared that:2-(A) Colorado families struggle to afford many necessary goods3-and services, such as child care, housing, and health care. Eighty-three4-percent of Colorado parents worry that their children won't be able to5-afford to live in the state in the future.6-(B) Targeted tax credits are a proven tool to lift families out of7-poverty. Research has shown that families that claim these types of tax8-credits, such as the state and federal child tax credit and the state and9-federal earned income tax credit, have better health, improved schooling10-outcomes, and increased adult earning potential. As the cost of raising11-children has increased, a family affordability tax credit is critical for the12-well-being of many children and families across Colorado.13-(C) According to the Institute on Taxation and Economic Policy,14-"[t]o cut child poverty rates by half, the majority of states would require15-a base credit value of between three thousand dollars and four thousand16-five hundred dollars per child plus a twenty percent boost for young17-children". When coupled with the state and federal earned income tax18-credit and the state and federal child tax credit, the additional investment19-provided by the family affordability tax credit would establish Colorado20-as a national leader in equitable economic policy.21-(D) Colorado is dealing with rising costs and funding shortfalls in22-many areas across our state, and it is necessary to provide tax credits to23-the people who need it most in a way that will do the most good.24-Establishing the family affordability tax credit is a proven way to do that;25-and26-(E) By prioritizing the state's lowest-income households,27-1222-5--expanding the child age eligibility, and including more families, the state1-can provide research-backed investments for families. Through2-thoughtful and strategic investment, Colorado can cut child poverty nearly3-in half.4-(II) Therefore, it is a priority of Colorado to provide a tax credit5-that targets the same taxpayers that the family affordability tax credit6-targeted, to offset the reduction in the family affordability tax credit. 7-(e) (I) This House Bill 26-1222 constitutes a single comprehensive8-tax policy change that better aligns the state tax code with Colorado's9-priorities by, at least partially, mitigating the modified federal income tax10-code's effects on the family affordability tax credit by creating a tax credit11-that targets the same population that the family affo rdability tax credit12-targeted while also requiring taxpayers to add back to their taxable13-income only the incremental income amounts attributable to the recent14-expansion of the federal business deductions. The expanded business15-deductions disproportionately benefit large and capital-intensive16-businesses, while providing little or no direct benefit to low- and17-moderate-income households, which households are particularly sensitive18-to changes in tax policy and public investment. While Colorado's income19-tax system is designed to conform to federal law generally, state law also20-preserves the general assembly's authority to decouple from federal tax21-provisions that undermine state fiscal stability, equity, or policy priorities.22-This House Bill 26-1222 preserves the integrity of the state's commitment23-to support low-income households, while maintaining long-standing24-federal conformity for core income calculations and the state income tax25-base.26-(II) The income tax credit created in this House Bill 26-122227-1222-6--reduces state tax revenue in an amount equal to or greater than the1-amount of state revenue gain attributable to the changes made in this2-House Bill 26-1222;3-(III) Any net district revenue gain resulting from the tax policy4-change in this House Bill 26-1222 is incidental and de minimis; and5-(IV) Therefore, consistent with the Colorado Supreme Court's6-holding in TABOR Found. v. Reg'l Transp. Dist., 2018 CO 29, that a tax7-policy change that causes either no net district tax revenue gain or a net8-district tax revenue gain that is only incidental and de minimis does not9-require voter approval under section 20 (4)(a) of article X of the state10-constitution, this House Bill 26-1222 is not a tax policy change that11-requires voter approval.12-SECTION 2. In Colorado Revised Statutes, 39-22-104, add13-(3)(v), (3)(w), (3)(x), (3)(y), and (4)(ff) as follows:14-39-22-104. Income tax imposed on individuals, estates, and15-trusts - single rate - report - tax preference performance statement16-- legislative declaration - definitions - repeal.17-(3) There shall be added to the federal taxable income:18-(v) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY19-1, 2027, AN AMOUNT EQUAL TO THE FEDERAL DEDUCTION CLAIMED BY THE20-TAXPAYER FOR THE INCOME TAX YEAR FOR BUSINESS INTEREST PURSUANT21-TO SECTION 163 OF THE INTERNAL REVENUE CODE TO THE EXTENT THE22-AMOUNT CLAIMED EXCEEDS THE AMOUNT THE TAXPAYER WOULD HAVE23-BEEN ALLOWED TO CLAIM PURSUANT TO THE LIMITATION ON BUSINESS24-INTEREST SET FORTH IN SECTION 163 (j) OF THE INTERNAL REVENUE CODE25-WITHOUT REGARD TO ANY AMENDMENT BY PUB. L. 119-21;26-(w) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY27-1222-7--1, 2027, AN AMOUNT EQUAL TO THE FEDERAL DEDUCTION CLAIMED BY THE1-TAXPAYER FOR THE INCOME TAX YEAR FOR QUALIFIED PROPERTY2-DEPRECIATION PURSUANT TO SECTION 168 (k) OF THE INTERNAL REVENUE3-CODE TO THE EXTENT THE AMOUNT CLAIMED EXCEEDS THE AMOUNT THE4-TAXPAYER WOULD HAVE BEEN ALLOWED TO CLAIM PURSUANT TO SECTION5-168 (k) OF THE INTERNAL REVENUE CODE WITHOUT REGARD TO ANY6-AMENDMENT BY PUB. L. 119-21; EXCEPT THAT , THE TAXPAYER MAY7-REDUCE THE AMOUNT OTHERWISE REQUIRED TO BE ADDED TO THE8-TAXPAYER'S FEDERAL TAXABLE INCOME PURSUANT TO THIS SUBSECTION9-(3)(w) BY THE AMOUNT OF QUALIFIED PROPERTY DEPRECIATION THE10-TAXPAYER WOULD HAVE BEEN ALLOWED TO CLAIM FOR THE INCOME TAX11-YEAR WITH RESPECT TO THE SAME PROPERTY PURSUANT TO ANY SECTION12-OTHER THAN SECTION 168 (k) OF THE INTERNAL REVENUE CODE WITHOUT13-REGARD TO ANY AMENDMENT BY PUB. L. 119-21;14-(x) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY15-1, 2027, AN AMOUNT EQUAL TO THE FEDERAL DEDUCTION CLAIMED BY THE16-TAXPAYER FOR THE INCOME TAX YEAR FOR QUALIFIED PRODUCTION17-PROPERTY DEPRECIATION PURSUANT TO SECTION 168 (n) OF THE INTERNAL18-REVENUE CODE; EXCEPT THAT, THE TAXPAYER MAY REDUCE THE AMOUNT19-OTHERWISE REQUIRED TO BE ADDED TO THE TAXPAYER 'S FEDERAL20-TAXABLE INCOME PURSUANT TO THIS SUBSECTION (3)(x) BY THE AMOUNT21-OF QUALIFIED PRODUCTION PROPERTY DEPRECIATION THE TAXPAYER22-WOULD HAVE BEEN ALLOWED TO CLAIM FOR THE INCOME TAX YEAR WITH23-RESPECT TO THE SAME PROPERTY PURSUANT TO ANY SECTION OTHER THAN24-SECTION 168 (k) OF THE INTERNAL REVENUE CODE WITHOUT REGARD TO25-ANY AMENDMENT BY PUB. L. 119-21; AND26-(y) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY27-1222-8--1, 2027, AN AMOUNT EQUAL TO THE FEDERAL DEDUCTION CLAIMED BY THE1-TAXPAYER FOR THE INCOME TAX YEAR FOR DOMESTIC RESEARCH AND2-EXPERIMENTAL EXPENDITURES PURSUANT TO SECTION 174A OF THE3-INTERNAL REVENUE CODE ; EXCEPT THAT , THE TAXPAYER MAY REDUCE4-THE AMOUNT OTHERWISE REQUIRED TO BE ADDED TO THE TAXPAYER 'S5-FEDERAL TAXABLE INCOME PURSUANT TO THIS SUBSECTION (3)(y) BY THE6-AMOUNT OF THE DEDUCTION THE TAXPAYER WOULD HAVE BEEN ALLOWED7-TO CLAIM FOR THE INCOME TAX YEAR WITH RESPECT TO THE SAME8-RESEARCH AND EXPERIMENTAL EXPENDITURES PURSUANT TO SECTION 1749-OF THE INTERNAL REVENUE CODE WITHOUT REGARD TO ANY AMENDMENT10-BY PUB. L. 119-21.11-(4) There shall be subtracted from federal taxable income:12-(ff) (I) F OR INCOME TAX YEARS COMMENCING ON OR AFTER13-JANUARY 1, 2028, A TAXPAYER REQUIRED TO MAKE AN ADDITION TO14-FEDERAL TAXABLE INCOME PURSUANT TO SUBSECTION (3)(v), (3)(w),15-(3)(x), OR (3)(y) OF THIS SECTION, IS ALLOWED TO APPLY THE FOLLOWING16-SUBTRACTIONS IN ACCORDANCE WITH THIS SUBSECTION (4)(ff):17-(A) A N AMOUNT EQUAL TO ONE -FIFTH OF THE CUMULATIVE18-AMOUNT ADDED TO FEDERAL T AXABLE INCOME AS REQUIRED BY19-SUBSECTION (3)(v) OF THIS SECTION FOR EACH OF THE FIVE INCOME TAX20-YEARS IMMEDIATELY FOLLOWING THE INCOME TAX YEAR IN WHICH THE21-ADDITION WAS REQUIRED PURS UANT TO SUBSECTION (3)(v) OF THIS22-SECTION;23-(B) A N AMOUNT EQUAL TO ONE -TENTH OF THE CUMULATIVE24-AMOUNT ADDED TO FEDERAL T AXABLE INCOME AS REQUIRED BY25-SUBSECTION (3)(w) OF THIS SECTION FOR EACH OF THE TEN INCOME TAX26-YEARS IMMEDIATELY FOLLOWING THE INCOME TAX YEAR IN WHICH THE27-1222-9--ADDITION WAS REQUIRED PURSUANT TO SUBSECTION (3)(w) OF THIS1-SECTION;2-(C) A N AMOUNT EQUAL TO ONE THIRTY -EIGHTH OF THE3-CUMULATIVE AMOUNT ADDED TO FEDERAL TAXABLE INCOME AS REQUIRED4-BY SUBSECTION (3)(x) OF THIS SECTION FOR EACH OF THE THIRTY-EIGHT5-INCOME TAX YEARS IMMEDIATELY FOLLOWING THE INCOME TAX YEAR IN6-WHICH THE ADDITION WAS REQUIRED PURSUANT TO SUBSECTION (3)(x) OF7-THIS SECTION; AND8-(D) A N AMOUNT EQUAL TO ONE -FOURTH OF THE CUMULATIVE9-AMOUNT ADDED TO FEDERAL TAXABLE INCOME AS REQUIRED BY10-SUBSECTION (3)(y) OF THIS SECTION FOR EACH OF THE FOUR INCOME TAX11-YEARS IMMEDIATELY FOLLOWING THE INCOME TAX YEAR IN WHICH THE12-ADDITION WAS REQUIRED PURS UANT TO SUBSECTION (3)(y) OF THIS13-SECTION.14-(II) T HE TOTAL AMOUNT OF EACH SUBTRACTION ALLOWED15-PURSUANT TO SUBSECTIONS (4)(ff)(I)(A), (4)(ff)(I)(B), (4)(ff)(I)(C), AND16-(4)(ff)(I)(D) OF THIS SECTION FOR A TAXPAYER SHALL NOT EXCEED THE17-CUMULATIVE AMOUNT ADDED TO FEDERAL TAXABLE INCOME PURSUANT18-TO EACH CORRESPONDING ADDITION REQUIRED BY SUBSECTIONS (3)(v),19-(3)(w), (3)(x), AND (3)(y) OF THIS SECTION FOR THAT SAME TAXPAYER.20-(III) THE SUBTRACTIONS ALLOWED PURSUANT TO THIS SUBSECTION21-(4)(ff) APPLY AFTER THE APPLICATION OF THE OTHER SUBTRACTIONS22-PROVIDED FOR IN THIS SUBSECTION (4), EXCEPT FOR THE SUBTRACTION23-ALLOWED PURSUANT TO SUBSECTION (4)(z) OF THIS SECTION . IF THE24-AMOUNT OF THE SUBTRACTIONS ALLOWED UNDER THIS SUBSECTION (4)(ff)25-EXCEEDS A TAXPAYER 'S FEDERAL TAXABLE INCOME AS CALCULATED26-PURSUANT TO THIS SECTION WITHOUT REGARD TO THE SUBTRACTION27-1222-10--ALLOWED PURSUANT TO SUBSECTION (4)(z) OF THIS SECTION, THE AMOUNT1-NOT SUBTRACTED FROM THE TAXPAYER 'S FEDERAL TAXABLE INCOME2-PURSUANT TO THIS SECTION MAY BE CARRIED FORWARD AND USED AS A3-SUBTRACTION FROM THE TAXPAYER 'S FEDERAL TAXABLE INCOME AS4-CALCULATED PURSUANT TO THIS SECTION WITHOUT REGARD TO THE5-SUBTRACTION ALLOWED PURSUANT TO SUBSECTION (4)(z) OF THIS6-SECTION IN SUBSEQUENT YEARS FOR A PERIOD NOT TO EXCEED TEN YEARS7-AND MUST BE APPLIED FIRST TO THE EARLIEST POSSIBLE INCOME TAX8-YEAR. ANY SUBTRACTION REMAINING AFTER THE PERIOD IS NOT9-REFUNDED OR CREDITED TO THE TAXPAYER.10-SECTION 3. In Colorado Revised Statutes, add 39-22-131 as11-follows:12-39-22-131. Family affordability credit - tax preference13-performance statement - legislative declaration - definitions.14-(1) (a) I N ACCORDANCE WITH SECTION 39-21-304 (1), WHICH15-REQUIRES EACH BILL THAT CREATES A NEW TAX EXPENDITURE TO INCLUDE16-A TAX PREFERENCE PERFORMANCE STATEMENT AS PART OF A STATUTORY17-LEGISLATIVE DECLARATION, THE GENERAL ASSEMBLY HEREBY FINDS AND18-DECLARES THAT THE PURPOSES OF THE INCOME TAX CREDIT CREATED IN19-THIS SECTION ARE THE SAME AS THE FAMILY AFFORDABILITY TAX CREDIT:20-TO SUBSTANTIALLY REDUCE CHILD POVERTY , MAKE COLORADO MORE21-AFFORDABLE FOR FAMILIES , AND HELP FAMILIES AFFORD EXPENSES22-ASSOCIATED WITH HAVING CHILDREN BY PROVIDING TAX RELIEF FOR23-CERTAIN INDIVIDUALS.24-(b) T HE GENERAL ASSEMBLY AND THE STATE AUDITOR , IN25-CONSULTATION WITH THE DEPARTMENT , SHALL MEASURE THE26-EFFECTIVENESS OF THE INCOME TAX CREDIT CREATED IN THIS SECTION IN27-1222-11--COMBINATION WITH THE FAMILY AFFORDABILITY TAX CREDIT AND, IN THE1-SAME MANNER AS THE GENERAL ASSEMBLY AND THE STATE AUDITOR2-MEASURE THE EFFECTIVENESS OF THE FAMILY AFFORDABILITY TAX CREDIT3-BY DETERMINING THE NUMBER OF COLORADO FAMILIES THAT , AFTER4-CLAIMING A CREDIT PURSUANT TO THIS SECTION AND THE FAMILY5-AFFORDABILITY CREDIT, NO LONGER FALL BELOW THE FEDERAL POVERTY6-LEVEL IN THE TAX YEAR IN WHICH THEY CLAIMED THE CREDITS.7-(2) AS USED IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE8-REQUIRES:9-(a) "CREDIT" MEANS THE CREDIT AGAINST INCOME TAX CREATED10-IN THIS SECTION.11-(b) "DEPARTMENT" MEANS THE DEPARTMENT OF REVENUE.12-(c) "ELIGIBLE CHILD" MEANS A QUALIFYING CHILD, AS DEFINED IN13-SECTION 152 (c) OF THE FEDERAL "INTERNAL REVENUE CODE OF 1986";14-EXCEPT THAT THE AGE REQUIREMENTS ARE SET FORTH IN SUBSECTIONS15-(3)(a)(I), (3)(a)(II), (3)(b)(I), AND (3)(b)(II) OF THIS SECTION.16-(d) "FEDERAL POVERTY LEVEL" MEANS THE POVERTY LINE THAT17-IS REQUIRED TO BE UPDATED ANNUALLY WITHIN THE FEDERAL POVERTY18-GUIDELINES ADOPTED BY THE UNITED STATES DEPARTMENT OF HEALTH19-AND HUMAN SERVICES PURSUANT TO 42 U.S.C. SEC. 9902 (2).20-(e) "INFLATION" MEANS THE ANNUAL PERCENTAGE CHANGE IN THE21-UNITED STATES DEPARTMENT OF LABOR BUREAU OF LABOR STATISTICS22-CONSUMER PRICE INDEX FOR DENVER-AURORA-LAKEWOOD FOR ALL23-ITEMS PAID BY ALL URBAN CONSUMERS , OR ITS APPLICABLE SUCCESSOR24-INDEX. 25-(f) "J OINT FILER ADJUSTED BASE INCOME" MEANS, FOR INCOME26-TAX YEARS COMMENCING BEFORE JANUARY 1, 2034, AN AMOUNT OF27-1222-12--ADJUSTED GROSS INCOME EQUAL TO THE AMOUNT OF ADJUSTED GROSS1-INCOME DETERMINED BY THE DEPARTMENT PURSUANT TO SECTION2-39-22-130 (7) TO BE NECESSARY FOR TWO RESIDENT INDIVIDUALS WHO3-FILE A JOINT RETURN TO QUALIFY FOR THE FAMILY AFFORDABILITY TAX4-CREDIT PURSUANT TO SECTION 39-22-130 FOR THE INCOME TAX YEAR5-COMMENCING ON JANUARY 1, 2027.6-(g) "SINGLE FILER ADJUSTED BASE INCOME" MEANS, FOR INCOME7-TAX YEARS COMMENCING BEFORE JANUARY 1, 2034, AN AMOUNT OF8-ADJUSTED GROSS INCOME EQUAL TO THE AM OUNT OF ADJUSTED GROSS9-INCOME DETERMINED BY THE DEPARTMENT PURSUANT TO SECTION10-39-22-130 (7) TO BE NECESSARY FOR A SINGLE RESIDENT INDIVIDUAL WHO11-FILES A SINGLE RETURN TO QUALIFY FOR THE FAMILY AFFORDABILITY TAX12-CREDIT PURSUANT TO SECTION 39-22-130 FOR THE INCOME TAX YEAR13-COMMENCING ON JANUARY 1, 2027.14-(3) (a) I N ADDITION TO THE CHILD TAX CREDIT ALLOWED BY15-SECTION 39-22-129 AND THE FAMILY AFFORDABILITY TAX CREDIT16-ALLOWED BY SECTION 39-22-130, FOR INCOME TAX YEARS COMMENCING17-ON OR AFTER JANUARY 1, 2027, A RESIDENT INDIVIDUAL WHO FILES A18-SINGLE RETURN IS ALLOWED A CREDIT AGAINST THE INCOME TAXES19-IMPOSED PURSUANT TO THIS ARTICLE 22 FOR:20-(I) E ACH ELIGIBLE CHILD OF THE RESIDENT INDIVIDUAL WHO IS21-FIVE YEARS OLD OR YOUNGER AT THE CLOSE OF THE INCOME TAX YEAR IN22-AN AMOUNT DETERMINED BY STAFF OF THE LEGISLATIVE COUNCIL23-PURSUANT TO SUBSECTION (5)(b) OF THIS SECTION; AND24-(II) EACH ELIGIBLE CHILD OF THE RESIDENT INDIVIDUAL WHO IS SIX25-YEARS OLD OR OLDER BUT LESS T HAN SEVENTEEN YEARS OLD AT THE26-CLOSE OF THE INCOME TAX YEAR IN AN AMOUNT THAT IS SEVENTY -FIVE27-1222-13--PERCENT OF THE AMOUNT ALLOWED IN SUBSECTION (3)(a)(I) OF THIS1-SECTION.2-(b) IN ADDITION TO THE CHILD TAX CREDIT ALLOWED BY SECTION3-39-22-129 AND THE FAMILY AFFORDABILITY TAX CREDIT ALLOWED BY4-SECTION 39-22-130, FOR INCOME TAX YEARS COMMENCING ON OR AFTER5-JANUARY 1, 2027, TWO RESIDENT INDIVIDUALS WHO FILE A JOINT RETURN6-ARE ALLOWED A FAMILY AFFORDABILITY TAX CREDIT AGAINST THE7-INCOME TAXES DUE IMPOSED PURSUANT TO THIS ARTICLE 22 FOR:8-(I) E ACH ELIGIBLE CHILD OF THE RESIDENT INDIVIDUAL WHO IS9-FIVE YEARS OLD OR YOUNGER AT THE CLOSE OF THE INCOME TAX YEAR IN10-AN AMOUNT DETERMINED BY STAFF OF THE LEGISLATIVE COUNCIL11-PURSUANT TO SUBSECTION (5)(b) OF THIS SECTION; AND12-(II) EACH ELIGIBLE CHILD OF THE RESIDENT INDIVIDUAL WHO IS SIX13-YEARS OLD OR OLDER BUT LESS T HAN SEVENTEEN YEARS OLD AT THE14-CLOSE OF THE INCOME TAX YEAR IN AN AMOUNT THAT IS SEVENTY -FIVE15-PERCENT OF THE AMOUNT ALLOWED IN SUBSECTION (3)(b)(I) OF THIS16-SECTION.17-(4) (a) NOTWITHSTANDING SUBSECTION (3) OF THIS SECTION, FOR18-INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY 1, 2027, THE19-CREDIT AMOUNTS IN:20-(I) SUBSECTION (3)(a)(I) OF THIS SECTION ARE REDUCED, BUT NOT21-BELOW ZERO , BY AN AMOUNT EQUAL TO SIX AND EIGHT HUNDRED22-SEVENTY-FIVE ONE-THOUSANDTHS PERCENT FOR EACH FIVE THOUSAND23-DOLLARS BY WHICH A RESIDENT INDIVIDUAL'S ADJUSTED GROSS INCOME24-EXCEEDS THE SINGLE FILER ADJUSTED BASE INCOME; AND25-(II) SUBSECTION (3)(b)(I) OF THIS SECTION ARE REDUCED, BUT NOT26-BELOW ZERO , BY AN AMOUNT EQUAL TO SIX AND EIGHT HUNDRED27-1222-14--SEVENTY-FIVE ONE-THOUSANDTHS PERCENT FOR EACH FIVE THOUSAND1-DOLLARS BY WHICH TWO RESIDENT INDIVIDUALS ' ADJUSTED GROSS2-INCOME EXCEEDS THE JOINT FILER ADJUSTED BASED INCOME.3-(b) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY4-1, 2028, THE DEPARTMENT SHALL ADJUST THE JOINT FILER ADJUSTED BASE5-INCOME AND SINGLE FILER ADJUSTED BASE INCOME TO REFLECT INFLATION6-FOR EACH INCOME TAX YEAR IN WHICH THE CREDIT DESCRIBED IN THIS7-SECTION IS ALLOWED IF CUMULATIVE INFLATION SINCE THE LAST8-ADJUSTMENT, WHEN APPLIED TO THE CURRENT LIMITS , RESULTS IN AN9-INCREASE OF AT LEAST ONE THOUSAND DOLLARS WHEN THE ADJUSTED10-LIMITS ARE ROUNDED TO THE NEAREST ONE THOUSAND DOLLARS.11-(5) B EGINNING WITH THE QUARTERLY DECEMBER REVENUE12-FORECAST THAT LEGISLATIVE COUNCIL STAFF PRESENTS IN DECEMBER OF13-2027, AND FOR EACH DECEMBER REVENUE FORECAST THEREAFTER , AS14-PART OF THE QUARTERLY DECEMBER REVENUE FORECAST, LEGISLATIVE15-COUNCIL STAFF SHALL DETERMINE:16-(a) FOR THE CURRENT INCOME TAX YEAR , A PROJECTION OF THE17-NET AMOUNT OF REVENUE GAIN DIRECTLY ATTRIBUTABLE TO THE18-CHANGES MADE IN THIS HOUSE BILL 26-1222, NOTWITHSTANDING THE19-TAX CREDIT CREATED IN THIS SECTION;20-(b) A DOLLAR AMOUNT OF THE CREDIT AVAILABLE PURSUANT TO21-SUBSECTIONS (3)(a)(I) AND (3)(b)(I) OF THIS SECTION , WHICH DOLLAR22-AMOUNT MUST BE THE SAME FOR BOTH SUBSECTIONS (3)(a)(I) AND23-(3)(b)(I) OF THIS SECTION , SUCH THAT THE STAFF OF THE LEGISLATIVE24-COUNCIL PROJECTS, FOR THE CURRENT STATE INCOME TAX YEAR , THAT25-THE TOTAL DOLLAR AMOUNT OF CREDITS CLAIMED PURSUANT TO26-SUBSECTION (3) WILL EQUAL THE DOLLAR AMOUNT THAT STAFF OF THE27-1222-15--LEGISLATIVE COUNCIL DETERMINE PURSUANT TO SUBSECTION (5)(a) OF1-THIS SECTION.2-(6) N O LATER THAN TWO WEEKS BEFORE THE QUARTERLY3-DECEMBER REVENUE FORECAST THAT LEGISLATIVE COUNCIL STAFF4-PRESENTS IN DECEMBER OF 2028, AND EACH DECEMBER REVENUE5-FORECAST THEREAFTER, THE DEPARTMENT SHALL DELIVER A REPORT TO6-THE STAFF OF THE LEGISLATIVE COUNCIL THAT DESCRIBES THE REVENUE7-GAIN DIRECTLY ATTRIBUTABLE TO THE CHANGES MADE IN THIS HOUSE8-BILL 26-1222 FOR THE PREVIOUS INCOME TAX YEAR, NOTWITHSTANDING9-THE TAX CREDIT CREATED IN THIS SECTION.10-(7) IN THE CASE OF A PART-YEAR RESIDENT, THE CREDIT ALLOWED11-UNDER THIS SECTION IS APPORTIONED IN THE RATIO DETERMINED UNDER12-SECTION 39-22-110 (1).13-(8) T HE CREDIT ALLOWED UNDER THIS SECTION IS NOT14-CONSIDERED TO BE INCOME OR RESOURCES FOR THE PURPOSE OF15-DETERMINING ELIGIBILITY FOR THE PAYMENT OF PUBLIC ASSISTANCE16-BENEFITS AND MEDICAL ASSISTANCE BENEFITS AUTHORIZED UNDER STATE17-LAW OR FOR A PAYMENT MADE UNDER ANY OTHER PUBLICLY F UNDED18-PROGRAM.19-(9) THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SECTION20-THAT EXCEEDS THE RESIDENT INDIVIDUAL 'S INCOME TAXES DUE IS21-REFUNDED TO THE INDIVIDUAL.22-(10) T HE DEPARTMENT IS AUTHORIZED AND ENCOURAGED TO23-DEVELOP A MEANS OF REFUNDING THE CREDITS ALLOWED BY THIS SECTION24-TO RESIDENT INDIVIDUALS WHO QUALIFY FOR THE CREDITS IN TWELVE25-EQUAL MONTHLY REFUNDS RATHER THAN ANNUALLY.26-(11) NOTWITHSTANDING SECTION 39-21-304 (4), THE CREDIT DOES27-1222-16--NOT REPEAL AFTER A SPECIFIED PERIOD OF TAX YEARS.1-SECTION 4. In Colorado Revised Statutes, 39-22-304, add2-(2)(m), (2)(n), (2)(o), (2)(p), and (3)(u) as follows:3-39-22-304. Net income of corporation - legislative declaration4-- definitions - repeal.5-(2) There shall be added to federal taxable income:6-(m) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY7-1, 2027, AN AMOUNT EQUAL TO THE FEDERAL DEDUCTION CLAIMED BY THE8-TAXPAYER FOR THE INCOME TAX YEAR FOR BUSINESS INTEREST PURSUANT9-TO SECTION 163 OF THE INTERNAL REVENUE CODE TO THE EXTENT THE10-AMOUNT CLAIMED EXCEEDS THE AMOUNT THE TAXPAYER WOULD HAVE11-BEEN ALLOWED TO CLAIM PURSUANT TO THE LIMITATION ON BUSINESS12-INTEREST SET FORTH IN SECTION 163 (j) OF THE INTERNAL REVENUE CODE13-WITHOUT REGARD TO ANY AMENDMENT BY PUB. L. 119-21;14-(n) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY15-1, 2027, AN AMOUNT EQUAL TO THE FEDERAL DEDUCTION CLAIMED BY THE16-TAXPAYER FOR THE INCOME TAX YEAR FOR QUALIFIED PROPERTY17-DEPRECIATION PURSUANT TO SECTION 168 (k) OF THE INTERNAL REVENUE18-CODE TO THE EXTENT THE AMOUNT CLAIMED EXCEEDS THE AMOUNT THE19-TAXPAYER WOULD HAVE BEEN ALLOWED TO CLAIM PURSUANT TO SECTION20-168 (k) OF THE INTERNAL REVENUE CODE WITHOUT REGARD TO ANY21-AMENDMENT BY PUB. L. 119-21; EXCEPT THAT , THE TAXPAYER MAY22-REDUCE THE AMOUNT OTHERWISE REQUIRED TO BE ADDED TO THE23-TAXPAYER'S FEDERAL TAXABLE INCOME PURSUANT TO THIS SUBSECTION24-(2)(n) BY THE AMOUNT OF QUALIFIED PROPERTY DEPRECIATION THE25-TAXPAYER WOULD HAVE BEEN ALLOWED TO CLAIM FOR THE STATE26-INCOME TAX YEAR WITH RESPECT TO THE SAME PROPERTY PURSUANT TO27-1222-17--ANY SECTION OTHER THAN SECTION 168 (k) OF THE INTERNAL REVENUE1-CODE WITHOUT REGARD TO ANY AMENDMENT BY PUB. L. 119-21;2-(o) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY3-1, 2027, AN AMOUNT EQUAL TO THE FEDERAL DEDUCTION CLAIMED BY THE4-TAXPAYER FOR THE INCOME TAX YEAR FOR QUALIFIED PRODUCTION5-PROPERTY DEPRECIATION PURSUANT TO SECTION 168 (n) OF THE INTERNAL6-REVENUE CODE; EXCEPT THAT, THE TAXPAYER MAY REDUCE THE AMOUNT7-OTHERWISE REQUIRED TO BE ADDED TO THE TAXPAYER 'S FEDERAL8-TAXABLE INCOME PURSUANT TO THIS SUBSECTION (2)(o) BY THE AMOUNT9-OF QUALIFIED PRODUCTION PROPERTY DEPRECIATION THE TAXPAYER10-WOULD HAVE BEEN ALLOWED TO CLAIM FOR THE STATE INCOME TAX YEAR11-WITH RESPECT TO THE SAME PROPERTY PURSUANT TO ANY SECTION OTHER12-THAN SECTION 168 (k) OF THE INTERNAL REVENUE CODE WITHOUT REGARD13-TO ANY AMENDMENT BY PUB. L. 119-21;14-(p) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY15-1, 2027, AN AMOUNT EQUAL TO THE FEDERAL DEDUCTION CLAIMED BY THE16-TAXPAYER FOR THE INCOME TAX YEAR FOR DOMESTIC RESEARCH AND17-EXPERIMENTAL EXPENDITURES PURSUANT TO SECTION 174A OF THE18-INTERNAL REVENUE CODE ; EXCEPT THAT, THE TAXPAYER MAY REDUCE19-THE AMOUNT OTHERWISE REQUIRED TO BE ADDED TO THE TAXPAYER 'S20-FEDERAL TAXABLE INCOME PURSUANT TO THIS SUBSECTION (2)(p) BY THE21-AMOUNT OF THE DEDUCTION THE TAXPAYER WOULD HAVE BEEN ALLOWED22-TO CLAIM FOR THE STATE INCOME TAX YEAR WITH RESPECT TO THE SAME23-RESEARCH AND EXPERIMENTAL EXPENDITURES PURSUANT TO SECTION 17424-OF THE INTERNAL REVENUE CODE WITHOUT REGARD TO ANY AMENDMENT25-BY PUB. L. 119-21.26-(3) There shall be subtracted from federal taxable income:27-1222-18--(u) (I) F OR INCOME TAX YEARS COMMENCING ON OR AFTER1-JANUARY 1, 2028, A TAXPAYER REQUIRED TO MAKE AN ADDITION TO2-FEDERAL TAXABLE INCOME PURSUANT TO SUBSECTION (2)(m), (2)(n),3-(2)(o), OR (2)(p) OF THIS SECTION, IS ALLOWED TO APPLY THE FOLLOWING4-SUBTRACTIONS IN ACCORDANCE WITH THIS SUBSECTION (3)(u):5-(A) A N AMOUNT EQUAL TO ONE -FIFTH OF THE CUMULATIVE6-AMOUNT ADDED TO FEDERAL TAXABLE INCOME AS REQUIRED BY7-SUBSECTION (2)(m) OF THIS SECTION FOR EACH OF THE FIVE STATE INCOME8-TAX YEARS IMMEDIATELY FOLLOWING THE STATE INCOME TAX YEAR IN9-WHICH THE ADDITION WAS REQUIRED;10-(B) A N AMOUNT EQUAL TO ONE -TENTH OF THE CUMULATIVE11-AMOUNT ADDED TO FEDERAL T AXABLE INCOME AS REQUIRED BY12-SUBSECTION (2)(n) OF THIS SECTION FOR EACH OF THE TEN TAXABLE13-YEARS IMMEDIATELY FOLLOWING THE TAXABLE YEAR IN WHICH THE14-ADDITION WAS REQUIRED;15-(C) A N AMOUNT EQUAL TO ONE THIRTY -EIGHTH OF THE16-CUMULATIVE AMOUNT ADDED TO FEDERAL TAXABLE INCOME AS REQUIRED17-BY SUBSECTION (2)(o) OF THIS SECTION FOR EACH OF THE THIRTY -EIGHT 18-STATE INCOME TAX YEARS IMMEDIATELY FOLLOWING THE STATE INCOME19-TAX YEAR IN WHICH THE ADDITION WAS REQUIRED; AND20-(D) A N AMOUNT EQUAL TO ONE -FOURTH OF THE CUMULATIVE21-AMOUNT ADDED TO FEDERAL TAXABLE INCOME AS REQUIRED BY22-SUBSECTION (2)(p) OF THIS SECTION FOR EACH OF THE FOUR STATE INCOME23-TAX YEARS IMMEDIATELY FOLLOWING THE STATE INCOME TAX YEAR IN24-WHICH THE ADDITION WAS REQUIRED.25-(II) T HE TOTAL AMOUNT OF EACH SUBTRACTION ALLOWED26-PURSUANT TO SUBSECTIONS (3)(u)(I)(A), (3)(u)(I)(B), (3)(u)(I)(C), AND27-1222-19--(3)(u)(I)(D) OF THIS SECTION SHALL NOT EXCEED THE CUMULATIVE1-AMOUNT ADDED TO FEDERAL TAXABLE INCOME PURSUANT TO EACH2-CORRESPONDING ADDITION REQUIRED BY SUBSECTIONS (2)(m), (2)(n),3-(2)(o), AND (2)(p) OF THIS SECTION.4-(III) T HE SUBTRACTIONS ALLOWED IN THIS SUBSECTION (3)(u)5-APPLY AFTER THE APPLICATION OF THE OTHER SUBTRACTIONS PROVIDED6-FOR IN THIS SUBSECTION (3), EXCEPT FOR THE SUBTRACTION ALLOWED7-PURSUANT TO SUBSECTION (3)(p) OF THIS SECTION. IF THE AMOUNT OF THE8-SUBTRACTIONS ALLOWED UNDER THIS SUBSECTION (3)(u) EXCEEDS A9-TAXPAYER'S FEDERAL TAXABLE INCOME AS CALCULATED PURSUANT TO10-THIS SECTION WITHOUT REGARD TO THE SUBTRACTION ALLOWED11-PURSUANT TO SUBSECTION (3)(p) OF THIS SECTION , THE AMOUNT NOT12-SUBTRACTED FROM THE TAXPAYER 'S FEDERAL TAXABLE INCOME13-PURSUANT TO THIS SECTION MAY BE CARRIED FORWARD AND USED AS A14-SUBTRACTION FROM THE TAXPAYER 'S FEDERAL TAXABLE INCOME AS15-CALCULATED PURSUANT TO THIS SECTION WITHOUT REGARD TO THE16-SUBTRACTION ALLOWED PURSUANT TO SUBSECTION (3)(p) OF THIS17-SECTION IN SUBSEQUENT YEARS FOR A PERIOD NOT TO EXCEED TEN YEARS18-AND MUST BE APPLIED FIRST TO THE EARLIEST POSSIBLE INCOME TAX19-YEAR. ANY SUBTRACTION REMAINING AFTER THE PERIOD IS NOT20-REFUNDED OR CREDITED TO THE TAXPAYER.21-SECTION 5. Act subject to petition - effective date. This act22-takes effect at 12:01 a.m. on the day following the expiration of the23-ninety-day period after final adjournment of the general assembly (August24-12, 2026, if adjournment sine die is on May 13, 2026); ex cept that, if a25-referendum petition is filed pursuant to section 1 (3) of article V of the26-state constitution against this act or an item, section, or part of this act27-1222-20--within such period, then the act, item, section, or part will not take effect1-unless approved by the people at the general election to be held in2-November 2026 and, in such case, will take effect on the date of the3-official declaration of the vote thereon by the governor.4-1222-21-+HB1222_L.014 Amendment No. ___________+HB26-1222+HOUSE FLOOR AMENDMENT+Second Reading BY REPRESENTATIVE DeGraaf+1 Amend printed bill, page 7, after line 12 insert:+2 "(f) This House Bill 26-1222 constitutes multiple subjects for+3 purposes of section 21 article V of the state constitution.".+** *** ** *** **+LLS: Pierce Lively x2059
Diffs are computed deterministically from extracted bill text and show additions, deletions, and section moves. Scanned-PDF text extracted via OCR is flagged where confidence is low; see methodology.