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SB 25-302

Achieving a Better Life Experience Tax Deduction

2025 Regular Session Introduced by Judy Amabile and 21 co-sponsors

Extends Colorado’s ABLE deduction through 2030, keeps current contribution/withdrawal rules, and clarifies purpose to encourage disability‑related saving.

Governor Signed
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Bill Summary · SB 25-302

SB 25‑302 — Achieving a Better Life Experience (ABLE) Tax Deduction — Summary

Status: Governor signed (May 24, 2025)
Introduced: April 21, 2025 | Classification: Bill

Purpose

Extend Colorado’s state income tax treatment for ABLE (529A) accounts to continue encouraging savings for disability‑related expenses and to provide tax relief for individuals with disabilities and their families.

Key provisions

  • Extends the state income tax subtraction for ABLE accounts so the deduction remains available through tax year 2030.
  • Updates multiple statutory expiration/repeal dates related to ABLE provisions (several references changed from 2026 → 2031 and from 2030 → 2035), effectively prolonging the current state tax treatment and related rules for an additional five years.
  • Retains the existing rules that:
    • Allow a subtraction for interest and other income of distributions used for qualified disability expenses (to the extent included in federal taxable income).
    • Allow a subtraction for contributions/payments to qualified programs, subject to limits ($20,000 per taxpayer per beneficiary for single filers; $30,000 per taxpayer per beneficiary for joint filers).
    • Require certain additions back to taxable income if nonqualified distributions/refunds occur.
  • Adds an express legislative declaration that the deduction’s purposes are to support individuals with disabilities and to incentivize saving for future disability‑related expenses.
  • Continues administration of ABLE accounts by CollegeInvest and tax administration by the Department of Revenue; no new appropriation required.

Who is affected

  • Colorado taxpayers who open or contribute to ABLE (529A) accounts — primarily individuals with disabilities (and their families/benefactors) who meet ABLE eligibility rules.
  • State government finances: General Fund and TABOR refund calculations.
  • Program administrator (CollegeInvest) and Department of Revenue (with minor ongoing workload managed within existing resources).

Fiscal impact and TABOR

  • Legislative Council / JBC estimate: General Fund revenue decreases by roughly:
    • $0.5 million (half‑year) in FY 2025‑26
    • $1.1 million in FY 2026‑27
    • $1.4 million in FY 2027‑28
    • Increasing amounts through FY 2030‑31
  • The bill reduces the TABOR surplus/refund liability by similar amounts (lowering refunds required), per the March 2025 revenue forecast.
  • No appropriation required.

Timing / Effective date

  • Passed both chambers (unamended); Governor signed on May 24, 2025.
  • Effective at 12:01 a.m. on the day after the 90‑day period following final adjournment of the General Assembly, unless a referendum is filed. If referred, the act would not take effect unless approved by voters (general election November 2026).

Context

  • Colorado enacted the ABLE deduction originally in HB 22‑1320. Federal law (ABLE Age Adjustment Act) expands ABLE eligibility (disability onset before age 46 vs. 26) beginning in 2026; the fiscal note assumes this federal change will increase account openings and contributions, driving the state revenue impacts estimated above.

Compiled from official sources — confirm details with the bill’s official record.

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