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HB 25B-1018

Income Tax Credit Adjustment

2025 First Extraordinary Session Introduced by Scott Bright and 2 co-sponsors

HB 25B-1018 aimed to adjust Colorado's income tax credits, making the Family Affordability Tax Credit nonrefundable, potentially increasing state revenue by $979 million.

Introduced In House - Assigned to State, Civic, Military, & Veterans Affairs
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Bill Summary · HB 25B-1018

Summary of HB 25B-1018: Income Tax Credit Adjustment

Bill Overview

Bill Number: HB 25B-1018
Introduced: August 21, 2025
Status: Postponed Indefinitely by the House State, Civic, Military, & Veterans Affairs Committee
Sponsors: Rep. Lori Garcia Sander, Sen. Barbara Kirkmeyer, Sen. Scott Bright

The Income Tax Credit Adjustment bill aimed to modify existing income tax credits in Colorado, primarily affecting the Family Affordability Tax Credit (FATC) and other related tax incentives.

Main Purpose and Intent

The primary intent of HB 25B-1018 was to adjust the structure of certain income tax credits based on state revenue projections. This included making the FATC nonrefundable and establishing a mechanism to prorate or eliminate tax credits depending on the state’s financial condition.

Key Provisions

  1. Family Affordability Tax Credit (FATC):

    • The FATC would be modified to become nonrefundable starting in tax year 2025. This change was expected to increase General Fund revenue significantly.

  2. Adjustment of Tax Credits Based on Revenue Forecasts:

    • A new process was proposed for prorating or suspending income tax credits (excluding the affordable housing tax credit and earned income tax credits) based on state revenue forecasts.
    • Revenue forecasts would include two scenarios: one assuming all credits are available and another assuming they are not.

  3. Sunset of Certain Tax Credits:

    • The bill proposed to end existing tax credits for electric bicycles, heat pumps, and electric lawn equipment after tax year 2025, which were previously set to expire later.

  4. Tax Credit Sales for Retailers:

    • Retailers of electric bicycles, heat pumps, and electric lawn equipment could bid on discounted tax credits in FY 2025-26, which could be claimed starting in tax year 2030. The total amount of credits issued would not exceed $40 million in value.

Fiscal Impact

  • State Revenue: The bill was projected to increase General Fund revenue by up to $979 million in FY 2025-26 and $458.8 million in FY 2026-27.
  • Appropriations: Required appropriations were estimated at $360,193 for FY 2025-26 and $3,746,261 for FY 2026-27.
  • State Expenditures: The bill would have ongoing impacts on state expenditures and transfers, as well as changes in TABOR refunds.

Affected Parties

  • Taxpayers: Individuals and families eligible for the FATC and other tax credits would be directly impacted by the changes.
  • Retailers: Businesses selling electric bicycles, heat pumps, and electric lawn equipment could benefit from the new tax credit sales mechanism.

Procedural Aspects

  • The bill was introduced and assigned to the House Committee on State, Civic, Military, & Veterans Affairs, where it was ultimately postponed indefinitely on the same day it was introduced. As a result, the provisions outlined in the bill did not take effect.

Conclusion

While HB 25B-1018 aimed to reform income tax credits in Colorado to align with state revenue conditions, its indefinite postponement means that the proposed changes will not be enacted. The bill's fiscal implications highlighted significant potential revenue increases for the state, but the adjustments to taxpayer benefits would have required careful consideration of the economic impact on families and businesses.

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

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