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HB 25-1157

Reauthorize Advanced Industries Tax Credit

2025 Regular Session Introduced by Judy Amabile and 19 co-sponsors

Reauthorizes Colorado's Advanced Industry Tax Credit through 2031, expands eligible manufacturing firms, relaxes investor limits, and lowers annual cap to $2.5M (2027-31).

Governor Signed
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Bill Summary · HB 25-1157

HB 25‑1157 — Reauthorize Advanced Industries Tax Credit (Governor Signed)

Status: Governor signed (May 19, 2025)
Introduced: Jan 29, 2025 — Effective: 90 days after adjournment sine die (assuming no referendum)

Main purpose

Extend and modify Colorado’s Advanced Industry Investment Income Tax Credit to continue incentivizing early‑stage investment, broaden eligible manufacturing businesses, relax certain investor ownership limits, and reduce the annual certification cap for the extension period.

Key provisions

  • Extension: Continues the Advanced Industry Investment Tax Credit program through calendar year 2031 (credit available for investments through Jan 1, 2032 in statute language). OEDIT may certify qualified small businesses until Oct 1, 2031.
  • Annual certification cap: Lowers the OEDIT certification capacity from $4.0 million per calendar year (current law through 2026) to $2.5 million per calendar year for 2027–2031. Total authorized for the extension: $12.5 million.
  • Eligible businesses: Maintains eligibility for defined “advanced industry” businesses and, on and after Jan 1, 2028, adds a narrowly defined category of commercially scalable, capital‑intensive manufacturing businesses that: operate in manufacturing, generate operating revenue, are a primary employer, produce products distributed outside Colorado, and are judged by OEDIT to be commercially scalable.
  • Investor eligibility and ownership limits:
    • Clarifies that entities subject to income tax may be qualified investors but explicitly excludes C corporations (including entities treated as C corporations for tax purposes).
    • Alters prior voting‑power restrictions so larger ownership positions are permitted (the bill relaxes/eliminates the previous prohibition tied to 30% pre‑investment / 49% post‑investment thresholds and raises the qualifying threshold toward 50% in relevant provisions).
    • Retains other limits: certain founders, employees, contractors, and persons with recent control are excluded; trusts may allocate credit to beneficiaries and receive credit certificates.
  • Reporting and oversight: Requires certified small businesses to report annually to OEDIT for five years after receiving a qualified investment; OEDIT may request investment use and hiring plans and may assess penalties for failure to report. OEDIT administers certification and issuance of credit certificates.
  • Credit mechanics (unchanged): Credit equals 25% of investment (30% if business is in rural/economically distressed area), up to $50,000 per investment per tax year; carryforward rules remain.

Fiscal impact & administration

  • Authorizes up to $12.5 million in credits (2027–2031). Legislative Council/JBC estimates:
    • General Fund reductions: $0 (FY2025‑26), -$875,000 (FY2026‑27, half‑year), -$2,062,500 (FY2027‑28), with similar impacts in later years tapering over time depending on claim timing and carryforwards.
    • TABOR: Decreases TABOR refund obligations in years revenue exceeds the limit by the same amounts (no net change to overall General Fund availability in those years).
  • Administration: OEDIT currently administers the program (1.0 FTE). Ongoing staff/marketing costs estimated ~ $180,000/year after FY2028‑29. No new appropriation required.

Who is affected

  • Beneficiaries: Individual and pass‑through investors (individuals, partnerships, LLCs, S corps, trusts/beneficiaries) who make qualified investments in certified small businesses; qualifying small businesses (advanced industries and qualifying scalable manufacturing firms).
  • Exclusions: C corporations (and entities treated as such) are not eligible investors; certain insiders (founders, controllers, major prior investors) are excluded per statutory rules.

Timeline / Implementation

  • Certification and credits under the new (reduced) cap apply for calendar years 2027–2031.
  • Expanded manufacturing eligibility becomes available on and after Jan 1, 2028 (per bill language).
  • Reporting obligations extend up to five years after each qualified investment.

For full statutory text, definitions, and procedural rules, consult Colorado Revised Statutes §24‑48.5‑112 and the enrolled act.

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

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