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HB 25B-1004

Sale of Tax Credits

2025 First Extraordinary Session Introduced by Jennifer Bacon and 35 co-sponsors

Colorado Treasury may sell up to $125 million of insurance premium and corporate tax credits to raise one-time proceeds for the General Fund, with future revenue reduced as credits

Governor Signed
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Bill Summary · HB 25B-1004

Summary — HB 25B-1004 (Sale of Tax Credits) — Signed into law (Aug 28, 2025)

Main purpose

Authorize the Colorado State Treasurer (Department of the Treasury) to sell two types of state tax credits—insurance premium tax credits and corporate (C‑corporation) income tax credits—to generate one‑time proceeds for the General Fund, subject to statutory limits and procedural safeguards.

Key provisions

  • Authorization: Treasury may issue tax credit certificates beginning FY 2025‑26 for sale to qualified taxpayers.
  • Size and limits:
    • Up to $125 million total face value of certificates may be issued.
    • Total sales proceeds may be up to $100 million (plus any reasonable administrative/implementation costs).
  • Pricing: Purchase price for certificates must be set either by a market‑based percentage determined by Treasury (or an independent third party) or at least 80% of certificate face value (final statutory minimum).
  • Priority purchasers: Treasury must offer insurance companies that qualify as a regional home office in Colorado a first right to purchase credits before offering to others.
  • Contracting and process: Treasury may contract with independent third parties (brokers/consultants) to conduct or consult on bidding and issuance.
  • Claiming the credits:
    • Credits are nonrefundable but may be carried forward and used against the buyer’s premium tax or corporate income tax liability.
    • For credits issued in FY 2025‑26, Treasury (in consultation with OSPB) may determine which calendar years taxpayers may claim the credits.
    • Credits cannot be claimed for taxable years that begin after December 31, 2033.
  • Funds and transfers:
    • Monthly sale proceeds are credited to a newly created Tax Credit Sale Proceeds Cash Fund.
    • After payment of Treasury’s and Revenue’s authorized administrative/implementation costs (subject to appropriation), remaining proceeds are transferred to the General Fund.
  • Reporting: Treasury must provide a list of eligible taxpayers to the Division of Insurance (DORA) and Department of Revenue within 30 days after fiscal‑year close. The State Auditor and General Assembly will measure program effectiveness.

Fiscal impact ( Legislative Council / JBC estimates, final fiscal note)

  • Up to $100–$103.2 million net cash to the state in FY 2025‑26 (sale proceeds), with an estimated transfer of about $100 million to the General Fund in that year after costs.
  • Subsequent revenue reductions as credits are claimed: estimated decreases up to $75 million (FY 2026‑27) and up to $50 million (FY 2027‑28). Total future revenue reductions will not exceed the $125 million face value through FY 2033‑34.
  • Appropriations/implementation costs:
    • A one‑time appropriation of $3,173,500 (included in the enacted bill) to the Treasury Department for FY 2025‑26 to administer issuance (funding source is the Tax Credit Sale Proceeds Cash Fund per committee amendment).
    • Department of Revenue costs estimated at $39,547 in FY 2026‑27 (GenTax programming, forms, reporting) and annual reporting costs thereafter (~$8,626).
  • TABOR considerations: Insurance premium and corporate income tax revenues are TABOR‑covered; timing of credit claims affects TABOR calculations and refund obligations.

Who is affected

  • Primary: Insurance companies authorized in Colorado (premium tax credits) and C corporations doing business in Colorado (income tax credits) that elect to purchase credits.
  • State agencies: Department of the Treasury (issuer/administrator), Department of Revenue (administration and tax processing), Division of Insurance (reporting/coordination).
  • State finances: General Fund (short‑term inflow, medium‑term outflows when credits are claimed) and TABOR calculations.

Legislative/procedural timeline

  • Introduced: Aug 21, 2025
  • Passed both houses with amendments Aug 22–26, 2025
  • Sent to Governor: Aug 27, 2025
  • Governor signed: Aug 28, 2025
  • Implementation begins FY 2025‑26 under the statutory procedures described above.

For readers tracking fiscal exposure: the program accelerates one‑time revenue to the General Fund in FY 2025‑26 in exchange for reduced premium and corporate income tax receipts spread across future years (no net revenue gain beyond the face value cap). The exact timing and magnitude of future revenue reductions depend on purchaser behavior and Treasury’s schedule for allowable claim years.

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

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