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SB 25B-006

Tax Credit for Health Savings Accounts

2025 First Extraordinary Session Introduced by John Carson

SB 25B-006 aimed to offer a tax credit for Colorado residents contributing to Health Savings Accounts, promoting savings for healthcare expenses but was postponed indefinitely.

Introduced In Senate - Assigned to State, Veterans, & Military Affairs
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Bill Summary · SB 25B-006

Summary of SB 25B-006: Tax Credit for Health Savings Accounts

Bill Overview

Bill Number: SB 25B-006
Title: Tax Credit for Health Savings Accounts
Introduced: August 21, 2025
Status: Postponed Indefinitely by the Senate Committee on State, Veterans, & Military Affairs
Prime Sponsor: Sen. John Carson

The purpose of SB 25B-006 was to establish a new tax credit for Colorado residents who contribute to Health Savings Accounts (HSAs) associated with high deductible health plans. The intent of the bill was to provide financial incentives for individuals to save for healthcare expenses, thereby promoting the use of HSAs.

Key Provisions

  • Tax Credit Amount:
    • 25% of contributions made to an HSA.
    • Maximum credit limits:
    • $500 for single filers.
    • $1,000 for joint filers.
    • $1,500 for contributions to family health plans, regardless of filing status.
  • Nonrefundable Credit: The credit cannot exceed the taxpayer's income tax liability and cannot be carried forward to future years or refunded.
  • Effective Date: The credit was set to begin in tax year 2026.
  • Repeal Date: The credit was scheduled to expire on December 31, 2030.

Fiscal Impact

State Revenue

  • The bill was projected to reduce General Fund revenue as follows:
    • FY 2025-26: -$71.3 million (half-year impact)
    • FY 2026-27: -$145.1 million
    • FY 2027-28: -$149.8 million
  • The reduction in revenue was anticipated to affect the Taxpayer's Bill of Rights (TABOR) refunds.

State Expenditures

  • The Department of Revenue was expected to incur costs associated with implementing the tax credit:
    • FY 2026-27: $228,922
    • FY 2027-28: $84,344
  • The bill would require an appropriation of $191,482 for the Department of Revenue in FY 2026-27.
  • Staffing needs included 2.5 full-time equivalents (FTE) for the first year to manage the credit's administration.

Potential Impact

  • The bill aimed to encourage more Colorado residents to enroll in high deductible health plans, which typically have lower premiums.
  • It was estimated that approximately 389,000 taxpayers would claim the credit in its first year, with growth expected due to population increases.
  • The fiscal note indicated that the average contributions to HSAs would rise with inflation, potentially increasing the uptake of HSAs among taxpayers.

Legislative Actions

  • The bill was introduced and assigned to the Senate Committee on State, Veterans, & Military Affairs on August 21, 2025.
  • On the same day, the committee recommended that the bill be postponed indefinitely, effectively halting its progress.

Conclusion

While SB 25B-006 proposed a significant tax incentive for contributions to HSAs, its indefinite postponement means that these potential benefits and impacts will not be realized at this time. The bill reflects ongoing discussions about healthcare savings and tax policy in Colorado.

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

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