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HB 25-1296

Tax Expenditure Adjustment

2025 Regular Session Introduced by Judy Amabile and 17 co-sponsors

House Bill 25-1296 adjusts Colorado's tax credits and exemptions, impacting taxpayers and local governments while improving efficiency and aligning with other states' practices.

Governor Signed
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Bill Summary · HB 25-1296

Summary of House Bill 25-1296: Tax Expenditure Adjustment

Bill Information:
- Bill Number: HB 25-1296
- Title: Tax Expenditure Adjustment
- Status: Governor Signed
- Introduced: March 05, 2025
- Sponsors:
- Rep. Lorena García (Primary)
- Rep. Zokaie
- Sen. Chris Weissman

Purpose and Intent

House Bill 25-1296 aims to adjust various tax expenditures in Colorado to improve administrative efficiency, reduce burdens on taxpayers, and align state tax policy with practices in other states. The bill modifies existing tax credits and exemptions, ensuring they better serve their intended purposes while also addressing inconsistencies in the tax code.

Key Provisions

The bill includes several significant changes to Colorado's tax policy:

  1. Enterprise Zone Investment Tax Credit:

    • Limits the total amount of credits a taxpayer can claim to $2 million starting in tax year 2026, with specific exclusions for certain industries (e.g., oil and gas extraction, aviation).

  2. Interstate Telecommunication Services:

    • Makes interstate telecommunication services taxable, allowing taxpayers to claim a credit for taxes paid to other states.

  3. Child Care Center Investment Tax Credit:

    • Extends the existing tax credit for investments in child care facilities through tax year 2028.

  4. Business Personal Property Tax Income Tax Credit:

    • Repeals this credit starting in tax year 2026, as it has low utilization and is considered duplicative.

  5. Care Worker Tax Credit:

    • Expands eligibility for the existing tax credit for informal child care workers, allowing claims for care provided outside their home.

  6. Sales and Use Tax Exemptions:

    • Exempts fertilizer and spray adjuvants used for marijuana cultivation from state sales tax starting July 1, 2025.
    • Modifies the medical marijuana sales tax exemption for low-income patients to allow the use of an EBT card for qualification.

  7. Preservation of Historic Structures Tax Credit:

    • Removes a 5% increase in the percentage of rehabilitation expenses for commercial structures located in disaster areas.

  8. Alternative Minimum Tax Credit:

    • Repeals the state alternative minimum tax credit effective for tax years starting after January 1, 2025.

Fiscal Impact

The bill is projected to have the following fiscal impacts:
- Current Year (FY 2024-25): Decrease in General Fund revenue by $0.5 million.
- Budget Year (FY 2025-26): Increase in General Fund revenue by $5.4 million.
- Out Year (FY 2026-27): Further increase in General Fund revenue by $10.7 million.

No appropriations are required for the implementation of this bill.

Affected Parties

The adjustments made by HB 25-1296 will primarily affect:
- Taxpayers in Colorado, particularly those involved in the specified industries (e.g., telecommunications, child care).
- Local governments that may see changes in tax revenue due to the adjustments in tax credits and exemptions.

Procedural Aspects

  • The bill was signed by the Governor on May 16, 2025, after passing through various legislative committees and readings in both the House and Senate.
  • It underwent multiple amendments during its legislative journey to refine its provisions and ensure clarity in its implementation.

This summary provides an overview of HB 25-1296, highlighting its purpose, key provisions, fiscal impacts, and the parties affected by the changes in tax policy.

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

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