ColoradoHB25-12962025 Regular SessionHouseWALLET

Tax Expenditure Adjustment

Sponsored By: Lorena Garcia (Democratic), Mike Weissman (Democratic), Yara Zokaie (Democratic)

Signed by Governor

Fiscal Policy & Taxes

Personalized for You

How does this bill affect your finances?

Personalize government policy and PRIA will tell you what this bill means for your household, plus every other piece of legislation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.

Free to download

Bill Overview

Analyzed Economic Effects

14 provisions identified: 6 benefits, 6 costs, 2 mixed.

Childcare providers keep property investment credits

Licensed childcare centers, family childcare homes, and foster care homes keep a 20% credit for qualifying annual property investments. Qualifying businesses providing licensed employee childcare receive a 10% credit. Investments must be in tangible personal property used in the facility. Credits apply to tax years starting after January 1, 1992, and before January 1, 2029. The section is repealed December 31, 2036.

More childcare workers qualify for credits

Informal family, friend, or neighbor childcare workers can qualify for the care worker credit without providing care at home. They must care for children other than their own who are five or younger. For licensed programs and family childcare homes, the license only needs to be valid during the tax year. The law removes the prior six-month license requirement.

Personal property tax credit ends

The personal property tax credit ends for income tax years starting on or after January 1, 2026. For years starting January 1, 2019, through December 31, 2025, it equals qualifying Colorado property tax paid. It covers tax on up to $18,000 of total actual personal property value—not an $18,000 credit. The section is repealed December 31, 2036.

Workers owe Colorado tax on overtime

Workers must add back overtime pay excluded or deducted from federal gross income when figuring Colorado taxable income. The federal tax break does not remove that pay from Colorado's income tax base.

Lower medical marijuana costs for patients

Medical marijuana registry applicants pay no application fee with income at or below 185% of the family-size-adjusted federal poverty line. They must provide a certified Colorado tax return or a federal return copy received from the IRS. Beginning July 1, 2025, qualifying medical marijuana purchases from licensed centers are exempt from Colorado's state sales tax. Buyers must show a valid electronic benefits transfer card or other state or federal benefits identification at purchase.

Some workers avoid Colorado tax withholding

Employers need not withhold Colorado income tax on compensation identified as eligible for the subtraction under section 39-22-104(4)(u). The employee's withholding certificate must show that eligibility. This changes withholding during the year; it does not itself determine the final tax owed.

Investors can seek credit cap waivers

For tax years starting January 1, 2026, or later, investors can seek enterprise zone credits above the $2 million cap. Applications must show substantial investment and well-paying job gains unlikely without a waiver, and its major role in investment decisions. The Colorado Economic Development Commission reviews requests at public meetings and can approve all, part, or none. It can require an independent analysis at the applicant's expense. Approved taxpayers must file the credit certificate with the return for the year it covers.

More local governments qualify for transport credits

The alternative transportation options credit includes more types of local government. Statutory cities, towns, and counties now count alongside home rule governments under the credit's definition.

Agencies can share childcare credit records

Colorado's tax director can share detailed taxpayer information with the Department of Early Childhood. The information must relate to early childhood educator or care worker credit claims. Existing confidentiality limits and penalties still apply.

Special 2022 senior credit rule expires

A special rule gives eligible seniors the full 2022 senior tax credit without the usual income-based reduction. It applies to taxpayers who qualified for an Article 31 grant in calendar year 2022. The law repeals this 2022-only rule on December 31, 2026.

Employers face broader tax withholding rules

Colorado's tax director can require employers to withhold state income tax from employee compensation other than wages. The amount must approximate the employee's Colorado tax due. Related statements, returns, and nonresident withholding rules also apply. Filing, payment, and reporting generally follow federal requirements where practical, with differences allowed to administer Colorado law.

Enterprise zone investors face credit limits

For tax years starting January 1, 2026, or later, enterprise zone investment credits generally face a $2 million annual taxpayer cap. Property directly used to retail motor vehicle gasoline or diesel, or in wireless telecommunications facilities, is excluded. Beginning January 1, 2040, specified credit carryover and deferred-credit rules end. Those rules include treatment for investments made before January 1, 2014.

Interstate phone taxes include double-tax relief

Beginning July 1, 2025, Colorado taxes interstate telephone and telegraph service that starts or ends in Colorado. The service must also be billed to a Colorado address. Mobile service is exempt when the customer's main place of use is outside Colorado. A credit covers tax legally imposed and paid to another state on the same service, capped at Colorado's tax.

Cannabis products enter agricultural tax definition

Beginning July 1, 2025, products regulated under Colorado's marijuana code count as agricultural commodities under state sales tax law. The prior exclusion is repealed effective July 1, 2026. Tax effects depend on the rules that use this definition; this change alone does not establish a tax exemption.

Sponsors & Cosponsors

Cosponsors

Andrew Boesenecker
Democratic • House
Brianna Titone
Democratic • House
Emily Sirota
Democratic • House
Jennifer Bacon
Democratic • House
Javier Mabrey
Democratic • House
Kyle Brown
Democratic • House
Mandy Lindsay
Democratic • House
Manny Rutinel
Democratic • House
Naquetta Ricks
Democratic • House
Regina English
Democratic • House
Sean Camacho
Democratic • House
Tammy Story
Democratic • House
Cathy Kipp
Democratic • Senate
Iman Jodeh
Democratic • Senate
Judy Amabile
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 178 • No: 101

House vote • 5/7/2025

Senate amendments: Repass

Yes: 40 • No: 24

House vote • 5/7/2025

Senate amendments: Concur

Yes: 42 • No: 22

Senate vote • 5/6/2025

Third reading: Bill

Yes: 23 • No: 12

Senate vote • 5/2/2025

Refer House Bill 25-1296 to the Committee of the Whole.

Yes: 4 • No: 3

Senate vote • 5/1/2025

Refer House Bill 25-1296, as amended, to the Committee on Appropriations.

Yes: 5 • No: 3

House vote • 4/28/2025

Third reading: Bill

Yes: 39 • No: 25

House vote • 4/25/2025

Refer House Bill 25-1296 to the Committee of the Whole.

Yes: 6 • No: 5

House vote • 4/21/2025