(1) As used in this section, unless the context otherwise requires:
(a) Advanced industry investment tax credit or tax credit means the credit against income tax created in this section.
(b) Qualified investment shall have the same meaning as set forth in section 24-48.5-112 (1)(e), C.R.S.
(c) Qualified investor shall have the same meaning as set forth in section 24-48.5-112 (1)(f), C.R.S.
(d) Qualified small business shall have the same meaning as set forth in section 24-48.5-112 (1)(g), C.R.S.
(e) Tax credit certificate means a tax credit certificate issued to a qualified investor pursuant to section 24-48.5-112 (3), C.R.S.
(2) There shall be allowed an advanced industry investment tax credit against the income taxes imposed pursuant to this article for a qualified investment in a qualified small business. The amount of the credit is the amount determined and authorized by the Colorado office of economic development pursuant to section 24-48.5-112, C.R.S., and set forth in a tax credit certificate.
(3) To claim the advanced industry investment tax credit, the taxpayer shall attach to the taxpayer's tax return a copy of the tax credit certificate. No tax credit is allowed under this section unless the taxpayer provides the copy of the tax credit certificate.
(4) If the allowable advanced industry investment tax credit exceeds the amount of income tax due on the income of the taxpayer for the tax year during which the qualified investment was made, the amount of the tax credit not used as an offset against income taxes in such income tax year is not allowed as a refund. The taxpayer may carry forward and apply the unused credit against the income tax due in each of the five succeeding income tax years, but the taxpayer shall apply the credit against the income tax due for the earliest of the income tax years possible. Any amount of the tax credit that is not used after this period is not refundable.
(5) Repealed.
(6) If the department of revenue determines that there has been a misrepresentation on an application submitted to the Colorado office of economic development pursuant to section 24-48.5-112, C.R.S., the department of revenue shall deny the advanced industry investment tax credit if the misrepresentation relates to whether the applicant was a qualified investor or made a qualified investment. If the misrepresentation relates to whether the investment was made to a qualified small business, the department of revenue shall deny the tax credit only if the applicant knew or should have known at any time before the certification that the representation was false.
(7) If a qualified investor receiving a credit allowed in this section is a partnership or S corporation, the qualified investor may allocate the credit among its partners or shareholders in any manner agreed to by such partners or shareholders. If the qualified investor receiving the credit allowed by this section is a trust, the qualified investor may allocate the credit between the trust and its beneficiaries in any manner determined by the trust. The qualified investor shall certify to the Colorado office of economic development the amount of the credit allocated to each partner, shareholder, or beneficiary and the office shall issue credit certificates in the appropriate amounts to each partner, shareholder, or beneficiary. Each partner, shareholder, or beneficiary shall be allowed to claim such amount subject to any restrictions set forth in this section and section 24-48.5-112.
Source: L. 2009: Entire section added, (HB 09-1105), ch. 378, p. 2059, � 4, effective September 1. L. 2011: (4) amended, (HB 11-1045), ch. 209, p. 907, � 3, effective May 23. L. 2014: (1)(a), (2) to (4), and (6) amended, (HB 14-1012), ch. 274, p. 1102, � 3, effective May 29. L. 2022: (5) repealed and (7) added, (HB 22-1149), ch. 358, p. 2571, � 2, effective August 10. L. 2025: (7) amended, (HB 25-1157), ch. 213, p. 966, � 2, effective August 6.
Cross references: (1) For the legislative declaration in the 2011 act amending subsection (4), see section 1 of chapter 209, Session Laws of Colorado 2011.
(2) For the legislative declaration in HB 14-1012, see section 1 of chapter 274, Session Laws of Colorado 2014.
39-22-533. Instream flow incentive tax credit for water rights holders - rules - definitions - repeal. (Repealed)
Source: L. 2009: Entire section added and (6) amended, (HB 09-1067), ch. 426, pp. 2377, 2380, �� 1, 2, effective August 5.
Editor's note: Subsection (9) provided for the repeal of this section, effective December 31, 2024. (See L. 2009, pp. 2377, 2380.)
39-22-534. Credit for estate taxes paid - agricultural land - recapture - definitions. (Repealed)
Source: L. 2012: Entire section added, (HB 12-1042), ch. 193, p. 771, � 2, effective August 8. L. 2018: (4)(b) amended, (HB 18-1375), ch. 274, p. 1722, � 81, effective May 29. L. 2020: Entire section repealed, (HB 20-1176), ch. 89, p. 358, � 2, effective September 14.
39-22-535. Credit for purchase of uniquely valuable motor vehicle registration numbers - repeal. (1) For tax years commencing on or after January 1, 2013, and prior to January 1, 2025, a person who buys the right to use a registration number under section 8-88-206 is allowed a credit against the income taxes imposed by this article 22 for twenty percent of the purchase price of the right to use the registration number that is paid to the Colorado disability funding committee created in section 8-88-202.
(2) If the credit allowed by this section exceeds the tax otherwise due, the taxpayer may carry it forward for up to five years but shall claim it on the earliest possible subsequent tax return.
(3) This section is repealed, effective December 31, 2034.
Source: L. 2013: Entire section added, (SB 13-170), ch. 254, p. 1347, � 4, effective May 23. L. 2019: (1) amended, (SB 19-241), ch. 390, p. 3477, � 56, effective August 2. L. 2022: (1) amended, (SB 22-217), ch. 378, p. 2683, � 7, effective August 10. L. 2024: (1) amended, (HB 24-1360), ch. 324, p. 2167, � 10, effective July 1; (1) amended and (3) added, (HB 24-1036), ch. 373, p. 2528, � 14, effective August 7.
Editor's note: Amendments to subsection (1) by HB 24-1036 and HB 24-1360 were harmonized.
Cross references: For the legislative declaration in HB 24-1360, see section 1 of chapter 324, Session Laws of Colorado 2024. For the legislative declaration in HB 24-1036, see section 1 of chapter 373, Session Laws of Colorado 2024.
39-22-536. Credit for food contributed to hunger-relief charitable organizations - definitions - repeal. (Repealed)
Source: L. 2014: Entire section added, (HB 14-1119), ch. 286, p. 1173, � 2, effective May 30.
Editor's note: Subsection (5) provided for the repeal of this section, effective January 1, 2025. (See L. 2014, p. 1173.)
39-22-537. Credit for personal property taxes paid - legislative declaration - definitions - repeal. (Repealed)
Source: L. 2014: Entire section added, (HB 14-1279), ch. 340, p. 1513, � 1, effective August 6. L. 2017: IP(3)(a) and (6) amended, (SB 17-267), ch. 267, p. 1468, � 25, effective May 30. L. 2018: (2)(b) amended, (HB 18-1375), ch. 274, p. 1722, � 82, effective May 29.
Editor's note: Subsection (6) provided for the repeal of this section, effective July 1, 2021. (See L. 2017, p. 1468.)
39-22-537.5. Credit for personal property taxes paid - legislative declaration - definitions - repeal. (1) The general assembly declares that the purpose of the tax expenditure in this section is to minimize the negative impact of the business personal property tax on businesses.
(2) As used in this section, unless the context otherwise requires:
(a) Property tax means the ad valorem tax imposed pursuant to section 3 of article X of the state constitution but does not include public utilities assessed pursuant to section 39-4-102, and does not include the graduated annual specific ownership tax imposed pursuant to section 6 of article X of the state constitution.
(b) Taxpayer includes an organization exempt from federal taxation pursuant to section 501 (c) of the internal revenue code.
(3) (a) For income tax years commencing on or after January 1, 2019, but before January 1, 2026, a taxpayer is allowed a credit against the tax imposed by this article 22 equal to the property tax paid in Colorado during the income tax year on up to eighteen thousand dollars of the total actual value of the taxpayer's personal property.
(b) A taxpayer may not claim a tax credit under this section for the payment of delinquent property taxes that were owed for a prior property tax year.
(c) The amount of the credit under this section that exceeds the taxpayer's income taxes due is refunded to the taxpayer.
(4) To claim a credit under this section, a taxpayer must submit to the department of revenue a copy of a property tax statement described in section 39-10-103 for all of the taxpayer's personal property for the property tax year for which the credit is claimed.
(5) This section is repealed, effective December 31, 2036.
Source: L. 2017: Entire section added, (SB 17-267), ch. 267, p. 1469, � 26, effective May 30. L. 2025: (3)(a) amended and (5) added, (HB 25-1296), ch. 202, p. 914, � 10, effective May 16.
Cross references: For the legislative declaration in SB 17-267, see section 1 of chapter 267, Session Laws of Colorado 2017. For the legislative declaration in HB 25-1296, see section 1 of chapter 202, Session Laws of Colorado 2025.
39-22-538. Credit for health-care preceptors working in health professional shortage areas - legislative declaration - definitions. (1) (a) The general assembly finds, determines, and declares that:
(I) to (III) (Deleted by amendment, L. 2022.)
(IV) The COVID-19 pandemic and subsequent economic crisis have caused significant challenges for Colorado's health-care system and exacerbated the workforce shortage across multiple disciplines and sectors of the health-care industry;
(V) While the pandemic has had lasting impacts on the entire health-care system across the state, rural Colorado is experiencing the most severe workforce turnover and shortages, and as a result these communities experience reduced access to primary care services and exhibit poorer health outcomes;
(VI) Rural communities often face challenges in recruiting an adequate health workforce, making it difficult to provide needed patient care or to meet staffing requirements for their facilities. Therefore, rural health-care facilities should be proactive and strategic about recruiting and retaining primary care personnel, which includes professionals in physical, dental, behavioral, and mental health.
(VII) Most of Colorado's forty-seven rural and frontier counties are also designated as primary care health professional shortage areas by the Colorado primary care office;
(VIII) Preceptorship programs are a critical component of clinical training and a proven approach to developing one-on-one relationships between expert professionals and students needing to develop the clinical skills and practical experience of working with patients in rural settings;
(IX) Health professional students who obtain a significant amount of their clinical training in rural communities and under the guidance of rural health-care providers are much more likely to live and work in a rural or frontier area after completing their health professional training;
(X) Recent studies and surveys by the American academy of family physicians have shown that primary care physicians are more likely to engage in preceptorships when professional recognition and financial incentives are provided; and
(XI) The general assembly therefore finds that maintaining a highly qualified and sustainable rural health-care workforce depends on the extension and expansion of the rural and frontier health-care preceptor tax credit to provide sufficient financial incentives to preceptors statewide.
(b) and (c) (Deleted by amendment, L. 2022.)
(d) In accordance with section 39-21-304 (1), which requires each bill that extends an expiring tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly hereby finds and declares that:
(I) The general legislative purposes of the tax credit allowed by this section are:
(A) To induce certain designated behavior by taxpayers, specifically the offering of professional instruction, training, and supervision to students seeking careers as primary health-care providers in rural areas and frontier areas of the state; and
(B) To provide tax relief to preceptors in rural and frontier areas of the state who offer the professional instruction, training, and supervision described in subsection (1)(d)(I)(A) of this section; and
(II) The specific legislative purpose of the tax credit allowed by this section is to encourage preceptors to offer professional instruction, training, and supervision to students matriculating at Colorado institutions of higher education who are seeking careers as primary health-care providers in rural and frontier areas of the state. In order to allow the general assembly and the state auditor to measure the effectiveness of the credit, the department of revenue, when administering the credit, shall require each taxpayer who claims the credit to submit a certification form with each income tax return form in accordance with subsection (4) of this section. The certification form must verify that the taxpayer has satisfied the requirements for allowance of the tax credit as specified in this section and state the number of eligible health professional students that the taxpayer has instructed, trained, or supervised during the applicable income tax year.
(2) As used in this section, unless the context otherwise requires:
(a) AHEC or AHEC program means the area health education center.
(b) Frontier area means a county in the state that has a population density of six or fewer individuals per one square mile.
(c) Repealed.
(c.5) Health professional student means an individual matriculating at any accredited Colorado institution of higher education seeking a degree or certification in a primary health-care field.
(d) Preceptor means a medical doctor, doctor of osteopathic medicine, advanced practice nurse, physician assistant, doctor of dental surgery, doctor of dental medicine, registered nurse, registered dental hygienist, pharmacist, licensed clinical or counseling psychologist, licensed clinical social worker, licensed professional counselor, licensed marriage and family therapist, psychiatric nurse specialist, licensed addiction counselor, or certified addiction counselor working in an outpatient clinical setting who has been licensed in his or her primary health-care field in the state by the applicable licensing authority.
(e) Preceptorship means an uncompensated mentoring experience in which a preceptor provides a program of personalized instruction, training, and supervision for a total of not less than four consecutive or nonconsecutive working weeks or twenty consecutive or nonconsecutive business days per calendar year that is offered to eligible health professional students to enable the students to obtain eligible professional degrees or certifications.
(f) Primary health-care means the provision of integrated, equitable, and accessible health-care services provided by clinicians who are accountable for addressing a large majority of personal health-care needs, developing a sustained partnership with patients, and practicing in the context of family and community. Integrated health-care encompasses the provision of comprehensive, coordinated, and continuous services that provide a seamless process of care.
(g) Rural area means an area listed as eligible for rural health funding by the federal office of rural health policy.
(h) Taxpayer means a preceptor who files an income tax return under this article.
(3) (a) (I) For income tax years commencing on or after January 1, 2017, but prior to January 1, 2025, and subject to the requirements of subsection (3)(b)(I)(A) of this section, a taxpayer is allowed a credit against the income taxes imposed by this article 22 in an amount equal to one thousand dollars for a preceptorship provided by the taxpayer during the applicable income tax year for which the credit is claimed.
(II) For income tax years commencing on or after January 1, 2025, but prior to January 1, 2033, and subject to the requirements of subsection (3)(b)(I)(B) of this section, a taxpayer is allowed a credit against the income taxes imposed by this article 22 in an amount equal to two thousand dollars for each preceptorship provided by the taxpayer during the applicable income tax year for which the credit is claimed. A credit is allowed for a maximum of three preceptorships per applicable income tax year. The maximum total credit in a taxable year is six thousand dollars.
(b) Notwithstanding any other provision of this section:
(I) (A) For income tax years commencing before January 1, 2025, the aggregate amount of the credit awarded to any one taxpayer under this section shall not exceed one thousand dollars for any one income tax year regardless of the number of preceptorships undertaken by the taxpayer during the applicable income tax year or the number of eligible health professional students the taxpayer instructs, trains, or supervises during the applicable income tax year.
(B) For income tax years commencing on or after January 1, 2025, but prior to January 1, 2033, the aggregate amount of the credit awarded to any one taxpayer under this section shall not exceed six thousand dollars for any one income tax year regardless of the number of preceptorships undertaken by the taxpayer during the applicable income tax year or the number of eligible health professional students the taxpayer instructs, trains, or supervises during the applicable income tax year.
(II) A taxpayer is eligible to claim the credit allowed by this section if the taxpayer performs a preceptorship that lasts a total of not less than four consecutive or nonconsecutive working weeks or twenty consecutive or nonconsecutive business days during the income tax year in which the credit is claimed and the preceptor is practicing in the preceptor's primary health-care field in a rural or frontier area; and
(III) Not more than three hundred preceptors are entitled to claim the credit authorized by this section for any one income tax year. The department shall promulgate by rule, in accordance with article 4 of title 24, a method for determining the manner in which taxpayers who have obtained certification under subsection (4) of this section are able to claim the tax credit.
(4) To qualify for the credit provided by this section, the taxpayer shall submit a certification form with each income tax return. Certification may be provided by either the institution for which the taxpayer teaches, whether it is an institution of higher education or a hospital, clinic, or other medical facility, or by the particular regional office of the AHEC program with jurisdiction over the area in which the preceptor's medical practice is located. In the case of certification by an institution for which the taxpayer teaches, the institution must execute the form certifying that the taxpayer has satisfied the requirements for allowance of the tax credit as specified in this section and identifying the number of eligible health professional students that the taxpayer has instructed, trained, or supervised during the applicable income tax year through all preceptorships provided by the taxpayer. In the case of certification by the AHEC program, the certification form must be obtained from the particular regional office of the AHEC program with jurisdiction over the area in which the preceptor is practicing, which office shall certify that the taxpayer has satisfied the requirements for allowance of the tax credit as specified in this section and identify the number of eligible health professional students the taxpayer has instructed, trained, or supervised during the applicable income tax year through all preceptorships provided by the taxpayer. The AHEC program may charge the taxpayer a reasonable fee for providing such certification, which fee shall not exceed the actual costs incurred by the AHEC in completing the certification.
(5) Where a taxpayer claims the credit provided by this section but fails to satisfy the requirements of this section during the income tax year for which the credit is claimed, the taxpayer shall repay the entire amount of the total credit that is attributed to him or her pursuant to this section. The taxpayer shall report the recapture required by this subsection (5) by increasing his or her income tax liability by the amount of the total credit claimed for the year in which the recapture occurs.
(6) If the amount of the credit allowed pursuant to this section exceeds the amount of the income tax otherwise due on the taxpayer's income in the income tax year for which the credit is being claimed, the amount of the credit not used as an offset against income taxes in the income tax year is not allowed as a refund but may be carried forward and applied against the income tax due in each of the five succeeding income tax years, but must first be applied against the income tax due for the earliest of the income tax years possible.
(7) Nothing in this section modifies or changes the definition of public employee specified in section 24-10-103 (4)(b)(II) and (4)(b)(V), C.R.S.
(8) Repealed.
Source: L. 2016: Entire section added, (HB 16-1142), ch. 229, p. 891, � 1, effective August 10. L. 2017: (2)(e) amended, (SB 17-294), ch. 264, p. 1418, � 119, effective May 25. L. 2019: (2)(e), (3)(a), and (3)(b)(II) amended and (8) repealed, (HB 19-1088), ch. 363, p. 3355, � 1, effective August 2. L. 2022: (1), (2)(d), (2)(e), (2)(f), (2)(g), (3), and (4) amended, (2)(c) repealed, and (2)(c.5) added, (HB 22-1005), ch. 299, p. 2137, � 1, effective August 10. L. 2024: (3)(a) and (3)(b)(I) amended, (HB 24-1036), ch. 373, p. 2534, � 31, effective August 7.
Cross references: For the legislative declaration in HB 24-1036, see section 1 of chapter 373, Session Laws of Colorado 2024.
39-22-539. Credit for employer contributions to employee 529 qualified state tuition programs - legislative declaration - definitions - repeal. (1) The general assembly hereby finds and declares that the qualified state tuition savings program administered by collegeinvest helps empower families to save for higher education and enables residents to further educational opportunities and pursue professional goals. The purpose of this section is to provide an incentive for employers to help their employees enhance education savings goals by contributing directly to the employees' qualified state tuition program accounts administered by collegeinvest.
(2) As used in this section:
(a) 529 qualified state tuition program account means a qualified state tuition program account established by collegeinvest created in section 23-3.1-203.
(b) Employee means any person in the employment of an employer for a salary or for hourly wages, whether full-time or part-time and whether temporary or permanent.
(c) Employer means any person doing business in the state.
(3) For income tax years commencing on or after January 1, 2019, but prior to January 1, 2032, if an employer makes a contribution of money to a 529 qualified state tuition program account owned by an employee during the income tax year, without regard to the named beneficiary of the account, then the employer is allowed a credit against the income taxes imposed by this article 22 in an amount equal to twenty percent of the contribution. The maximum total credit an employer may claim under this section for each employee in a taxable year is five hundred dollars.
(4) If the amount of the credit allowed in this section exceeds the amount of income taxes otherwise due on the employer's income in the income tax year for which the credit is being claimed, the amount of the credit not used as an offset against income taxes in the current income tax year may be carried forward and used as a credit against subsequent years' income tax liability for a period not to exceed three years and must be applied first to the earliest income tax years possible. Any credit remaining after the period may not be refunded or credited to the employer.
(5) No later than January 1, 2019, and quarterly thereafter, collegeinvest shall provide the department with an electronic report containing information for 529 qualified state tuition program account holders, beneficiaries, and donors that the department determines is necessary for the administration of the credit allowed in this section. The report must include, but is not limited to:
(a) The name and social security number of the account holder of each 529 qualified state tuition program account;
(b) The name, date of birth, and social security number of the beneficiary of each 529 qualified state tuition program account; and
(c) Contribution data that contains the:
(I) Amount of each contribution;
(II) Date of each contribution; and
(III) Source of each contribution, including the social security number or federal employee identification number of the contributor.
(6) The department of revenue may seek, accept, and expend gifts, grants, or donations from private or public sources for the department's costs in administering the income tax credit allowed in this section. The department may expend money received through gifts, grants, or donations consistent with any terms and conditions imposed as a condition of receiving such money for administering the income tax credit allowed in this section within existing appropriations; except that, notwithstanding part 13 of article 75 of title 24, the general assembly may appropriate state funds to the department in the future to administer the income tax credit allowed in this section.
(7) This section is repealed, effective December 31, 2036.
Source: L. 2018: Entire section added, (HB 18-1217), ch. 287, p. 1777, � 2, effective August 8. L. 2020: (3) and (7) amended, (HB 20-1109), ch. 182, p. 837, � 2, effective September 14.
Cross references: (1) For the short title (Working Families College Savings Act) in HB 18-1217, see section 1 of chapter 287, Session Laws of Colorado 2018.
(2) For the legislative declaration in HB 20-1109, see section 1 of chapter 182, Session Laws of Colorado 2020.
39-22-540. Credit - organ donor - leave of absence period - legislative declaration - definitions. (1) (a) The general assembly hereby finds and declares that:
(I) Nearly two thousand four hundred Coloradans are currently on the waiting list for lifesaving organ transplants, and ninety-six percent of those people could receive an organ, such as a kidney or liver, from a living donor;
(II) Last year, two hundred fifty-eight Coloradans died or became too sick to remain on the waiting list, which is thirty-eight percent more than all the homicides in the state;
(III) These lives would be saved if more people became living donors;
(IV) If just one out of one thousand one hundred adults in the state became living donors, the waiting list for kidney and liver transplants in the state would be eradicated; and
(V) The ability to get paid time off work is an enormous barrier for living organ donors, and the loss of income and fear of losing their job has deterred many would-be donors.
(b) Now, therefore, the general assembly declares that the intended purpose of the tax credit in this section is to support living donors and the companies that employ them.
(2) As used in this section:
(a) Employee has the same meaning as set forth in section 39-22-604 (2)(a).
(b) Leave of absence period means the period, not exceeding ten working days or the hourly equivalent of ten working days per employee, during which a taxpayer provides a paid leave of absence to an employee for the purpose of organ donation. The term does not include a period during which an employee utilizes any annual leave or sick days that the employee has been given by the employer.
(c) Taxpayer means an employer that deducts and withholds amounts from the wages paid to a qualified employee pursuant to section 39-22-604 (3).
(d) Wages has the same meaning as set forth in section 3401 (a) of the internal revenue code.
(3) Except as set forth in subsection (4) of this section, for any income tax year commencing on or after January 1, 2020, but before January 1, 2025, a taxpayer is allowed a credit against the tax imposed by this article 22 that is an amount equal to thirty-five percent of the taxpayer's expenses incurred:
(a) Paying an employee during his or her leave of absence period; and
(b) For the cost of temporary replacement help, if any, during an employee's leave of absence period.
(4) A taxpayer shall not claim a tax credit under this section related to a leave of absence period for an employee who the taxpayer pays wages of eighty thousand dollars or more during the income tax year.
(5) If the amount of a credit under this section exceeds a taxpayer's actual tax liability for an income tax year, the amount of the credit not used to offset income tax liability for the income tax year is not refunded to the taxpayer. The taxpayer may carry forward and apply the unused credit against the income tax due in each of the five succeeding income tax years, but the taxpayer shall apply the credit against the income tax due for the earliest of the income tax years possible. Any amount of the tax credit that is not used after this period is not refundable.
(6) Upon request of the department of revenue as part of an audit, a taxpayer must provide the department with documentation from the employee's medical provider, which the taxpayer received from the employee, that verifies the employee's organ donation. If the taxpayer cannot provide the documentation, then the taxpayer is ineligible for the credit under this section.
Source: L. 2018: Entire section added, (HB 18-1202), ch. 310, p. 1869, � 2, effective August 8.
Cross references: For the short title (Living Organ Donor Support Act) in HB 18-1202, see section 1 of chapter 310, Session Laws of Colorado 2018.
39-22-541. Credit for retrofitting a residence to increase a residence's visitability - tax preference performance statement - legislative declaration - definitions - repeal. (1) In accordance with section 39-21-304 (1), which requires any bill that creates a new tax expenditure or extends an expiring tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that:
(a) The general legislative purpose of the tax credit allowed by this section is to provide tax relief for certain individuals;
(b) The specific legislative purpose of the tax credit allowed by this section is to make retrofitting a residence for health, welfare, and safety reasons more affordable; and
(c) The credit certificates required from the division of housing pursuant to subsection (3)(b)(I) of this section will allow the general assembly and the state auditor to measure the effectiveness of the credit in achieving its purpose based on the number and amount of credits that are claimed.
(2) As used in this section:
(a) Dependent means:
(I) A qualifying child or qualifying relative as defined in sections 152 (c) and 152 (d), respectively, of the internal revenue code; and
(II) A qualified individual's spouse or the person in a civil union with the qualified individual.
(b) Division of housing means the division of housing in the department of local affairs created in section 24-32-704.
(c) Qualified individual means an individual with a family income at or below one hundred fifty thousand dollars for the income tax year commencing on or after January 1, 2019, and as adjusted for inflation for each income tax year thereafter.
(d) Retrofit means changes made to a residence that must:
(I) Be necessary to ensure the health, welfare, and safety of a qualified individual or a dependent;
(II) Increase the residence's visitability;
(III) Enable greater accessibility and independence in the residence for a qualified individual or a dependent;
(IV) Be required due to a qualified individual's or dependent's illness, impairment, or disability; and
(V) Allow a qualified individual or dependent to age in place.
(e) Visitability means a measure of a residence's ease of access for persons with disabilities.
(3) (a) (I) Except as provided in subsection (3)(b)(III) of this section, for income tax years commencing on or after January 1, 2019, but prior to January 1, 2029, a qualified individual who retrofits or hires someone to retrofit the qualified individual's residence and who meets any additional requirements established by the division of housing is allowed a credit against the income taxes imposed by this article 22 in an amount equal to the cost of the retrofit or five thousand dollars per residence, whichever is less. Only one credit is allowed per residence; except that, if a retrofit is required for the qualified individual and for one or more dependents residing in the qualified individual's residence or a retrofit is required for more than one dependent residing in the qualified individual's residence, then a credit is allowed in an amount equal to the cost of the retrofit or five thousand dollars per individual for whom the retrofit is required, whichever is less.
(II) The division of housing shall consult with stakeholders in establishing any additional requirements for the income tax credit as required in subsection (3)(a)(I) of this section.
(b) (I) The division of housing is responsible for issuing credit certificates to qualified individuals. The credit certificate must identify the taxpayer and certify that the individual meets the requirements set forth in this section.
(II) To claim the credit under this section, the qualified individual must include the credit certificate with the income tax return filed with the department of revenue.
(III) The division of housing shall track all the credit certificates issued under this section in each income tax year and, when the total amount of credit certificates issued equals one million dollars per income tax year, shall cease issuing credit certificates in that income tax year. Until the one million dollar per income tax year cap is reached, the credit certificates shall be issued in the order in which they are requested.
(4) If the amount of the credit allowed in this section exceeds the amount of income taxes otherwise due on the qualified individual's income in the income tax year for which the credit is being claimed, the amount of the credit not used as an offset against income taxes in the current income tax year may be carried forward and used as a credit against subsequent years' income tax liability for a period not to exceed eight years and must be applied first to the earliest income tax years possible. Any credit remaining after the period may not be refunded or credited to the qualified individual.
(5) No later than January 1, 2020, and no later than January 1 of each year thereafter through January 1, 2029, the division of housing shall provide the department of revenue with an electronic report of the taxpayers receiving a credit certificate as allowed in this section for the previous calendar year that includes the following information:
(a) Each taxpayer's name;
(b) Each taxpayer's social security number or federal employee identification number; and
(c) The amount of the credit allocated.
(6) This section is repealed, effective December 31, 2041.
Source: L. 2018: Entire section added, (HB 18-1267), ch. 345, p. 2061, � 1, effective August 8. L. 2019: (2)(a), (2)(d), (3)(a)(I), (3)(b)(II), and (4) amended, (HB 19-1135), ch. 107, p. 381, � 1, effective August 2. L. 2023: (1), (3)(a)(I), (4), IP(5), and (6) amended, (SB 23-196), ch. 280, p. 1657, � 1, effective August 7.
39-22-542. Employee ownership tax credit - definitions - legislative declaration - repeal. (1) Legislative declaration. (a) The general assembly hereby finds and declares that:
(I) The purpose of this section is to provide an incentive for businesses to establish employee stock ownership plans or employee ownership trusts or to convert to a worker-owned cooperative, and to provide an incentive to entities that support businesses in such establishment or conversion;
(II) An employee stock ownership plan allows companies to share ownership with employees without requiring employees to invest their own money;
(III) This section encourages business owners to sell their businesses to the very employees that contributed to their success; and
(IV) This section will help to ensure that local businesses are not sold to out-of-state buyers, which is often detrimental to the fabric of local communities.
(b) It is the general assembly's intent that the Colorado office of economic development provide relevant and ascertainable metrics and collect any necessary data to allow the state auditor to measure the effectiveness of the tax credit in this section in achieving the purpose set forth in subsection (1)(a) of this section.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) (I) Alternate equity structure means a mechanism under which an employer grants to employees a form of employee ownership, including but not limited to an employee stock purchase plan, LLC membership, phantom stock, profit interest, restricted stock, stock appreciation right, stock option, or synthetic equity. An alternate equity structure must at a minimum:
(A) Grant rights to or be offered to at least twenty percent of an employer's eligible workers, or grant rights to or be offered to at least twenty percent of eligible workers of an employer that is owned by or operated for the benefit of eligible workers in a broad-based employee ownership transition. For purposes of this subsection (2)(a)(I), eligible workers means all full-time employees, regular employees, non-seasonal employees, non-managerial employees, and contract labor.
(B) Have the participation of at least twenty percent of an employer's eligible workers;
(C) Allocate at least twenty percent of the fully diluted securities or rights to a synthetic interest in securities to participating eligible workers, or allocate twenty percent of net profit from operations to participating eligible workers; and
(D) Grant to participating eligible workers informational rights, decision-making rights, and non-financial rights that are equal to or greater than the rights that are granted to holders of the employer's common stock or holders of the employer's residual membership interest.
(II) The office shall develop guidelines that clarify the types of employee ownership grants that qualify as an alternate equity structure. The office may develop guidelines that adjust the percentages set forth in subsection (2)(a)(I) of this section; except that the percentages shall not be adjusted to an amount less than twenty percent. The office may periodically update any guidelines issued pursuant to this subsection (2)(a)(II).
(b) Colorado office of economic development or office means the Colorado office of economic development created in section 24-48.5-101.
(c) Conversion costs means professional services, including accounting, legal, and business advisory services, as detailed in the guidelines issued by the office, for the transition of a business to employee ownership trust, an employee stock ownership plan, or a worker-owned cooperative. Conversion costs include costs to audit the cost certification as required in subsection (7)(b) of this section.
(c.5) Corporate headquarters means the sole location within a regional or national area where the majority of the taxpayer's or qualified support entity's staff members or employees are domiciled and employed and where the majority of the taxpayer's or qualified support entity's financial, personnel, legal, planning, or other business functions are conducted on a regional or national basis.
(d) Department means the Colorado department of revenue.
(e) Employee ownership trust means an indirect form of employee ownership in which a trust holds at least twenty percent of the fully diluted securities in a qualified business and benefits all employees on an equal basis.
(f) Employee stock ownership plan has the same meaning as set forth in section 4975 (e)(7) of the internal revenue code, as amended.
(g) Expansion costs means professional services, including accounting, legal, and business advisory services, as detailed in the guidelines issued by the office, for the expansion of a qualified employee-owned business's employee ownership trust, employee stock ownership plan, worker-owned cooperative, or alternate equity structure. Expansion costs include costs to audit the cost certification as required in subsection (7)(b) of this section.
(h) Owner means the owner of a qualified business before a conversion occurs.
(i) Qualified business means a taxpayer subject to tax under this article 22, including but not limited to a C corporation, S corporation, limited liability company, partnership, limited liability partnership, a sole proprietorship, or other similar pass-through entity, that is not owned in whole or in part by an employee ownership trust, that does not have an employee stock ownership plan, that is not, in whole or in part, a worker-owned cooperative, or does not have an alternate equity structure, and that is approved by the office for the tax incentives in this section.
(j) Qualified employee-owned business means a taxpayer that is subject to tax under this article 22, including but not limited to a C corporation, S corporation, limited liability company, partnership, limited liability partnership, sole proprietorship, or other similar pass-through entity, that:
(I) Repealed.
(II) Has its corporate headquarters located in this state;
(III) (A) Is owned in whole or in part by an employee ownership trust;
(B) Has an employee stock ownership plan;
(C) Is in whole or in part a worker-owned cooperative; or
(D) Has an alternate equity structure; and
(IV) Is approved by the office for the tax incentives in this section.
(j.5) Qualified support entity means an organization exempt from taxation under section 501 (c)(3) of the internal revenue code or a taxpayer subject to tax under this article 22, including a C corporation, S corporation, limited liability company, partnership, limited liability partnership, sole proprietorship, or other similar pass-through entity that:
(I) Has been in existence for not less than twelve months prior to January 1 of the income tax year for which the qualified support entity claims the credit;
(II) Either has provided services that have supported at least one successful conversion to or expansion of a qualified employee-owned business in the income tax year or has provided services that have supported at least three either qualified businesses that have the intent of converting to qualified employee-owned businesses or qualified employee-owned businesses that have the intent of expanding;
(III) Has its corporate headquarters located in this state; and
(IV) Is approved by the office for the tax incentives in this section.
(k) Securities has the same meaning as the term security set forth in 15 U.S.C. sec. 77b (a)(1).
(k.5) (I) Support costs means, subject to guidelines developed by the office pursuant to subsection (5)(a) of this section, costs that are or are related to:
(A) Staff salaries and benefits for staff involved in business development, marketing, and outreach;
(B) Marketing and outreach for producing educational materials or hosting workshops or conferences on converting a business to employee-ownership and similar costs; and
(C) A proportional amount of basic organizational overhead costs including general or administrative costs, expenses, rent, and facilities costs.
(II) Support costs does not include any costs that are conversion or expansion costs.
(l) Worker-owned cooperative has the same meaning as set forth in section 1042 (c)(2) of the internal revenue code, as amended.
(3) (a) Except as otherwise provided in subsection (3)(a.3) of this section and subject to certification by the office pursuant to this section, for income tax years commencing on or after January 1, 2022, but before January 1, 2032, a qualified business is allowed a credit with respect to the income taxes imposed pursuant to this article 22 as follows:
(I) Up to fifty percent of the conversion costs, not to exceed forty thousand dollars, incurred by a qualified business for converting the qualified business to a worker-owned cooperative or an employee ownership trust;
(II) Up to fifty percent of the conversion costs, not to exceed one hundred fifty thousand dollars, incurred by a qualified business for converting the qualified business to an employee stock ownership plan; or
(III) Up to fifty percent of the conversion costs, not to exceed twenty-five thousand dollars, incurred by a qualified business for converting the qualified business to an alternate equity structure.
(a.3) For income tax years commencing on or after January 1, 2026, but before January 1, 2032, the allowable percentage of conversion costs incurred by a qualified business for the applicable conversion of the qualified business set forth in subsections (3)(a)(I), (3)(a)(II), and (3)(a)(III) of this section for purposes of calculating the credit is up to seventy-five percent of the conversion costs.
(a.5) (I) Except as otherwise provided in subsection (3)(a.5)(III) of this section and subject to certification by the office pursuant to this section, for income tax years commencing on or after January 1, 2024, but before January 1, 2032, a qualified employee-owned business is allowed a credit with respect to the income taxes imposed pursuant to this article 22 of up to fifty percent of the expansion costs, not to exceed twenty-five thousand dollars, incurred to expand a qualified employee-owned business's employee ownership trust, employee stock ownership plan, worker-owned cooperative, or alternate equity structure.
(II) To be eligible for the credit allowed pursuant to this subsection (3), a qualified employee-owned business must expand its employee ownership trust, employee stock ownership plan, worker-owned cooperative, or alternate equity structure by an increment of at least twenty percent of the total ownership of the entire qualified employee-owned business.
(III) For income tax years commencing on or after January 1, 2026, but before January 1, 2032, the allowable percentage of expansion costs incurred by a qualified employee-owned business to expand a qualified employee-owned business as set forth in subsection (3)(a.5)(I) of this section for purposes of calculating the credit is up to seventy-five percent of the expansion costs.
(a.7) Subject to certification by the office pursuant to this section, for income tax years commencing on or after January 1, 2027, but prior to January 1, 2032, a qualified support entity is allowed a credit with respect to the income taxes imposed pursuant to this article 22 of up to seventy-five percent of the support costs, but not to exceed one hundred sixty-seven thousand dollars, incurred in providing services that support the conversion of qualified businesses to qualified employee-owned businesses or the expansion of qualified employee-owned businesses.
(b) (I) In the case of a qualified business or qualified employee-owned business that is a C corporation, the credit is allowed to the qualified business or the qualified employee-owned business.
(II) In the case of a qualified business or qualified employee-owned business that is a partnership or an S corporation, the credit is allowed to the owner of the business.
(III) In the case of a qualified support entity, the credit is allowed to the qualified support entity.
(c) The maximum amount of all tax credit certificates that the office may reserve under subsection (6)(a) of this section is:
(I) Ten million dollars for any income tax year commencing on or after January 1, 2022, but before January 1, 2026; and
(II) Two million dollars for any income tax year commencing on or after January 1, 2026, but before January 1, 2032.
(d) (I) A qualified business or qualified employee-owned business may apply for and claim only one tax credit for the conversion or expansion costs incurred per tax year.
(II) A qualified support entity may apply for and claim only one tax credit per tax year.
(4) (a) A business or, where applicable, a nonprofit organization shall submit an application to the office for the issuance of a credit certificate for the credit allowed in this section by the deadlines established in the office's guidelines. Except as otherwise provided in subsection (4)(b) of this section, the application must include information, as set forth in the office's guidelines, regarding the type of conversion or expansion the business intends to undertake, a list of the expected conversion or expansion costs, and an estimated amount, as calculated by the business, of the expected conversion or expansion costs.
(b) An application for a business or a nonprofit organization submitting the application to be approved as a qualified support entity must include information, as set forth in the office's guidelines, regarding the support services the business or the nonprofit organization provides to qualified businesses or qualified employee-owned businesses, whether the business or the nonprofit organization supported a successful conversion of a qualified business to a qualified employee-owned business or expansion of a qualified employee-owned business in the taxable year, if the business or the nonprofit organization has not supported a successful conversion or expansion, the number of qualified businesses or qualified employee-owned businesses the business or the nonprofit organization is supporting that intend to convert or expand, as applicable, and the status of the anticipated conversions or expansions, and information regarding support costs incurred in the income tax year.
(5) (a) The office shall develop guidelines for the administration of this section, including, but not limited to:
(I) Application requirements, including a list of the data the office needs to meet the requirements in subsections (11) and (12) of this section;
(II) Guidelines regarding the issuing of credit certificates;
(III) Detailed guidelines regarding conversion costs;
(IV) Guidelines and standards for certifying a business as a qualified business;
(V) Detailed guidelines regarding expansion costs;
(VI) Guidelines and standards for certifying a business as a qualified employee-owned business; and
(VII) Guidelines and standards for certifying a business or a nonprofit organization as a qualified support entity.
(b) Before the office begins to provide reservations of tax credits under subsection (6) of this section, the office shall provide the finance committees of the house of representatives and the senate, or any successor committees, with a written report setting forth the clear, relevant, and ascertainable metrics and data requirements that the office will track under subsection (12) of this section in order to allow the general assembly and the state auditor to measure the effectiveness of the tax expenditure allowed in this section in achieving the purpose set forth in subsection (1)(a) of this section.
(6) (a) (I) After the office provides the written report required in subsection (5)(b) of this section, a reservation of tax credits is permitted for the tax credit allowed in this section. If the office determines that the application filed under subsection (4) of this section is complete, the office shall determine whether the business or, if applicable, the nonprofit organization is a qualified business, a qualified employee-owned business, or a qualified support entity, review the list of the expected conversion or expansion costs, and review the estimated conversion, expansion, or support costs as calculated by the business or, if applicable, the qualified support entity. If the office approves the business or, if applicable, the nonprofit organization as a qualified business, a qualified employee-owned business, or a qualified support entity, the list of expected conversion or expansion costs, and the estimated conversion, expansion, or support costs, the office may reserve for the benefit of the qualified business, the qualified employee-owned business, the owner of the business, or the qualified support entity an allocation of a tax credit subject to the limitation specified in subsection (3)(c) of this section. The office shall notify the qualified business, the qualified employee-owned business, or the qualified support entity in writing of the amount of the reservation. The reservation of a tax credit does not entitle the qualified business, the qualified employee-owned business, the owner of the business, or the qualified support entity to an issuance of a tax credit certificate until the qualified business, the qualified employee-owned business, or the qualified support entity complies with all of the other requirements specified in this section for the issuance of the tax credit certificate.
(II) A business may apply for a staged conversion or staged expansion. If the office receives an application for a staged conversion or staged expansion, and the office determines the requirements set forth in subsection (6)(a)(I) of this section have been met, the office shall reserve tax credits for all stages of the qualified business's conversion or the qualified employee-owned business's expansion in the year the application is filed. The office may certify the staged conversion costs or staged expansion costs and issue tax credit certificates under subsection (7)(b)(II) of this section when the costs are incurred.
(b) (I) The office must reserve tax credits in the order in which it receives completed applications that comply with the requirements of this section and the guidelines developed by the office. The office shall provide written notice of any reservation of tax credits authorized by this subsection (6) or disapprove the application within a reasonable time, not to exceed ninety days after the filing of a completed application.
(II) The office shall stamp each completed application with the date and time the application was received and shall review the application on the basis of the order in which it was submitted by date and time.
(III) Any application disapproved by the office will be removed from the review process, and the office shall notify the business in writing of the decision to remove its application from the review process. Disapproved applications lose their priority in the review process. A business may resubmit a disapproved application, but such resubmitted application is deemed to be a new submission for purposes of the priority procedures described in this subsection (6)(b).
(c) If, for any calendar year, the total amount of reservations for tax credits the office has approved is equal to the total amount of tax credits available for reservation during that calendar year, the office shall notify all businesses who have submitted applications then awaiting approval that no additional approvals of applications for reservations of tax credits will be granted during that calendar year. The office shall additionally notify each business of the priority number given to the business's application then awaiting approval. The applications will remain in priority status for two years from the date of the original application and will be considered for reservations of tax credits in the priority order established in this subsection (6) in the event that additional credits become available resulting from the rescission of approvals under subsection (7)(a) of this section or because a new allocation of tax credits for a calendar year becomes available.
(7) (a) Any qualified business or qualified employee-owned business with respect to which the office has made a reservation of tax credits under subsection (6) of this section shall incur not less than twenty percent of the estimated conversion or expansion costs not later than eighteen months after the date of the written notice from the office to the qualified business or qualified employee-owned business granting the reservation of tax credits. The qualified business or qualified employee-owned business shall submit evidence of compliance with the provisions of this subsection (7)(a). If the office determines that a qualified business or qualified employee-owned business has failed to comply with the requirements of this subsection (7)(a), the office may rescind the written notice it previously gave the business or the owner approving the reservation of tax credits and, if so, the total amount of tax credits made available for the calendar year for which reservations may be granted must be increased by the amount of the tax credits rescinded. The office shall promptly notify any qualified business, any qualified employee-owned business, or the owner of the business whose reservation of tax credits has been rescinded and, upon receipt of the notice, the qualified business or qualified employee-owned business may submit a new application.
(b) (I) Following the completion of the conversion or expansion, the qualified business or the qualified employee-owned business shall notify the office that the conversion or expansion has been completed and shall provide the office with a cost certification of the estimated conversion or expansion costs. The cost certification must be audited by a licensed certified public accountant that is not affiliated with the qualified business or the qualified employee-owned business. The office shall review the cost certification, and within ninety days after receipt of the cost certification, the office shall certify the conversion or expansion costs and issue a tax credit certificate in the amounts allowed in subsection (3) of this section. The office shall promptly notify the qualified business or the qualified employee-owned business of any disallowed conversion or expansion costs.
(II) If a conversion or expansion is a staged conversion or staged expansion as set forth in subsection (6)(a)(II) of this section, and the qualified business or the qualified employee-owned business meets the requirements in this subsection (7), the office shall issue pro rata tax credit certificates to the qualified business, qualified employee-owned business, or owner of the business based on the percent of the conversion or expansion completed during each tax year.
(c) Notwithstanding subsection (7)(b) of this section, the total amount of the tax credit certificate issued to a qualified business, a qualified employee-owned business, or the owner of the business shall not exceed the amount of the tax credit reservation under subsection (6)(a) of this section.
(d) If the amount of certified costs incurred by the qualified business or the qualified employee-owned business would result in the qualified business, qualified employee-owned business, or owner of the business being issued an amount of tax credits that exceeds the amount of tax credits reserved for the business under subsection (6)(a) of this section, the qualified business or the qualified employee-owned business may apply to the office for the issuance of an amount of tax credits that equals the excess. The qualified business or the qualified employee-owned business must submit its application for issuance of such excess tax credits on a form prescribed by the office. Unless the office is concerned that the application it received under this subsection (7)(d) is fraudulent, the office shall automatically approve the application, which it shall issue by means of a separate certificate, subject only to the availability of tax credits and the provisions concerning priority provided in subsection (6)(a) of this section.
(8) If the credit allowed under this section exceeds the income taxes due on the income of the qualified business, qualified employee-owned business, owner of the business, or qualified support entity, the amount of the credit not used to offset income taxes must be refunded to the qualified business, qualified employee-owned business, owner of the business, or qualified support entity.
(9) Any tax credits issued under this section to a partnership or an S corporation must be passed through to the partners, members, or owners, including any nonprofit entity that is a partner, member, or owner, respectively, on a pro rata basis according to their ownership percentage.
(10) (a) To claim the income tax credit allowed in this section, the qualified business, qualified employee-owned business, owner of the business, or qualified support entity shall attach a copy of the credit certificate to its state income tax return. No tax credit is allowed under this section unless the qualified business, qualified employee-owned business, owner of the business, or qualified support entity provides the copy of the credit certificate with its filed state income tax return. The amount of the credit that the qualified business, the qualified employee-owned business, or the qualified support entity may claim under this section is the amount stated on the tax credit certificate.
(b) A qualified support entity that is an organization exempt from taxation under section 501 (c)(3) of the internal revenue code and that claims the credit allowed by this section shall file a return pursuant to section 39-22-601 (7)(b) and attach a copy of the credit certificate in accordance with subsection (10)(a) of this section.
(11) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report of each qualified business, qualified employee-owned business, owner of a business, and qualified support entity that the office approved for the income tax credit allowed in this section for the preceding calendar year that includes the following information:
(a) The taxpayer's name; and
(b) The taxpayer's social security number or the taxpayer's Colorado account number and federal employer identification number.
(12) The office shall maintain a database of any information necessary to evaluate the effectiveness of the tax credit allowed in this section in meeting the purposes set forth in subsection (1)(a) of this section, and shall provide such information, and any other information that may be needed, to the state auditor as part of the state auditor's evaluation of tax expenditures under section 39-21-305.
(13) The office shall conduct statewide outreach efforts, within existing resources, to minority owned businesses, as defined in section 24-48.5-127 (2)(g), about the availability of the tax credit allowed in this section.
(14) This section is repealed, effective December 31, 2037.
Source: L. 2021: Entire section added, (HB 21-1311), ch. 298, p. 1780, � 9, effective June 23. L. 2023: (2), (3)(a), (3)(b), (4), (5)(a)(III), (6)(a), (7), (8), (10), and IP(11) amended and (3)(a.5), (3)(d), (5)(a)(V), and (5)(a)(VI) added, (HB 23-1081), ch. 244, p. 1309, � 1, effective August 7. L. 2025: (1)(a)(I), (1)(a)(III), (2)(a)(II), (2)(e), (2)(j)(II), (2)(j)(III), IP(3)(a), (3)(a.5)(I), (3)(c), (3)(d), (4), (5)(a)(V), (5)(a)(VI), (6)(a)(I), (8), (10), IP(11), and (14) amended, (2)(c.5), (2)(j.5), (2)(k.5), (3)(a.3), (3)(a.5)(III), (3)(a.7), (3)(b)(III), (5)(a)(VII) added, and (2)(j)(I) repealed, (HB 25-1021), ch. 311, p. 1621, � 3, effective August 6.
Cross references: For the legislative declaration in HB 21-1311, see section 1 of chapter 298, Session Laws of Colorado 2021.
39-22-542.5. Tax credit for new employee-owned businesses - employee ownership cash fund - tax preference performance statement - legislative declaration - definitions - repeal. (1) Tax preference performance statement. (a) In accordance with section 39-21-304, which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purposes of the tax credit created in this section are to induce certain designated behavior by taxpayers, to create or retain jobs, and to provide income tax relief for certain businesses or individuals. Specifically, the tax credit facilitates employee ownership and the retention of community investment and wealth by business owners and employees in a community.
(b) The general assembly and the state auditor shall measure the effectiveness of the tax credit in achieving the purposes specified in subsection (1)(a) of this section based on the information required to be maintained by and reported to the state auditor by the employee ownership office pursuant to subsection (7)(b) of this section.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) Alternate equity structure means a mechanism under which an employer grants to employees a form of employee ownership, including but not limited to an employee stock purchase plan, LLC membership, phantom stock, profit interest, restricted stock, stock appreciation right, stock option, or synthetic equity. The office may develop guidelines that clarify the types of employee ownership grants that qualify as an alternate equity structure. The office may develop guidelines that adjust the percentages set forth in this subsection (2)(a); except that the percentages shall not be adjusted to an amount less than twenty percent. An alternate equity structure must at a minimum:
(I) Grant rights to or be offered to at least twenty percent of an employer's eligible workers, or grant rights to or be offered to at least twenty percent of eligible workers of an employer that is owned by or operated for the benefit of eligible workers in a broad-based employee ownership transition. For purposes of this subsection (2)(a), eligible workers means all full-time employees, regular employees, nonseasonal employees, nonmanagerial employees, and contract labor.
(II) Have the participation of at least twenty percent of an employer's eligible workers;
(III) Allocate at least twenty percent of the fully diluted securities or rights to a synthetic interest in securities to participating eligible workers, or allocate twenty percent of net profit from operations to participating eligible workers; and
(IV) Grant to participating eligible workers informational rights, decision-making rights, and nonfinancial rights that are equal to or greater than the rights that are granted to holders of the employer's common stock or holders of the employer's residual membership interest.
(b) Department means the Colorado department of revenue.
(c) Eligible costs means costs incurred as a result of being a new employee-owned business, as detailed in the guidelines issued by the office, including costs associated with accounting, legal, business advisory, and similar professional services that are incurred as a result of being a new employee-owned business.
(d) Employee-owned business means a taxpayer that is subject to tax under this article 22, including but not limited to a C corporation, S corporation, limited liability company, partnership, limited liability partnership, sole proprietorship, or other similar pass-through entity, that:
(I) Repealed.
(II) (A) Is owned in whole or in part by an employee ownership trust;
(B) Has an employee stock ownership plan;
(C) Is beneficially owned in whole or in part by a worker-owned cooperative; or
(D) Has an alternate equity structure; and
(III) Has its corporate headquarters located in this state. For purposes of this subsection (2)(d), corporate headquarters means the sole location within a regional or national area where the majority of the taxpayer's staff members or employees are domiciled and employed, and where the majority of the taxpayer's financial, personnel, legal, planning, or other business functions are conducted on a regional or national basis.
(e) Employee ownership office or office means the employee ownership office created in section 24-48.5-135.
(f) Employee ownership trust means an indirect form of employee ownership in which a trust holds at least twenty percent of the fully diluted securities in a business and benefits all employees on an equal basis and otherwise meets the definition of an alternate equity structure.
(g) Employee stock ownership plan has the same meaning as set forth in section 4975 (e)(7) of the internal revenue code, as amended.
(h) New employee-owned business means an employee-owned business that has been an employee-owned business for seven years or fewer.
(i) Qualified business means a taxpayer that is a new employee-owned business.
(j) Securities has the same meaning as the term security set forth in 15 U.S.C. sec. 77b (a)(1).
(k) Tax credit means the credit against income tax created in this section.
(l) Taxpayer means a person subject to tax pursuant to this article 22.
(m) Worker-owned cooperative has the same meaning as set forth in section 1042 (c)(2) of the internal revenue code, as amended.
(3) Tax credit for new employee-owned businesses. (a) Subject to certification by the office pursuant to this section, for income tax years commencing on or after January 1, 2025, but before January 1, 2030, a qualified business is allowed a credit against the income taxes imposed by this article 22 in an amount equal to fifty percent of the eligible costs, not to exceed fifty thousand dollars, incurred by the qualified business.
(b) (I) A qualified business may apply for and claim only one tax credit allowed in this subsection (3) for the eligible costs incurred in any tax year.
(II) In the case of a qualified business that is a C corporation, the tax credit is allowed to the qualified business.
(III) In the case of a qualified business that is a partnership or an S corporation, the tax credit is allowed to the owners of the qualified business.
(IV) In the case of a qualified business that is taxed pursuant to subchapter T of the internal revenue code, 26 U.S.C. sec. 1381 et seq., as amended, the tax credit is allowed either to the qualified business or to the owners of the qualified business as permitted under subchapter T of the internal revenue code.
(4) Tax credit certificate. (a) A qualified business shall submit an application to the office for the certification and issuance of a tax credit certificate for the tax credit allowed in subsection (3) of this section by the deadlines established in the office's guidelines. The application must include the information set forth in the office's guidelines. The office may impose a reasonable application fee not to exceed two hundred fifty dollars. The office shall transmit all fees collected to the state treasurer, who shall credit the money to the employee ownership cash fund created in subsection (8) of this section.
(b) To claim the tax credit allowed in subsection (3) of this section, a qualified business must annually apply for and receive a tax credit certificate from the office pursuant to this subsection (4). The submission of an application does not entitle the qualified business to the issuance of a tax credit certificate.
(c) The office shall document the date and time that a complete application was received and shall review complete applications in the order in which they are received. If the office determines that an applicant is not entitled to a tax credit certificate, the office shall notify the applicant of its disapproval in writing.
(d) If the office is satisfied that the requirements of this section and the office's guidelines for the tax credit are met, then the office shall issue to the qualified business a tax credit certificate that evidences the qualified business's right to claim the tax credit allowed in subsection (3) of this section. The office shall not issue tax credit certificates in excess of the maximum aggregate amount for any single income tax year specified in subsection (4)(e) of this section.
(e) The maximum aggregate amount of all tax credit certificates that the office may issue pursuant to this section in any single income tax year is one million five hundred thousand dollars.
(5) Claiming tax credit. To claim the tax credit allowed in subsection (3) of this section, the qualified business shall file the tax credit certificate with the qualified business's state income tax return. The amount of the tax credit that the qualified business may claim under this section is the amount stated on the tax credit certificate issued pursuant to subsection (4) of this section.
(6) Tax credit refundable. If the amount of the tax credit exceeds the taxes due on the income of the qualified business for the taxable year for which the tax credit is claimed, the amount of the tax credit not used to offset income taxes must be refunded to the qualified business.
(7) Guidelines and reporting requirements. (a) The office shall develop guidelines for the administration of this section and post the guidelines on the website of the office of economic development and international trade. The guidelines must include:
(I) Application requirements;
(II) Guidelines for issuing tax credit certificates;
(III) Guidelines regarding eligible costs; and
(IV) Guidelines for approving a business as a qualified business.
(b) The office shall maintain a database of any information determined necessary by the office to evaluate the effectiveness of the tax credit allowed in this section in achieving the purposes set forth in subsection (1)(a) of this section and shall provide this information, and any other information that may be needed, to the state auditor as part of the state auditor's evaluation of tax expenditures under section 39-21-305.
(c) The office shall review the effectiveness of the tax credit and include the results of the review in the annual report submitted to the general assembly by the office of economic development. Notwithstanding the requirement in section 24-1-136 (11)(a)(I), the requirement to submit the report required in this subsection (7)(c) continues until the annual report following the income tax year commencing January 1, 2030.
(d) The office shall provide the department with an electronic report of each qualified business and owner of a qualified business to which the office issued a tax credit certificate for the preceding calendar year. The office shall provide this report in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section. This report must include:
(I) The taxpayer's name;
(II) The tax identification number of the taxpayer to whom the tax credit certificate is issued; and
(III) The amount of the tax credit certificate.
(8) Employee ownership cash fund. (a) The employee ownership cash fund is created in the state treasury. The fund consists of money from fees collected and credited to the fund pursuant to subsection (4)(a) of this section and any other money that the general assembly may appropriate, transfer, or require by law to be credited to the fund.
(b) The state treasurer shall credit all interest and income derived from the deposit and investment of money in the employee ownership cash fund to the fund.
(c) Money in the employee ownership cash fund is continuously appropriated to the office for the purpose of administering this section.
(d) The state treasurer shall transfer all unexpended and unencumbered money in the fund on December 31, 2034, to the general fund.
(9) Repeal. This section is repealed, effective January 1, 2035.
Source: L. 2024: Entire section added, (HB 24-1157), ch. 370, p. 2488, � 3, effective August 7. L. 2025: IP(2)(a), (2)(d)(II), (2)(d)(III), and (2)(f) amended and (2)(d)(I) repealed, (HB 25-1021), ch. 311, p. 1626, � 4, effective August 6.
Cross references: For the legislative declaration in HB 24-1157, see section 1 of chapter 370, Session Laws of Colorado 2024.
39-22-543. Credit for wildfire hazard mitigation expenses - legislative declaration - definitions - repeal. (1) The general assembly declares that the purpose of the tax expenditure in this section is to reimburse a landowner for the costs incurred in performing wildfire mitigation measures on the landowner's property located within the state.
(2) As used in this section, unless the context otherwise requires:
(a) Costs means any actual out-of-pocket expense incurred and paid by the landowner to a third-party service provider, documented by receipt, for performing wildfire mitigation measures. Costs does not include any inspection or certification fees, in-kind contributions, donations, incentives, or cost sharing associated with performing wildfire mitigation measures. Costs does not include expenses paid by the landowner from any grants awarded to the landowner for performing wildfire mitigation measures. Costs does not include any amount paid by the landowner for the purchase or rental of any article of tangible personal property for the landowner's own use.
(b) Inflation means the annual percentage change in the United States department of labor's bureau of labor statistics consumer price index for Denver-Aurora-Lakewood for all items paid by all urban consumers, or its applicable predecessor or successor index.
(c) Landowner means any owner of record of private land located within the state, including any easement, right-of-way, or estate in the land, and includes the heirs, successors, and assigns of such land. Landowner shall not include any partnership, S corporation, or other similar entity that owns private land as an entity, unless there is a dwelling on that land that is designed for residential occupancy.
(d) Wildfire mitigation measures means the creation of a defensible space around structures; the establishment of fuel breaks; the thinning of woody vegetation for the primary purpose of reducing risk to structures from wildland fire; or the secondary treatment of woody fuels by lopping and scattering, piling, chipping, removing from the site, or prescribed burning; so long as such activities meet or exceed any Colorado state forest service standards or any other applicable state rules.
(3) (a) In the case of two taxpayers filing a joint return, the amount of the credit shall not exceed six hundred twenty-five dollars in any taxable year. In the case of two taxpayers who may legally file a joint return but actually file separate returns, only one of the taxpayers may claim the credit specified in this section.
(b) In the case of real property owned by tenants in common or joint tenants, the credit allowed pursuant to this section is only allowed for one of the individuals of the ownership group.
(4) (a) For income tax years commencing on or after January 1, 2023, but prior to January 1, 2025, a landowner with a federal taxable income at or below one hundred twenty thousand dollars for the income tax year commencing on or after January 1, 2023, as adjusted for inflation and rounded to the nearest hundred dollar amount for each income tax year thereafter, is allowed a credit against the income taxes imposed by this article 22 in an amount equal to twenty-five percent of up to two thousand five hundred dollars in costs for wildfire mitigation measures. The maximum total credit in a taxable year is six hundred twenty-five dollars.
(b) For income tax years commencing on or after January 1, 2025, but prior to January 1, 2028, a landowner with a federal taxable income at or below one hundred twenty thousand dollars for the income tax year commencing on or after January 1, 2023, as adjusted for inflation and rounded to the nearest hundred dollars for each income tax year thereafter, is allowed a credit against the income taxes imposed by this article 22 in an amount equal to the landowner's costs incurred for wildfire mitigation measures in an amount up to one thousand dollars. The maximum total credit in a taxable year is one thousand dollars.
(5) If the amount of a credit under this section exceeds a taxpayer's actual tax liability for an income tax year, the amount of the credit not used to offset the taxpayer's income tax liability is not refunded to the taxpayer and shall not be carried forward as a tax credit against the taxpayer's income tax liability in any subsequent tax year.
(6) This section is repealed, effective January 1, 2030.
Source: L. 2022: Entire section added, (HB 22-1007), ch. 343, p. 2458, � 3, effective June 3. L. 2024: (2)(a) and (4) amended, (HB 24-1036), ch. 373, p. 2535, � 32, effective August 7.
Cross references: For the legislative declaration in HB 24-1036, see section 1 of chapter 373, Session Laws of Colorado 2024.
39-22-544. Credit against tax - qualifying seniors - creation - legislative declaration - definitions - repeal. (1) (a) The general assembly hereby finds and declares that:
(I) Colorado's affordable housing shortage is hurting seniors, making it more difficult for many seniors to afford housing;
(II) The senior property tax exemption was adopted by Colorado voters in 2000 in order to help seniors afford to stay in their homes;
(III) Many seniors are ineligible for the senior property tax exemption because they have owned their home for fewer than ten years or because they rent; and
(IV) Property tax rebates or tax-equivalent rebates for renters available under section 39-31-102 only assist seniors with incomes below very low thresholds.
(b) (I) Therefore, in order to help more seniors afford the high cost of housing in Colorado, the general assembly hereby intends to establish a refundable income tax credit for income-qualified seniors who do not qualify for the senior property tax exemption to help them afford the high cost of housing.
(II) In accordance with section 39-21-304 (1), the purpose of the tax expenditure created in this section is to provide tax relief for income-qualified seniors.
(c) The general assembly and the state auditor shall measure the effectiveness of the exemption in achieving the purpose specified in subsection (1)(b)(II) of this section based on the number of taxpayers who have claimed the exemption.
(2) As used in this section, unless the context otherwise requires:
(a) Credit means a credit against income tax that is created in this section.
(b) Repealed.
(3) (a) (I) For the income tax year commencing on January 1, 2022, a qualifying senior is allowed a credit against the tax imposed by this article 22 in an amount set forth in subsection (4) of this section.
(II) As used in this subsection (3)(a), qualifying senior means a resident individual who:
(A) Is sixty-five years of age or older at the end of 2022;
(B) Has a federal adjusted gross income that is less than or equal to seventy-five thousand dollars for the income tax year commencing on January 1, 2022; and
(C) Has not claimed a property tax exemption under section 39-3-203 for the property tax year commencing on January 1, 2022.
(b) (I) For the income tax year commencing on January 1, 2024, a qualifying senior is allowed a credit against the tax imposed by this article 22 in an amount set forth in subsection (4.5) of this section.
(II) As used in this subsection (3)(b), qualifying senior means a resident individual who:
(A) Is sixty-five years of age or older at the end of 2024;
(B) Has, for the income tax year commencing on January 1, 2024, a federal adjusted gross income less than or equal to seventy-five thousand dollars for an individual filing a single return, or has a federal adjusted gross income less than or equal to one hundred twenty-five thousand dollars for an individual filing a joint return; and
(C) Has not claimed a property tax exemption under section 39-3-203 for the property tax year commencing on January 1, 2024, on or before August 15, 2024.
(4) (a) For the income tax year commencing on January 1, 2022, the amount of the credit is one thousand dollars for a qualifying senior with federal adjusted gross income that is twenty-five thousand dollars or less. For every five hundred dollars of adjusted gross income above twenty-five thousand dollars, the amount of the credit is reduced by ten dollars.
(b) For the income tax year commencing on January 1, 2022, the credit is the same whether it is claimed by one taxpayer filing a single return or two taxpayers filing a joint return. In the case of two taxpayers who share the same primary residence and who may legally file a joint return but actually file separate returns, both taxpayers may claim the credit, but the maximum credit for each is five hundred dollars and, for every five hundred dollars of adjusted gross income above twenty-five thousand dollars, the amount of the credit is reduced by five dollars.
(c) (I) For the income tax year commencing on January 1, 2022, notwithstanding subsections (4)(a) and (4)(b) of this section, a taxpayer who also qualifies for a grant under article 31 of this title 39 during calendar year 2022 is eligible to receive the full credit without an income-based reduction that otherwise applies for the taxpayer under subsection (4)(a) or (4)(b) of this section.
(II) This subsection (4)(c) is repealed, effective December 31, 2026.
(4.5) For the income tax year commencing on January 1, 2024:
(a) The amount of the credit is eight hundred dollars for a qualifying senior filing a single return with a federal adjusted gross income that is twenty-five thousand dollars or less. For every five hundred dollars of adjusted gross income above twenty-five thousand dollars, the amount of the credit is reduced by eight dollars.
(b) The amount of the credit is eight hundred dollars for two taxpayers filing a joint return with a federal adjusted gross income that is twenty-five thousand dollars or less. For every five hundred dollars of adjusted gross income above twenty-five thousand dollars, the amount of the credit is reduced by four dollars.
(c) In the case of two taxpayers who share the same primary residence and who may legally file a joint return but actually file separate returns, both taxpayers may claim the credit, but the maximum credit for each taxpayer is four hundred dollars and, for every five hundred dollars of adjusted gross income above twenty-five thousand dollars, the amount of the credit is reduced by four dollars.
(d) Notwithstanding subsections (4.5)(a), (4.5)(b), and (4.5)(c) of this section, a taxpayer who also qualifies for a grant under article 31 of this title 39 during calendar year 2024 is eligible to receive the full credit without an income-based reduction that otherwise applies for the taxpayer pursuant to subsections (4.5)(a), (4.5)(b), and (4.5)(c) of this section.
(e) In the case of a part-year resident, the credit allowed under this subsection (4.5) is apportioned in the ratio determined under section 39-22-110 (1).
(5) (a) Any amount of the credit that exceeds the qualifying senior's income taxes due is refunded to the qualifying senior.
(b) To the extent permitted by federal law, the credit is not income or resources for the purpose of determining eligibility for the payment of public assistance benefits and medical assistance benefits authorized under state law or for a payment made under any other publicly funded programs.
(6) The department of revenue may use the reports received from the property tax administrator in accordance with section 39-3-207 (8) for purposes of confirming that a taxpayer meets the eligibility requirement set forth in subsection (3)(b)(II)(C) of this section.
Source: L. 2022: Entire section added, (HB 22-1205), ch. 436, p. 3071, � 2, effective August 10. L. 2024: (2)(b) repealed, (3), (4), and (6) amended, and (4.5) added, (HB 24-1052), ch. 473, p. 3322, � 2, effective August 7. L. 2025: (4)(c) amended, (HB 25-1296), ch. 202, p. 914, � 11, effective May 16.
Cross references: For the legislative declaration in HB 25-1296, see section 1 of chapter 202, Session Laws of Colorado 2025.
39-22-545. Credit against tax - heat pump systems - heat pump water heaters - tax preference performance statement - legislative declaration - definitions - repeal. (1) (a) The general assembly hereby finds and declares that:
(I) The general assembly has committed to reduce greenhouse gases through numerous policy and regulatory measures to meet the goals established in 2019;
(II) Great quantities of emissions are released in the traditional process of heating and cooling private sector residential buildings;
(III) There is great potential for businesses and individuals in the state to reduce greenhouse gas emissions generated in the heating and cooling of residential buildings by installing heat pump systems or heat pump water heaters, which reduce net greenhouse gas emissions;
(IV) Providing an income tax credit for heat pump systems and heat pump water heaters will encourage businesses and individuals to purchase and use heat pump systems and heat pump water heaters rather than traditional heating and cooling methods; and
(V) The purchase and use of heat pump systems and heat pump water heaters will benefit public health in the heating and cooling of homes and businesses and take advantage of latent heat sources and available renewable power during low demand periods.
(b) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly hereby finds and declares that the purposes of the tax expenditure created in subsection (3) of this section are to:
(I) Induce certain designated behavior by taxpayers, specifically the purchase and use of heat pump systems and heat pump water heaters; and
(II) Contribute to the state's effort to achieve its climate goals.
(c) The general assembly and the state auditor shall measure the effectiveness of the tax credits in achieving the purposes specified in subsection (1)(b) of this section based on the number of heat pump systems and the number of heat pump water heaters sold and used in the state. The Colorado energy office shall provide the state auditor with any available information that would assist the state auditor's measurement.
(2) As used in this section, unless the context otherwise requires:
(a) Air-source heat pump system has the same meaning set forth in section 39-26-732 (2)(a).
(b) Ground-source heat pump system has the same meaning set forth in section 39-26-732 (2)(b).
(c) Heat pump system means an air-source heat pump system, ground-source heat pump system, water-source heat pump system, or variable refrigerant flow heat pump system.
(d) Heat pump water heater has the same meaning set forth in section 39-26-732 (2)(d).
(e) Purchase price means the amount actually paid by the purchaser for the tangible personal property installed, including charges for sales tax and freight, but not including any charges for assembly, installation, or other construction services, or permit fees.
(f) Purchaser means a taxpayer who is the buyer of a heat pump system or heat pump water heater.
(g) Seller means the entity that sells a heat pump system or heat pump water heater to a purchaser.
(h) Taxpayer means a person subject to tax under this article 22, or a person or political subdivision of this state who is exempt from tax under section 39-22-112 (1), but does not include insurance companies subject to the tax imposed on gross premiums by section 10-3-209. For purposes of this section, a person or political subdivision of this state who is exempt from tax under section 39-22-112 (1) is a taxpayer even if the person or political subdivision has no unrelated business income.
(i) Variable refrigerant flow heat pump system has the same meaning set forth in section 39-26-732 (2)(f).
(j) Water-source heat pump system has the same meaning set forth in section 39-26-732 (2)(e).
(3) (a) Subject to the provisions of subsection (4) of this section, for income tax years commencing on or after January 1, 2023, but before January 1, 2024, any purchaser that installs a residential or commercial heat pump system into real property in this state or that installs a residential or commercial heat pump water heater into real property in this state is allowed a credit against the tax imposed by this article 22 in an amount equal to ten percent of the purchase price paid by the purchaser for the heat pump system or heat pump water heater.
(b) The credit allowed pursuant to this section is for the income tax year in which the heat pump system or heat pump water heater is purchased.
(4) (a) (I) To be eligible to claim a tax credit pursuant to this section, the purchaser shall certify, as specified in subsection (4)(b) of this section, that all necessary mechanical, plumbing, and electrical work performed in connection with the installation of a heat pump system or heat pump water heater in a new or existing industrial, commercial, or multifamily residential building containing twenty thousand square feet or more of conditioned floor space was or will be performed by a contractor on the certified contractor list created pursuant to section 40-3.2-105.6 (3)(a), or by employees of a utility, subject to state licensing requirements and all applicable state and local rules, codes, and standards.
(II) The requirements of this subsection (4)(a) do not apply to the installation of a heat pump system or heat pump water heater that is limited to in-unit work in a multifamily building or unit and that is initiated by the owner or tenant of the multifamily building or unit.
(b) The purchaser shall certify, in a form and manner to be determined by the department of revenue, that the heat pump system or heat pump water heater was or will be installed in accordance with the provisions of subsection (4)(a) of this section, if applicable. The seller shall provide the certification to the purchaser for the purposes of subsection (5) of this section.
(5) (a) A purchaser may assign the tax credit allowed in this section to the purchaser's seller as follows:
(I) The assignment to the seller must be completed at the time of purchase of a new heat pump system or heat pump water heater by entering into an agreement as set forth in subsection (5)(c) of this section;
(II) The purchaser must certify in writing that the purchaser will comply with the provisions regarding installation of the heat pump system or heat pump water heater specified in subsection (4) of this section, if applicable;
(III) The purchaser must assign the tax credit to the seller and forfeit the right to claim the tax credit on the purchaser's tax return in exchange for good and valuable consideration; and
(IV) The seller must compensate the purchaser for the full nominal value of the tax credit. The compensation paid to the purchaser is considered a refund of state taxes and is not state taxable income.
(b) Notwithstanding section 39-21-108 (3), if a purchaser assigns the tax credit to a seller pursuant to this subsection (5), the seller receives the full amount of the tax credit that the purchaser is allowed in this section. Any unpaid balance or unpaid debt of the purchaser may not be credited from the amount of the tax credit allowed in this section.
(c) To complete the tax credit assignment, the purchaser and the seller must enter into an agreement that:
(I) Includes the purchaser's written certification to comply with the provisions regarding installation of the heat pump system or heat pump water heater specified in subsection (4) of this section, if applicable; and
(II) Affirms that the requirements specified in subsection (5)(a) of this section were met.
(d) The seller may authorize an agent or a designee to sign the agreement on its behalf.
(e) The seller shall electronically submit a report containing the information required in the agreement described in subsection (5)(c) of this section to the department of revenue within thirty days of the purchase of a heat pump system or heat pump water heater in a form and manner to be determined by the department.
(f) The seller shall also file the agreement described in subsection (5)(c) of this section with the original tax return for the taxable year in which the heat pump system or heat pump water heater is purchased.
(g) The department of revenue, in consultation with the Colorado energy office, shall develop a model report and agreement no later than December 1, 2022.
(6) If a credit authorized in this section exceeds the income tax due on the income of the seller for the taxable year, the excess credit may not be carried forward and shall be refundable to the seller.
(7) Making a purchaser aware of the income tax credit allowed in this section or helping a purchaser assign the income tax credit to a seller as allowed in this section does not rise to the level of providing the purchaser with unauthorized tax advice.
(8) This section is repealed, effective January 1, 2028.
Source: L. 2022: Entire section added, (SB 22-051), ch. 333, p. 2346, � 2, effective August 10. L. 2023: (3)(a) amended, (HB 23-1272), ch. 167, p. 775, � 4, effective May 11.
Cross references: For the legislative declaration in HB 23-1272, see section 1 of chapter 167, Session Laws of Colorado 2023.
39-22-546. Credit against tax - residential energy storage systems - tax preference performance statement - legislative declaration - definition - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly hereby finds and declares that the purposes of the tax expenditure created in subsection (3) of this section are to:
(I) Induce certain designated behavior by taxpayers, specifically the purchase and installation of residential energy storage systems; and
(II) Contribute to the state's effort to achieve its climate goals.
(b) The general assembly and the state auditor shall measure the effectiveness of the tax credits in achieving the purposes specified in subsection (1)(a) of this section based on the number of residential energy storage systems installed in the state. The Colorado energy office shall provide the state auditor with any available information that would assist the state auditor's measurement.
(2) As used in this section, unless the context otherwise requires:
(a) Energy storage system means any commercially available, customer-sited system, including batteries and the batteries paired with on-site generation, that is capable of retaining, storing, and delivering energy by chemical, thermal, mechanical, or other means.
(b) Purchase price means the amount actually paid by the purchaser for the tangible personal property installed, including charges for sales tax and freight, but not including any charges for assembly, installation, or other construction services, or permit fees.
(c) Purchaser means a taxpayer who is the buyer of an energy storage system.
(d) Seller means the entity that sells an energy storage system.
(3) (a) For income tax years commencing on or after January 1, 2023, but before January 1, 2027, any purchaser that installs an energy storage system in a residential dwelling in this state is allowed a credit against the tax imposed by this article 22 in an amount equal to ten percent of the purchase price paid by the purchaser for the energy storage system.
(b) The credit allowed pursuant to this section is for the income tax year in which the energy storage system is purchased.
(4) (a) A purchaser may assign the tax credit allowed in this section to the purchaser's seller as follows:
(I) The assignment to the seller must be completed at the time of purchase of a new energy storage system by entering into an agreement as set forth in subsection (4)(c) of this section;
(II) The purchaser must assign the tax credit to the seller and forfeit the right to claim the tax credit on the purchaser's tax return in exchange for good and valuable consideration; and
(III) The seller must compensate the purchaser for the full nominal value of the tax credit. The compensation paid to the purchaser is considered a refund of state taxes and is not state taxable income.
(b) Notwithstanding section 39-21-108 (3), if a purchaser assigns the tax credit to a seller pursuant to this subsection (4), the seller receives the full amount of the tax credit that the purchaser is allowed in this section. Any unpaid balance or unpaid debt of the purchaser may not be credited from the amount of the tax credit allowed in this section.
(c) To complete the tax credit assignment, the purchaser and the seller must enter into an agreement that affirms that the requirements specified in subsection (4)(a) of this section were met.
(d) The seller may authorize an agent or a designee to sign the agreement on its behalf.
(e) The seller shall electronically submit a report containing the information required in the agreement described in subsection (4)(c) of this section to the department of revenue within thirty days of the purchase of an energy storage system in a form and manner to be determined by the department.
(f) The seller shall also file the agreement described in subsection (4)(c) of this section with the original tax return for the taxable year in which the energy storage system is purchased.
(g) The department of revenue, in consultation with the Colorado energy office, shall develop a model report and agreement no later than December 1, 2022.
(5) If a credit authorized in this section exceeds the income tax due on the income of the seller for the taxable year, the excess credit may not be carried forward and shall be refundable to the seller.
(6) Making a purchaser aware of the income tax credit allowed in this section or helping a purchaser assign the income tax credit to a seller as allowed in this section does not rise to the level of providing the purchaser with unauthorized tax advice.
(7) This section is repealed, effective January 1, 2030.
Source: L. 2022: Entire section added, (SB 22-051), ch. 333, p. 2346, � 2, effective August 10. L. 2025: (3)(a) and (7) amended, (SB 25-026), ch. 362, p. 1963, � 2, effective August 6.
39-22-547. Early childhood educator income tax credit - tax preference performance statement - legislative declaration - definitions - repeal. (1) (a) The general assembly finds and declares that:
(I) The benefits of quality child care and early childhood education are well documented and a striking connection exists between children's learning experiences well before kindergarten and their later school success;
(II) Small business owners and parents who rely on child care to work would also experience lower turnover in child care staff when early childhood educators experience better economic stability; and
(III) When early childhood educators improve the quality of their education by receiving early childhood professional credentials or attaining higher credential levels, it improves the quality of children's early learning experiences.
(b) In accordance with section 39-21-304 (1), the purpose of this tax expenditure is to:
(I) Induce certain designated behavior by taxpayers, which in this instance is for early childhood educators to receive an early childhood professional credential or to attain higher credential levels; and
(II) Provide tax relief for early childhood educators.
(c) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purpose specified in subsection (1)(b)(I) of this section based on a comparison of the number of early childhood professional credentials at the various levels before and with the credit.
(d) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purpose specified in subsection (1)(b)(II) of this section based on the number of credits that are claimed.
(2) As used in this section, unless the context otherwise requires:
(a) Department means the department of revenue.
(b) Early childhood professional credential means the early childhood professional credentials issued by the department of education, or a successor department, and designated as early childhood professional I, early childhood professional II, early childhood professional III, early childhood professional IV, early childhood professional V, and early childhood professional VI.
(c) Eligible early childhood educator means an individual who:
(I) Has a federal adjusted gross income less than or equal to seventy-five thousand dollars for an individual filing a single return, or has a federal adjusted gross income less than or equal to one hundred fifty thousand dollars for an individual filing a joint return;
(II) Holds an early childhood professional credential for at least part of the income tax year for which the credit is claimed; and
(III) For at least six months of the income tax year for which the credit is claimed, is either the licensee of an eligible program or employed by an eligible program.
(d) Eligible program means either an early childhood education program as defined in section 26.5-2-202 (3) or a licensed family child care home. An eligible program must have held at least a level one quality rating pursuant to the Colorado shines quality rating and improvement system established in section 26.5-5-101 for the income tax year for which the credit is claimed.
(e) Family child care home has the same meaning as set forth in section 26.5-5-303 (7).
(f) Inflation means the annual percentage change in the United States department of labor's bureau of labor statistics consumer price index for Denver-Aurora-Lakewood for all items paid by all urban consumers, or its applicable successor index.
(3) (a) For income tax years commencing on or after January 1, 2022, but before January 1, 2026, an eligible early childhood educator is allowed a credit against the tax imposed by this article 22 in an amount as set forth in subsection (3)(b) of this section.
(b) (I) Except as provided in subsection (3)(b)(II) of this section, the amount of the credit equals, for:
(A) Seven hundred fifty dollars for an early childhood professional I;
(B) One thousand dollars for an early childhood professional II; and
(C) One thousand five hundred dollars for an early childhood professional III, early childhood professional IV, early childhood professional V, or early childhood professional VI.
(II) For the income tax years commencing on or after January 1, 2023, the department shall adjust the credit amounts set forth in subsection (3)(b)(I) of this section to reflect inflation for each income tax year in which the credit described in this section is allowed.
(c) Each eligible early childhood educator is only allowed one credit per income tax year, even if the eligible early childhood educator earns a higher level early childhood professional credential in the same year. In such case, the eligible early childhood educator's credit is based on the highest early childhood professional credential attained during the income tax year.
(4) The amount of the credit under this section that exceeds the eligible early childhood educator's income taxes due is refunded to the eligible early childhood educator.
(5) No later than January 1, 2023, and each January 1 thereafter through January 1, 2026, the department of human services, or a successor department, shall provide the department of revenue with an electronic report of each individual who held an early childhood professional credential during the previous calendar year for which the credit is allowed. The department shall include the following information in the report, if available:
(a) The name of the individual who holds the early childhood professional credential;
(b) The individual's social security number or tax identification number;
(c) The highest level of early childhood professional credential held by the individual during the year; and
(d) The length of time that the individual held an early childhood professional credential at any level.
(6) This section is repealed, effective July 1, 2030.
Source: L. 2022: Entire section added, (HB 22-1010), ch. 347, p. 2475, � 2, effective August 10. L. 2023: (2)(e) amended, (HB 23-1301), ch. 303, p. 1844, � 86, effective August 7. L. 2024: (2)(d) amended, (HB 24-1450), ch. 490, p. 3426, � 82, effective August 7.
Cross references: For the legislative declaration in HB 22-1010, see section 1 of chapter 347, Session Laws of Colorado 2022.
39-22-548. Colorado homeless contribution tax credit - legislative declaration - definitions - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the general legislative purpose of this tax expenditure is to induce certain designated behavior by taxpayers. Specifically, this tax expenditure is intended to encourage taxpayers to make contributions to approved nonprofit organizations providing certain qualifying activities to leverage financial contributions from Colorado residents and businesses to support providing appropriate housing and services to assist individuals and families experiencing homelessness. The tax expenditure will catalyze and strengthen statewide efforts to address the effects of homelessness through private investment and civic engagement in Colorado-based service providers for individuals and families experiencing homelessness.
(b) The annual review presented by the division as set forth in subsection (6) of this section will allow the general assembly and the state auditor to measure the effectiveness of the tax expenditure.
(2) As used in this section, unless the context otherwise requires:
(a) Approved nonprofit organization means a nonprofit organization that provides a qualifying activity and that has been reviewed and approved by the division as specified in subsection (5) of this section and has a history or track record of success in delivering services and demonstrated financial viability.
(b) Approved project means a project administered by an approved nonprofit organization that has been evaluated, reviewed, and approved by the division as specified in subsection (5) of this section, and that implements one or more qualifying activities.
(c) Capital campaign means a campaign that encourages public and private partnerships and is focused on raising funds for a specific capital project. The capital project must involve construction and implementation that commences within three years of the project being approved by the division. A capital campaign must include a campaign for one or more of the following:
(I) Supportive housing for individuals or families experiencing homelessness;
(II) Community overnight shelters, community day shelters, or emergency shelters;
(III) Facilities, including the acquisition or rehabilitation of facilities, used to provide housing or services to individuals or families experiencing homelessness, including facilities that are necessary to perform qualifying services; or
(IV) Facilities needed to provide administrative support for approved projects.
(d) Division of housing or division means the division of housing in the department of local affairs created in section 24-32-704.
(e) In-kind contribution means a contribution that is not a monetary contribution and is valued over five thousand dollars pursuant to an independent third-party valuation, including a contribution of property, services, stocks, bonds, or other intangible property.
(f) Monetary contribution means a contribution in United States currency in any form, including cash, payment made by check, electronic funds transfer, debit card, or credit card.
(g) Nonprofit organization means any organization in good standing with the secretary of state that is exempt from taxation pursuant to section 501 (a) of the federal Internal Revenue Code of 1986, 26 U.S.C. sec. 501 (a), as amended, and listed as an exempt organization in section 501 (c)(3) of the federal Internal Revenue Code of 1986, 26 U.S.C. sec. 501 (c)(3), as amended.
(h) Operational service means a service with the primary focus on assisting individuals or families experiencing homelessness or, in the case of prevention, individuals or families facing imminent risk of homelessness. An operational service must also be a service that supports or provides:
(I) Outreach efforts to engage or provide services to unsheltered individuals or families experiencing homelessness;
(II) Safe emergency, temporary, or transitional shelters, such as day shelters, that may include supportive services to individuals or families experiencing homelessness;
(III) Prevention services that target individuals or families facing imminent risk of homelessness as defined by the department of local affairs;
(IV) Supportive housing for individuals or families experiencing homelessness or who would otherwise be homeless;
(V) Services designed to assist individuals or families experiencing homelessness to obtain an employment outcome, including job placement services and services that help individuals become workforce ready;
(VI) Case management, including establishing client goals for individuals or families experiencing homelessness and coordination of referrals to address health or mental health benefit procurement and procurement of other essential services for individuals or families experiencing homelessness;
(VII) Shelters and services for survivors of domestic violence who are fleeing an abusive household; or
(VIII) The implementation and operation of successor projects or other services for individuals or families experiencing homelessness that are identified by the division as emerging, promising, and providing best practices.
(i) Qualifying activity means a capital campaign or an operational service.
(j) Taxpayer means a resident individual or a domestic or foreign corporation subject to part 3 of this article 22, a partnership, S corporation, or other similar pass-through entity, estate, or trust that makes a contribution as an entity, and a partner, member, and subchapter S shareholder of such a pass-through entity.
(3) (a) For income tax years commencing on or after January 1, 2023, but before January 1, 2027, except as provided in subsection (3)(b) of this section, any taxpayer who makes a monetary or in-kind contribution to an approved nonprofit organization, or to an approved project administered by an approved nonprofit organization, is allowed a credit equal to twenty-five percent of the total value of the contribution, subject to the limitations specified in subsection (3)(d) of this section.
(b) If a taxpayer makes a monetary or in-kind contribution to an approved nonprofit organization, or to an approved project administered by an approved nonprofit organization, in an underserved, rural county, as defined by the division in its guidelines for the program, then the taxpayer is allowed a credit equal to thirty percent of the total value of the contribution, subject to the limitations in subsection (3)(d) of this section.
(c) The approved nonprofit organization that receives the allowable contribution shall issue a tax credit certificate to each taxpayer that makes an allowable contribution pursuant to subsections (3)(a) or (3)(b) of this section; except that the approved nonprofit organization shall not issue tax credit certificates that total more than seven hundred fifty thousand dollars per income tax year, and if the approved nonprofit organization administers one or more approved projects, in addition to providing a qualifying service, then the approved nonprofit organization shall not issue tax credit certificates for allowable contributions to one or more approved projects that total more than an additional seven hundred fifty thousand dollars per income tax year. The tax credit certificate must state a unique certificate identification number, the amount of the allowable contribution, the taxpayer's name, the last four digits of the taxpayer's social security number or the taxpayer's full federal employer identification number, the type of the contribution, the date the taxpayer made the contribution, the amount of the tax credit that is authorized for that taxpayer, and any other information that the executive director of the department of revenue may require. Tax credit certificates shall be issued in the order of received allowable contributions.
(d) (I) (A) The credit allowed in subsections (3)(a) and (3)(b) of this section shall not exceed one hundred thousand dollars per taxpayer per tax year.
(B) For a contribution made pursuant to subsections (3)(a) or (3)(b) of this section that is made in a cash payment, the contribution must be equal to or greater than one hundred dollars.
(C) In the case of a partnership, S corporation, or other similar pass-through entity, the limitations in this subsection (3)(d) apply at the entity level.
(II) In no event is a credit allowed pursuant to this section for contributions that directly benefit the taxpayer. If a taxpayer receives a benefit for the contribution, the value of the contribution is reduced by the value of the benefit received by the taxpayer to arrive at the contribution that may be certified for the income tax credit allowed in this section.
(III) If the amount of the allowed credit exceeds the amount of income taxes otherwise due on the income of the taxpayer in the income tax year for which the credit is being claimed, the amount of the credit not used as an offset against income taxes in that income tax year may be carried forward as a credit against subsequent years' income tax liability for a period not exceeding five years and must be applied first to the earliest income tax years possible. Any credit remaining after the period may not be refunded or credited to the taxpayer.
(4) On or before November 1, 2022, and on or before November 1 of each year thereafter, the division shall develop and post on the division's website a list, including a description, of all approved nonprofit organizations and any approved projects administered by an approved nonprofit organization to which taxpayers may contribute during the next calendar year for the purpose of receiving a tax credit pursuant to this section. Any modifications to the list, including nonprofit organizations or proposed projects of an approved nonprofit organization that are later approved, must be posted on the division's website no later than sixty days after the modification is made. The division shall review a proposed nonprofit organization and any proposed project of an approved nonprofit organization for eligibility and approval as described in subsection (5) of this section.
(5) (a) (I) A nonprofit organization shall apply to the division for approval to receive allowable contributions under this section, including approval of a proposed project. The application must:
(A) Set forth the qualifying activity that the nonprofit organization provides, and, in addition, for a proposed project, the qualifying activity that the project will implement;
(B) Provide a letter of approval from the nonprofit organization's board of directors;
(C) Provide evidence that the nonprofit organization is in good standing with the secretary of state; and
(D) Submit a recent audit or financial report to the division in a form that is acceptable to the division.
(II) An organization that has a program as set forth in section 39-30-103.5 (3)(a) that has been approved by the Colorado economic development commission under section 39-30-103.5 is deemed approved for purposes of compliance with this section to receive eligible contributions unless otherwise specifically disapproved by the division so long as the organization:
(A) Is a nonprofit;
(B) Provides or has the intent to provide a qualifying activity;
(C) Can provide a letter of approval from its board of directors;
(D) Submits a recent audit or financial report to the division in a form that is acceptable to the division; and
(E) No later than four years from August 10, 2022, submits an application for reapproval pursuant to subsection (5)(g) of this section.
(III) When reviewing applications and organizations for approval pursuant to subsections (5)(a)(I) and (5)(a)(II) of this section, with respect to a nonprofit organization's proposed qualifying activity or activities, the division shall consider the financial management capacity and operational capacity of the nonprofit organization and evaluate the capability of the nonprofit organization to enter a monitoring agreement for the purpose of the division evaluating the efficacy of the nonprofit organization and its qualifying activity or activities.
(b) The division shall review applications received pursuant to subsection (5)(a) of this section in a timely manner and in a time frame set forth in the division's guidelines for the program. The division shall issue a notice of approval or disapproval of a nonprofit organization, a proposed project, or both in writing.
(c) The division is authorized to hold hearings in order to review a nonprofit organization's request to reconsider a decision regarding disapproval within thirty days after the date of the disapproval notice.
(d) Once approved, the nonprofit organization shall maintain an accounting system and appropriate records to track contributions received by taxpayers for which a tax credit was allowed under this section and to accurately associate the use of the contributions with qualifying activities, an approved project, or both.
(e) The division shall specify in program guidelines what information regarding qualifying activities must be reported by the nonprofit organization and can request from the nonprofit organization an audit or financial report in a form that is acceptable to the division.
(f) (I) No later than June 30, 2025, the division shall complete a review of every organization and project deemed approved under subsection (5)(a)(II) of this section, and no later than June 30, 2026, and June 30 of each year thereafter, the division shall complete a review of every other approved nonprofit organization and approved project to evaluate performance and compliance with the requirements of this section. The division must review the qualifying activities being provided and determine how the activities are addressing current and emerging needs of individuals and families experiencing homelessness in each approved nonprofit organization's community, or, if applicable, each approved project's community.
(II) The division has the authority to monitor and audit approved nonprofit organizations and their performance and may disapprove an approved nonprofit organization or an approved project of an approved nonprofit organization if the approved nonprofit organization is not meeting expectations or if the approved nonprofit organization is otherwise not in compliance with objectives outlined in this section or program guidelines, or, if applicable, in the project proposal. The division shall immediately notify the department of revenue if an approved nonprofit organization or an approved project of an approved nonprofit organization is disapproved as a result of a review or audit in order to ensure that contributions made by taxpayers on or after the date of disapproval are no longer eligible for the tax credit allowed in this section.
(g) An approved nonprofit organization shall apply for reapproval with the division every four years in the same manner provided for approval in subsection (5)(a)(I) of this section. When applying for reapproval, the nonprofit organization may add or remove qualifying activities in the reapproval application. It is expected that a nonprofit organization will revise any previously approved goals, objectives, and expected outcomes of its qualifying activities to adjust to changes in community needs, emerging best practices, and feedback from the division.
(6) The division shall present an annual review of approved nonprofit organizations and any approved projects administered by an approved nonprofit organization to the state housing board created in section 24-32-706. The annual review must include individual and collective outputs and outcomes of each approved nonprofit organization described in this section and must summarize contributions received and tax credit certificates issued for the reporting period, including an estimate of expected contributions for the upcoming calendar year.
(7) The division shall develop program guidelines, with stakeholder involvement, for the administration of this section.
(8) (a) On or before September 30 of each calendar year, the state director of housing or the director's designee shall transmit to the department of revenue the data regarding income tax credits allowed pursuant to this section that are certified or approved by the division from January 1 through June 30 of the same calendar year.
(b) On or before March 31 of each calendar year, the state director of housing or the director's designee shall transmit to the department of revenue the data regarding income tax credits allowed pursuant to this section that are certified or approved by the division from July 1 through December 31 of the previous calendar year.
(9) This section is repealed, effective December 31, 2040.
Source: L. 2022: Entire section added, (HB 22-1083), ch. 286, p. 2046, � 1, effective August 10. L. 2024: (3)(c) and (5)(f)(I) amended, (SB 24-016), ch. 476, p. 3337, � 1, effective August 7.
39-22-549. Credit against tax - small food business recovery and resilience grant program equipment - community food consortium duties and responsibilities - tax preference performance statement - legislative declaration - definitions - repeal. (1) (a) The general assembly hereby finds and declares that, in accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly hereby finds and declares that the purposes of the tax expenditure created in subsection (3) of this section are to:
(I) Induce certain designated behavior by taxpayers, specifically the purchase and use of small food business recovery and resilience grant program equipment and the increase of activities of the community food consortium for small food retailers and Colorado-owned and Colorado-operated farms; and
(II) Contribute to the state's effort to improve access to and lower prices for healthy foods in low-income and underserved areas of the state by supporting small food retailers and small family farms.
(b) The general assembly and the state auditor shall measure the effectiveness of the tax credits in achieving the purposes specified in subsection (1)(a)(I) of this section based on the number of the tax credits created in this section that taxpayers claim. The department of agriculture and the department of revenue shall provide the state auditor with any available information that would assist the state auditor in this measurement.
(2) As used in this section, unless the context otherwise requires:
(a) Amount certain spent by the member of the consortium on completing its duties and responsibilities means the amount spent on pallet, pallet break, distribution, and delivery fees that is eligible for a subsidy from the consortium but is not otherwise covered by the consortium.
(b) Duties and responsibilities means the duties and responsibilities of the members of the consortium pursuant to section 35-1-117 (2)(a).
(c) Member of the consortium means any member of the community food consortium for small food retailers and Colorado-owned and Colorado-operated farms created in section 35-1-117 (2)(a).
(d) Purchase price means the amount actually paid by the purchaser for the small food business recovery and resilience grant program equipment, including charges for sales tax and freight, but not including any charges for assembly, installation, other construction services, or permit fees.
(e) Purchaser means a small food retailer or small family farm that purchases small food business recovery and resilience grant program equipment.
(f) Small family farm has the same meaning as set forth in section 35-1-117 (8)(d).
(g) Small food business recovery and resilience grant program equipment means the items listed in section 35-1-117 (3)(a)(II) and (3)(a)(IV).
(h) Small food retailer has the same meaning as set forth in section 35-1-117 (8)(e).
(3) (a) Subject to the provisions of subsection (4) of this section:
(I) (A) For income tax years commencing on or after January 1, 2024, but before January 1, 2025, any member of the food consortium is allowed a credit against the tax imposed by this article 22 in an amount equal to eighty-five percent of the amount certain spent by the member of the consortium on completing its duties and responsibilities minus any amount awarded to the member of the consortium pursuant to section 35-1-117 (2) for the completion of its duties and responsibilities;
(B) For income tax years commencing on or after January 1, 2025, but before January 1, 2031, any member of the food consortium is allowed a credit against the tax imposed by this article 22 in an amount equal to seventy-five percent of the amount certain spent by the member of the consortium on completing its duties and responsibilities minus any amount awarded to the member of the consortium pursuant to section 35-1-117 (2) for the completion of its duties and responsibilities; and
(II) (A) For income tax years commencing on or after January 1, 2024, but before January 1, 2025, any purchaser of small food business recovery and resilience grant program equipment is allowed a credit against the tax imposed by this article 22 in an amount equal to eighty-five percent of the purchase price of the relevant small food business recovery and resilience grant program equipment minus the amount of any grant awarded under the small food business recovery and resilience grant program for the purchase of the same small food business recovery and resilience grant program equipment;
(B) For income tax years commencing on or after January 1, 2025, but before January 1, 2031, any purchaser of small food business recovery and resilience grant program equipment is allowed a credit against the tax imposed by this article 22 in an amount equal to seventy-five percent of the purchase price of the relevant small food business recovery and resilience grant program equipment minus the amount of any grant awarded under the small food business recovery and resilience grant program for the purchase of the same small food business recovery and resilience grant program equipment.
(b) The credit allowed pursuant to this section is for the income tax year in which a member of the consortium spent an amount certain on completing its duties and responsibilities or a purchaser purchases the relevant small food business recovery and resilience grant program equipment.
(4) (a) A member of the consortium or a purchaser of small food business recovery grant program equipment may submit an application to the department of agriculture for the issuance of a letter of eligibility for a tax credit certificate allowed in this section by the deadlines established in the rules promulgated by the department of agriculture. The application must include:
(I) A certification that the applicant is either:
(A) A purchaser who is a small food retailer or small family farm that purchased small food business recovery and resilience grant program equipment; or
(B) A member of the consortium that spent an amount certain on completing its duties and responsibilities; and
(II) Detailed information regarding:
(A) The purchase price that would be incurred by a purchaser of small food business recovery and resilience grant program equipment and the date on which the purchase would be made; or
(B) An itemized total of the amount certain that would be spent by a member of the consortium on completing its duties and responsibilities, and the date or dates on which the member of the consortium would spend the amounts.
(b) If the department of agriculture determines that the application filed pursuant to subsection (4)(a) of this section is complete, the department of agriculture shall determine whether the applicant would qualify for the credit allowed pursuant to this section if the applicant made the purchase described in the application and the department of agriculture had not issued tax credit certificates in excess of a total of ten million dollars for the income tax year. If the department of agriculture approves the application, the department of agriculture shall issue a letter of eligibility to the applicant that indicates the amount of the tax credit that the purchaser or member of the consortium could claim for the specified income tax year if they were to make the purchase described in the application and if the department of agriculture has not issued tax credit certificates in excess of a total of ten million dollars for the income tax year.
(5) (a) A member of the consortium or a purchaser of small food business recovery grant program equipment shall submit an application to the department of agriculture for the issuance of a tax credit certificate allowed in this section by the deadlines established in the rules promulgated by the department of agriculture. The application must include:
(I) A certification that the applicant is either:
(A) A purchaser who is a small food retailer or small family farm that purchased small food business recovery and resilience grant program equipment; or
(B) A member of the consortium that spent an amount certain on completing its duties and responsibilities; and
(II) Detailed information regarding:
(A) The purchase price incurred by a purchaser of small food business recovery and resilience grant program equipment and the date that the purchase was made; or
(B) An itemized total of the amount certain spent by a member of the consortium on completing its duties and responsibilities, and the date or dates that the member of the consortium spent the amounts.
(b) If the department of agriculture determines that the application filed pursuant to subsection (5)(a) of this section is complete, the department of agriculture shall determine whether the applicant qualifies for the credit allowed pursuant to this section. If the department of agriculture approves the application, the department of agriculture shall issue a tax credit certificate to the applicant that indicates the amount of the tax credit that the purchaser or member of the consortium may claim for the specified income tax year; except that the total amount of tax credit certificates issued by the department of agriculture in a given income tax year must not exceed a total of ten million dollars.
(c) The department of agriculture shall issue tax credit certificates allowed in this section in an order that accords with the rules promulgated by the department of agriculture. The department of agriculture shall review and approve or disapprove an application filed pursuant to subsection (5)(a) of this section within a reasonable time, not to exceed ninety days after the filing of a completed application.
(6) To claim the income tax credit allowed pursuant to this section, the purchaser or member of the consortium shall attach a copy of the tax credit certificate to its state income tax return. No tax credit is allowed pursuant to this section unless the purchaser or member of the consortium provides a copy of the tax credit certificate with its filed state income tax return. The amount of the credit that the purchaser or member of the consortium may claim pursuant to this section is the amount stated on the tax credit certificate.
(7) In a sufficiently timely manner to allow the department of revenue to process returns claiming the income tax credit allowed pursuant to this section, the department of agriculture shall provide the department of revenue with an electronic report of each purchaser or member of the consortium that the department of agriculture approved for the income tax credit allowed pursuant to this section for the preceding calendar year that includes the following information:
(a) The taxpayer's name; and
(b) The taxpayer's social security number, Colorado account number, or federal employer identification number.
(8) If a credit authorized in this section exceeds the income tax due on the income of the member of the consortium or purchaser for the taxable year, the excess credit may not be carried forward and is refundable to the member of the consortium or purchaser.
(9) The department of agriculture and the department of revenue may promulgate rules in accordance with article 4 of title 24 as may be necessary to effectuate the purposes of this section.
(10) This section is repealed, effective December 31, 2035.
Source: L. 2023: Entire section added, (HB 23-1008), ch. 338, p. 2029, � 5, effective August 7.
Cross references: For the legislative declaration in HB 23-1008, see section 1 of chapter 338, Session Laws of Colorado 2023.
39-22-550. Tax credit for reducing emissions from certain lawn equipment - tax preference performance statement - legislative declaration - definitions - report - repeal. (1) (a) The general assembly finds and declares that:
(I) Gasoline-powered lawn equipment, such as lawn mowers, leaf blowers, trimmers, and snowblowers, emits high levels of air pollutants, including nitrogen oxides and volatile organic compounds that, together, form ozone and particulate matter;
(II) Replacing such gasoline-powered lawn equipment with electric-powered lawn equipment can reduce ozone pollution; and
(III) The purpose of the tax credit in subsection (3) of this section is to incentivize the voluntary transition from gasoline-powered to electric-powered lawn equipment.
(b) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly further finds and declares that:
(I) The general legislative purpose of the tax credit allowed by subsection (3) of this section is to induce certain designated behaviors by taxpayers, specifically the purchase of electric-powered lawn equipment; and
(II) In order to allow the general assembly and the state auditor to measure the effectiveness of the tax credit, the department of revenue shall submit to the general assembly and the state auditor an annual report in accordance with subsection (5) of this section detailing the sales of new, electric-powered lawn equipment, as reported by taxpayers claiming the tax credit authorized under subsection (3) of this section.
(2) As used in this section, unless the context otherwise requires:
(a) Lawn equipment means a lawn mower, leaf blower, trimmer, or snowblower.
(b) Purchase price has the meaning set forth in section 39-26-102 (7).
(c) Qualified retailer means a retailer that sells lawn equipment and:
(I) Holds a state sales tax license;
(II) Has timely filed a monthly sales tax return showing a tax liability for at least twelve months;
(III) Has paid the taxes due on the monthly sales tax return; and
(IV) Has registered with the department of revenue pursuant to subsection (3)(e)(II) of this section.
(d) Retailer has the meaning set forth in section 39-26-102 (8).
(e) Retail sale has the meaning set forth in section 39-26-102 (9).
(3) (a) For income tax years commencing on or after January 1, 2024, but before January 1, 2027, a retailer qualified pursuant to subsection (3)(e)(II) of this section is allowed a tax credit against the tax imposed pursuant to this article 22 in an amount equal to thirty-three percent of the aggregate purchase price for all retail sales of new, electric-powered lawn equipment that the qualified retailer sold in the state during the tax year.
(b) In order to qualify for the tax credit allowed under this subsection (3), the qualified retailer shall provide to the purchaser, at the time of the retail sale of new, electric-powered lawn equipment, a discount on the purchase price of the lawn equipment equal to thirty percent of the purchase price and shall show the discount as a separate item on the receipt or invoice provided to the purchaser.
(c) To determine whether a qualified retailer sold new, electric-powered lawn equipment in this state, the rules of section 39-26-104 (3)(a) apply.
(d) The qualified retailer may retain from the credit allowed in this section an administrative fee not to exceed three percent of the purchase price of the new, electric-powered lawn equipment sold.
(e) (I) The qualified retailer shall electronically submit a report to the department of revenue, on a quarterly basis and in the form and manner required by the department, that details the number of pieces of new, electric-powered lawn equipment sold by the qualified retailer in the reporting period for which the qualified retailer provided a discount as described in subsection (3)(b) of this section. The department may require the qualified retailer to include additional information in the report.
(II) Before selling a piece of new, electric-powered lawn equipment for which a retailer intends to claim a credit pursuant to this section, the retailer shall register as a qualified retailer by filing with the department of revenue a registration statement in the form and manner that the department prescribes.
(4) If a credit authorized by this section exceeds the income tax due on the income of the qualified retailer for the taxable year, the excess credit may not be carried forward and must be refunded to the qualified retailer.
(5) Pursuant to section 39-21-304 (3), notwithstanding section 24-1-136 (11)(a)(I), and for the purpose of providing data that allows the general assembly and the state auditor to measure the effectiveness of the tax credit created in subsection (3) of this section, the department of revenue, on or before January 1, 2025, and on or before January 1 of each year thereafter through January 1, 2028, shall submit to the general assembly and the state auditor a report detailing the sales of new, electric-powered lawn equipment, as reported by a qualified retailer claiming the tax credit authorized under subsection (3) of this section. The tax credit established in this section meets its purpose if sales of new, gasoline-powered lawn equipment are significantly reduced within five years after the tax credit becomes effective, as determined by the general assembly and the state auditor pursuant to section 39-21-304 (3).
(6) This section is repealed, effective December 31, 2033.
Source: L. 2023: Entire section added, (SB 23-016), ch. 165, p. 741, � 12, effective August 7. L. 2024: (2)(c)(IV) and (3)(a) amended, (HB 24-1450), ch. 490, p. 3426, � 83, effective August 7.
39-22-551. Industrial clean energy tax credit - tax preference performance statement - definitions - report - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credit provided for in this section is to induce certain designated behavior by taxpayers and to provide a reduction in income tax liability for certain businesses or individuals by allowing an owner of an industrial facility to receive a credit against income tax for the costs associated with conducting industrial studies or for implementing a plan to put into service greenhouse gas emissions reduction improvements.
(b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purposes specified in subsection (1)(a) of this section based on the information required and reported by the office pursuant to subsection (10)(b) of this section, and based on the number and value of the credits claimed.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) Applicable percentage means thirty percent, except as provided in subsection (3)(b)(II) of this section.
(b) Certified greenhouse gas emissions reduction improvements means greenhouse gas emissions reduction improvements to a qualified industrial facility that have been certified by the office as meeting the standards of the office.
(c) Colorado energy office or office means the Colorado energy office created in section 24-38.5-101.
(d) Department means the department of revenue.
(e) Greenhouse gas emissions reduction improvements means improvements that help to measurably reduce greenhouse gas emissions. Greenhouse gas emissions reduction improvements may include one or more of the following equipment purchases, improvements, retrofits, or investments:
(I) Replacing fossil-fuel-powered off-road equipment such as forklifts and construction equipment with electric equipment;
(II) Replacing fossil-fuel-fired equipment for space or water heating or industrial process heating with high-efficiency electric equipment;
(III) Replacing fossil-fuel-fired or compressed air-driven industrial process equipment with high-efficiency electric equipment;
(IV) Placing in service advanced refrigeration systems that reduce greenhouse gas emissions;
(V) Placing in service electric charging infrastructure for electric vehicles at an industrial facility;
(VI) Placing in service waste heat recovery technology;
(VII) Upgrading or implementing energy monitoring systems;
(VIII) Installing high efficiency electric pumps, motors, compressors, and lighting;
(IX) Installing variable volume or load efficiency equipment;
(X) Installing carbon capture equipment which provides supporting information that demonstrates a net reduction in greenhouse gas emissions when accounting for energy-related emissions released to operate the carbon capture equipment and provides a permanent durable carbon storage plan; except that the captured carbon may not be used for enhanced oil recovery;
(XI) Installing equipment used for collection of biomethane;
(XII) Replacing fossil-fuel-fired equipment with hydrogen fueled equipment;
(XIII) Installing hydrogen fueling stations for fuel cell vehicles at industrial facilities;
(XIV) Converting fossil-fuel-powered pumps, compressors, and controllers to compressed air-driven or electric-driven pumps, compressors, and controllers;
(XV) Installing onsite energy storage;
(XVI) Installing or upgrading to utility service feed equipment to directly support the implementation of any of the electrification improvements set forth in this subsection (2)(e);
(XVII) Placing in service carbon management systems including direct air capture and other forms of carbon dioxide removal;
(XVIII) Material substitutions within industrial processes to reduce industrial process greenhouse gas emissions by a minimum of fifteen percent when compared to existing production practices;
(XVIII.5) For income tax years commencing on or after January 1, 2026, embodied carbon investments, which are investments in the production of eligible materials, as defined in section 24-92-118 (2)(b), that result in the reduction of the eligible materials' cradle-to-gate embodied emissions, as established in policies created by the Colorado energy office, created in section 24-38.5-101, and in consultation with the office of the state architect. To qualify as an embodied carbon investment, an investment must result in a fifteen percent or greater reduction in cradle-to-gate embodied emissions of the eligible materials when compared to the eligible materials' cradle-to-gate baseline as established in standards and guidelines created by the Colorado energy office and in consultation with the office of the state architect. A cradle-to-gate measurement or baseline considers the life cycle stages for a product including, but not limited to, the raw material extraction and processing related to the product, and the transport to the manufacturer and manufacturing of the product.
(XIX) Other similar purchases and improvements identified and set forth in the standards developed by the office pursuant to subsection (4) of this section that result in at least a twenty percent reduction in greenhouse gas emissions when compared to current technology, equipment, or production processes being deployed by the owner.
(f) Greenhouse gas emissions reduction plan or plan means project implementation plans or specifications for the proposed greenhouse gas emissions reduction improvements to a qualified industrial facility that are sufficiently detailed to enable the office to evaluate whether the improvements are in compliance with the standards developed under this section and whether the plan will measurably reduce greenhouse gas emissions at a qualified industrial facility. The plan must include, but is not limited to, a property address, legal description, or other specific location of the industrial facility, and must include information on the estimated costs for the proposed greenhouse gas emissions reduction improvements.
(g) (I) Industrial facility means any real property in the state, and the machinery or equipment on the real property, where the principal trade or business activity is the mechanical or chemical transformation of organic or inorganic substances into new products, characteristically using power-driven machines and materials handling equipment.
(II) Industrial facility does not include a landfill, an electric utility subject to regulation by the public utilities commission, or an upstream or mid-stream oil and gas operation.
(h) Industrial process greenhouse gas emissions means greenhouse gas emissions that occur as a result of the chemical or physical transformation of process input materials.
(i) Industrial study means an energy and emissions audit, a feasibility study, a pre-front-end or a front-end engineering design study that meets or exceeds the standards established by the office, or any other industrial studies as outlined in program standards adopted by the office.
(j) Owner means a person or developer of a project to be implemented at a qualified industrial facility subject to tax under this article 22 who applies for and claims the credit allowed by this section.
(3) Availability of credit and amount. (a) For income tax years commencing on or after January 1, 2024, but prior to January 1, 2033, there shall be allowed a credit with respect to the income taxes imposed pursuant to this article 22 to the owner of a qualified industrial facility in an amount equal to:
(I) The applicable percentage of the costs paid and approved by the office for completing an industrial study during the tax year in which the credit is claimed; except that the credit cannot be claimed in an amount exceeding one million dollars; or
(II) The applicable percentage of the capital costs paid by the owner, not including the cost for design, and approved by the office for certified greenhouse gas emissions reduction improvements that are placed in service during the tax year in which the credit is claimed; except that the credit must be claimed in an amount that is not less than seventy-five thousand dollars and does not exceed eight million dollars.
(b) (I) If the office approves the owner's industrial study or greenhouse gas emissions reduction plan and reserves credits under subsection (6) of this section, the office shall apply the applicable percentage of the costs paid for completing an industrial study or the capital costs paid for greenhouse gas emissions reduction improvements to calculate the amount of the credit that the owner will receive for the tax year in which the industrial study is completed or the greenhouse gas emissions reduction improvements are placed in service.
(II) The office may on a case by case basis determine that the applicable percentage may be increased to an amount not to exceed fifty percent upon request by an owner for greenhouse gas emissions reduction improvements that have significant potential to significantly advance reductions in greenhouse gas emissions but may not be in the commercial stage of development. In evaluating such a request, the office may use United States department of energy technology readiness level criteria, scientific literature detailing potential decarbonization impacts of proposed technology, or subsequent literature on technology results to date to determine whether the requested increase of the applicable percentage sufficiently satisfies the office's criteria to justify the increase.
(c) An owner that claims the credit allowed by this section cannot, for the same greenhouse gas emission reduction improvements:
(I) Claim the credit allowed by section 39-30-104; or
(II) Receive grant money under the industrial and manufacturing operations clean air grant program created in section 24-38.5-116 (3)(a).
(4) Office to develop standards. (a) The office shall develop standards for the approval of industrial facilities as qualified industrial facilities for which a tax credit under this section is allowed to an owner.
(b) The office shall develop standards for the approval of industrial studies, for the approval of an industrial facility owner's greenhouse gas emissions reduction plan, for certifying greenhouse gas emissions reduction improvements, including verification of reduction in greenhouse gas emissions, and for reviewing the cost certifications for the costs of the industrial study and the costs related to the implementation of a greenhouse gas emissions reduction improvements plan. The standards that are adopted pursuant to this subsection (4)(b), must provide that a plan propose greenhouse gas emissions reduction improvements that lead to direct reductions through project implementation.
(c) Any standards developed by the office under this subsection (4) must be posted on the office's website.
(d) The office may annually review and update as necessary standards adopted pursuant to this subsection (4).
(5) Application and industrial study or plan submission. (a) An owner that intends to claim a credit pursuant to subsection (3)(a)(I) of this section shall submit to the office an application on a form prescribed by the office and any documentation that the office requires to demonstrate the anticipated completion of an industrial study in the current or in a future tax year, including the cost of the industrial study and the amount of credit requested.
(b) An owner that intends to claim a tax credit pursuant to subsection (3)(a)(II) of this section shall submit to the office an application and plan as set forth in the standards developed by the office. The office shall prescribe a form for the application, which must include a place for owners to provide the following information:
(I) Detailed estimates of the capital costs for the proposed greenhouse gas emissions reduction improvements;
(II) Estimates of expected energy consumption avoided by the use of the greenhouse gas emissions reduction improvements;
(III) Estimated timing for the greenhouse gas emissions reduction improvements to be placed into service;
(IV) For carbon management projects, net reductions in greenhouse gas emissions;
(V) Estimated dollar savings;
(VI) Estimated dollars leveraged, including any private investment, state grant funding, and federal grants or tax credits;
(VII) The type and age of equipment being replaced, if applicable;
(VIII) The type and estimated life span of new equipment, if applicable;
(IX) The amount of credit requested; and
(X) Any other information as specified in the standards set forth by the office.
(c) (I) The office shall accept applications through June 30, 2024, and semi-annually through each December 31 and June 30 thereafter, through June 30, 2032.
(II) (A) The office shall review applications and documentation related to industrial studies to be conducted or plans for greenhouse gas emissions reduction improvements at a qualified industrial facility to determine that the application, documentation, and plan, if applicable, are complete and in compliance with the requirements of this section and the standards established by the office.
(B) If the office determines that the application, documentation, and plan, if applicable, are complete and in compliance, the office shall add the application to an evaluation pool for the application period.
(C) If the office determines that the application is incomplete or that it does not comply with the requirements of this section or the standards established by the office, the office shall remove the application from the review process and notify the owner in writing of its decision. An owner may resubmit a disapproved application, documentation, and plan, if applicable, to be evaluated in a future application period.
(6) Merit-based review and reservation of credits. (a) (I) For each application period, the office shall conduct a merit-based evaluation of the applications that have been placed in the evaluation pool pursuant to subsection (5)(c)(II)(B) of this section. The office shall complete its review, and award reservations, within ninety days after the end of the application period.
(II) Based upon the totality of the factors set forth in subsection (6)(c) of this section, the office may adjust the applicable percentage as provided in subsection (3)(b)(II) of this section and reserve for the benefit of each owner all, part, or none of the credit amount requested by the owner; except that the office shall not reserve an amount in excess of the credit allowed by subsection (3)(a) of this section, and the aggregate amount of credits reserved for all owners may not exceed the reservation limits set forth in subsection (8) of this section.
(III) The office may reserve credits for the current or any future tax year based upon the anticipated completion or in service date indicated in the application; except that credits may not be reserved for an industrial study completed or for greenhouse gas emissions reduction improvements placed in service prior to the end of the application period. The office shall not reserve tax credits for any tax year beginning on or after January 1, 2033.
(b) (I) If the office reserves credits for the benefit of an owner under subsection (6)(a) of this section, the office shall notify the owner of the reservation and the amount reserved. The reservation of tax credits does not entitle the owner to an issuance of any tax credit certificates until the owner complies with all of the requirements specified in this section, or by the office, for the issuance of a tax credit certificate.
(II) The office shall notify any owner for which it reserved no credit under subsection (6)(a) of this section of its decision in writing.
(III) If the office reserves less than the full amount of credit requested by the owner, the owner may submit a new application for the remaining balance up to the amount of credit allowed by subsection (3)(a) of this section in a future application period.
(c) (I) In conducting the merit-based review pursuant to subsection (6)(a) of this section, the office shall consider the factors set forth in this subsection (6)(c) in addition to any other factors the office may establish in its guidelines. The office may weigh the factors equally or differently.
(II) The office shall:
(A) Consider additional resources leveraged by the owner to conduct the industrial study or implement the plan; and
(B) Prioritize the location of the industrial facility that is the subject of the industrial study or the plan, in particular if the location is in a disproportionately impacted community or within a non-attainment area.
(III) In addition to the factors set forth in subsection (6)(c)(II) of this section, for an application that is requesting a reservation of credit for the credit allowed pursuant to subsection (3)(a)(II) of this section, the office shall also consider:
(A) The annual greenhouse gas emissions reduction impact, considering both the total impact and the per dollar impact for the amount of credit requested to be reserved;
(B) Any co-benefits of a project that will implement the plan with prioritization given to projects that limit the amount of pollutants emitted by emerging technologies, including projects that include electrification and use of renewable electricity;
(C) The readiness of a greenhouse gas emissions reduction improvement that will be implemented by the plan; and
(D) The innovative nature of the plan and proposed greenhouse gas emissions reduction improvements.
(7) Proof of compliance - audit of cost certification - issuance of tax credit certificate. (a) Any owner receiving a reservation of tax credits under subsection (6) of this section for credits allowed pursuant to subsection (3)(a) of this section shall complete the approved industrial study or put the approved greenhouse gas emissions reduction improvements identified in the plan in service during the tax year for which the reservation is approved. When the approved industrial study is complete or the approved greenhouse gas emissions reduction improvements are placed in service, the owner shall notify the office of the completion of the industrial study or plan and shall provide the office with a cost certification of the costs for the approved industrial study or approved greenhouse gas emissions reduction improvements. The cost certification must be audited by a licensed certified public accountant that is not affiliated with the owner. The office shall review the cost certification and verify that it satisfies the information provided in the owner's application, including, if applicable, the plan, within ninety days after receipt of the cost certification. If the office determines that the industrial study is complete or that the plan is complete and that the greenhouse gas emissions reduction improvements have been placed in service, and the office approves the cost certification, the office shall issue a tax credit certificate in the amount allowed pursuant to subsection (3) of this section.
(b) Notwithstanding subsection (7)(a) of this section, the total amount of the initial tax credit certificate issued for an industrial study or certified greenhouse gas emissions reduction improvement must not exceed the amount of the tax credit reservation approved pursuant to subsection (6)(a) of this section.
(c) If the amount of certified costs incurred by the owner would result in an owner being issued an amount that exceeds the amount of tax credit reserved for the owner under subsection (6) of this section, the owner may apply to the office for the issuance of an amount of tax credits that equals the excess. The owner shall submit its application for issuance of such excess tax credits on a form prescribed by the office. The office shall review the application for an additional tax credit amount in the same manner it reviews all other applications and in accordance with subsection (6)(a) of this section. Subject to the availability of tax credits for the application period during which the owner applies for the additional credit award pursuant to this subsection (7)(c), the office may approve the application and shall issue a separate certificate.
(8) Limit on aggregate amount of tax credits available to be reserved. (a) For the application period ending June 30, 2024, and for each semi-annual application period commencing on or after July 1, 2024, but before July 1, 2028, the aggregate amount of all tax credits that may be reserved under subsection (6)(a) of this section and awarded under subsection (7)(c) of this section must not exceed eight million dollars. For application periods commencing on or after July 1, 2028, but before July 1, 2032, the aggregate amount of all tax credits that may be reserved under subsection (6)(a) of this section must not exceed twelve million dollars.
(b) Notwithstanding the provisions of subsection (8)(a) of this section, the office may increase the periodic aggregate amount of tax credits available for the application period ending June 30, 2024, and for any semi-annual application period commencing on or after July 1, 2024, but before July 1, 2028. If so increased, the office shall decrease accordingly the amount of tax credits available for the application periods commencing on or after July 1, 2028, but before July 1, 2032.
(c) Notwithstanding the provisions of subsection (8)(a) of this section, if the aggregate amount of all tax credits reserved pursuant to subsection (6)(a) of this section and awarded pursuant to subsection (7)(c) of this section for an application period is less than the amount available under subsections (8)(a) and (8)(b) of this section, then the aggregate amount of all tax credits that may be reserved and awarded in the next application period is increased by the unreserved and unawarded amount.
(9) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report of each owner to which the office has issued a tax credit certificate, as allowed in subsection (7) of this section, for the preceding tax year that includes the following information:
(a) The taxpayer's name;
(b) The amount of the credit; and
(c) The taxpayer's social security number or the taxpayer's Colorado account number and federal employer identification number.
(10) Guidelines. (a) In addition to the standards that the office is required to establish pursuant to subsection (4) of this section, the office may establish guidelines to implement this section. All guidelines established by the office must be posted on the office's website.
(b) The office shall maintain a database of any information necessary to evaluate the effectiveness of the tax credit allowed in this section in meeting the purpose set forth in subsection (1)(a) of this section and shall provide this information and any other information requested, if available, to the state auditor as part of the state auditor's evaluation of this tax expenditure required by section 39-21-305. Information provided by the office to the state auditor may include approved industrial studies or approved plans for greenhouse gas emissions reduction improvements.
(11) In order to claim the credit authorized by this section, the owner shall file the tax credit certificate with the owner's state income tax return. The amount of the credit that the owner may claim under this section is the amount stated on the tax credit certificate.
(12) (a) An owner shall submit a report to the office by the end of the first month after the end of any income tax year in which the owner received a tax credit under this section and shall annually submit a report for three years thereafter verifying the greenhouse gas emissions reduction improvements are, notwithstanding circumstances evaluated and determined by the office to be justified, in use at the location identified in the owner's application for a tax credit certificate and remain owned by the owner.
(b) If an owner was allowed a credit under this section and fails to demonstrate the greenhouse gas emissions reduction improvements are, notwithstanding circumstances evaluated and determined by the office to be justified, in use at the location identified in the owner's application for a tax credit certificate or are owned by the owner in any of the three taxable years immediately following the taxable year in which the greenhouse gas emissions reduction improvements were placed in service, the office shall notify the department in writing that the credit allowed in this section must be disallowed for that owner. The owner shall add the amount of the disallowed credit to its return as a recaptured credit for the tax year in which the credit is disallowed pursuant to this subsection (12).
(13) If a credit authorized by this section exceeds the income tax due on the income of the owner for the taxable year, the excess credit may not be carried forward and must be refunded to the owner.
(14) This section is repealed, effective December 31, 2038.
Source: L. 2023: Entire section added, (HB 23-1272), ch. 167, p. 776, � 5, effective May 11. L. 2024: IP(2)(e), (2)(i), (2)(j), (3)(a)(II), and (3)(c) amended, (SB 24-214), ch. 191, p. 1100, � 15, effective May 17. L. 2025: IP(2)(e) and (2)(e)(XVIII) amended and (2)(e)(XVIII.5) added, (SB 25-182), ch. 277, p. 1442, � 3, effective August 6.
Cross references: For the legislative declaration in HB 23-1272, see section 1 of chapter 167, Session Laws of Colorado 2023. For the legislative declaration in SB 25-182, see section 1 of chapter 277, Session Laws of Colorado 2025.
39-22-552. Tax credit for expenditures made in connection with a geothermal energy project - tax preference performance statement - legislative declaration - definitions - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credit provided in this section is to induce certain designated behavior by taxpayers and to provide a reduction in income tax liability for certain businesses or individuals by providing a financial incentive for the development of thermal energy networks and electricity generation from geothermal sources.
(b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purpose specified in subsection (1)(a) of this section based on the number and value of the credits claimed.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) (I) Applicable amount means, except as provided in subsection (2)(a)(II) of this section, an amount of tax credit not to exceed thirty percent of a qualified expenditure by an eligible taxpayer that is allowed pursuant to this section as set by the office in accordance with subsection (4)(c) of this section.
(II) The office may, on a case-by-case basis, determine that the applicable amount may be increased to an amount not to exceed fifty percent of a qualified expenditure by an eligible taxpayer if the office determines that a geothermal energy project has significant potential to result in geothermal electricity production or technological demonstration of geothermal electricity production.
(b) Approved geothermal energy project means a geothermal energy project that has been approved to receive qualified expenditures by the office pursuant to the standards developed by the office in accordance with subsection (5) of this section.
(c) Colorado energy office or office means the Colorado energy office created in section 24-38.5-101.
(d) Department means the department of revenue.
(e) Eligible taxpayer means any of the following people or entities that made a qualified expenditure:
(I) A person engaged in a trade or business that is subject to tax pursuant to this article 22;
(II) A person or political subdivision of this state that is exempt from tax pursuant to section 39-22-112 (1); or
(III) A tribal government.
(f) Geothermal electricity project or project means a project in the state that is intended to evaluate and develop a geothermal resource for the purpose of electricity production, that meets the standards developed pursuant to subsection (5) of this section, and that involves any of the following:
(I) The exploration and development of wells;
(II) Drilling exploration and confirmation wells;
(III) The use of any heat extracted with produced fluids in an oil and gas operation if the heat is only utilized to reduce emissions from the operation in the same location as the well from which it was produced and would otherwise not be economically feasible as a stand-alone geothermal energy project;
(IV) Drilling injection wells;
(V) Flow testing;
(VI) Reservoir engineering;
(VII) Geothermal energy storage;
(VIII) Coproduction of geothermal energy, including for industrial uses or thermal energy networks;
(IX) Power generation equipment; or
(X) Studies to identify and explore resources that may be suitable for geothermal electricity generation and may include hydrogen generation or utilization of direct air capture technology.
(f.5) Geothermal energy project means a geothermal electricity project, thermal energy network, or a thermal energy network study.
(g) Qualified expenditure means the total monetary cost approved by the office and expended on or after January 1, 2024, but before January 1, 2033, by an eligible taxpayer in connection with an approved geothermal energy project in the tax year for which the credit allowed in this section is claimed.
(h) Thermal energy network has the same meaning as set forth in section 39-22-554 (2)(n).
(i) Thermal energy network study means an energy and emissions scoping study, a feasibility study, an investment grade energy audit, a detailed engineering design, or a combination of these options that meets or exceeds the standards established by the office.
(j) Tribal government means a federally recognized Indian tribe, including its business operations and wholly owned entities, with reservation lands within the state of Colorado or operating within the state.
(3) (a) For income tax years commencing on or after January 1, 2024, but before January 1, 2033, an eligible taxpayer that makes a qualified expenditure is allowed a credit against the tax imposed under this article 22 in the applicable amount and subject to the limitations set forth in subsection (3)(b) of this section.
(b) An eligible taxpayer is not allowed a tax credit pursuant to this section in an aggregate amount of more than five million dollars in tax credits for all income tax years for which the tax credit may be claimed pursuant to this section per approved geothermal energy project.
(4) (a) An eligible taxpayer shall submit an application in a form and manner determined by the office for a tax credit certificate for the credit allowed in this section. The application must include:
(I) Information sufficient for the office to evaluate the geothermal energy project for which the eligible taxpayer proposes making an expenditure and to approve the project if the project has not been previously approved by the office;
(II) Information related to the specific costs associated with the proposed expenditure;
(III) Estimated timing for the proposed expenditure to be made by the eligible taxpayer;
(IV) The amount of credit requested; and
(V) Any other information as specified in the standards set forth by the office.
(b) (I) The office shall accept applications through June 30, 2024, and semi-annually through each December 31 and June 30 thereafter, through June 30, 2032.
(II) (A) The office shall review applications and documentation provided pursuant to subsection (4)(a) of this section to determine whether the application and documentation are complete and in compliance with the requirements of this section and the standards established by the office.
(B) If the office determines that the application and documentation are complete and in compliance with the requirements of this section and the standards established by the office, the office shall add the application to the evaluation pool for the application period.
(C) If the office determines that the application or documentation, or both, are not complete or do not comply with the requirements of this section or the standards established by the office, the office shall remove the application from the review process and notify the taxpayer in writing of its decision. A taxpayer may resubmit a disapproved application and documentation to be evaluated in a future application period.
(c) (I) (A) For each application period, the office shall conduct a merit-based evaluation of the application in the evaluation pool. The office shall complete its review and award reservations within ninety days after the end of the application period.
(B) Based upon the totality of the factors set forth in subsection (4)(d) of this section and based on considerations required for geothermal energy projects as set forth in subsection (5) of this section, which the office may weigh equally or differently, the office shall determine an applicable amount of credit that may be reserved for the benefit of the eligible taxpayer which may be all, part, or none of the credit amount requested in the eligible taxpayer's application; except that the office shall not reserve an amount in excess of the limitations set forth in subsection (3)(b) of this section, and the aggregate amount of credits reserved for all owners must not exceed thirty-five million dollars for all taxpayers in all years the credit is allowed.
(C) The office may reserve credits for the current or any future tax year based upon the anticipated timing of the expenditure; except that credits may not be reserved for an expenditure that is made prior to the end of the application period. The office shall not reserve credits for any tax year beginning on or after January 1, 2033.
(II) (A) If the office reserves credits for the benefit of an eligible taxpayer pursuant to subsection (4)(c)(I) of this section, the office shall notify the owner of the reservation and the amount reserved.
(B) The office shall notify any taxpayer for which it reserved no credit pursuant to subsection (4)(c)(I) of this section of its decision in writing.
(C) If the office reserves less than the full amount of credit requested by the taxpayer, the taxpayer may submit a new application for the remaining balance up to the limitation of the credit set forth in subsection (3)(b) of this section.
(d) In conducting the merit-based review pursuant to subsection (4)(c) of this section, the office shall consider the following factors in addition to any other factors that the office may establish in its standards:
(I) The workforce development and geothermal sector growth that the expenditure in the project will promote, including supporting workforce transition;
(II) Whether the project the expenditure is made in connection with demonstrates effective and unique technology and circumstances that are supported by public outreach and education;
(III) Demonstration of community resilience through utilization of geothermal energy in support of building heating and cooling decarbonization or enhancement of electric grid resiliency, including for dispatchability and energy storage, especially for rural or isolated communities; and
(IV) Whether the project the expenditure is made in connection with serves a disproportionately impacted community or a just transition community or is within a non-attainment area.
(e) The reservation of tax credits does not entitle an eligible taxpayer to an issuance of any credits until the eligible taxpayer provides the office with any documentation required by the office and a cost certification of the expenditure made in connection with an approved geothermal energy project during the tax year in which the reservation is approved. The cost certification must be audited by a licensed public accountant that is not affiliated with the eligible taxpayer. The office shall review the cost certification to verify that it satisfies the information provided in the eligible taxpayer's application. If the office determines that the eligible taxpayer made a qualified expenditure, the office shall issue a tax credit certificate in the applicable amount.
(5) The office shall develop standards for the implementation of the tax credit allowed pursuant to this section. Any standards developed by the office must be posted on the office's website. At a minimum, the standards must provide for the evaluation and approval of geothermal energy projects and require the office to consider whether the project:
(a) Demonstrates technology to further the adoption of clean, firm carbon-free electricity derived from geothermal energy in the state;
(b) Supports replicable, cost-effective reduction outcomes to stimulate the geothermal sector or otherwise expand geothermal energy capacity in the state; and
(c) Directly, or through technological demonstration evaluated and approved by the office, will lead to measurable greenhouse gas reduction outcomes for the state.
(6) (a) The office shall maintain a database of any information necessary to evaluate the effectiveness of the tax credit allowed in this section in meeting the purpose set forth in subsection (1)(a) of this section and shall provide such information, and any other information that may be needed, if available, to the state auditor as part of the state auditor's evaluation of this tax expenditure required by section 39-21-305.
(b) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report of each eligible taxpayer to which the office issued a tax credit certificate for the preceding tax year that includes the following information:
(I) The taxpayer's name;
(II) The amount of the credit; and
(III) The taxpayer's social security number or the taxpayer's Colorado account number and federal employer identification number.
(7) An eligible taxpayer that claims the credit allowed by this section may not claim the credit allowed by section 39-30-104 for the same project.
(8) In order to claim the credit authorized by this section, an eligible taxpayer shall file the tax credit certificate with the qualified entity's state income tax return and, if the eligible taxpayer is exempt from tax pursuant to section 39-22-112 (1), the eligible taxpayer shall file a return pursuant to section 39-22-601 (7)(b). The amount of the credit that the eligible taxpayer may claim pursuant to this section is the amount stated on the tax credit certificate.
(9) If a credit authorized in this section exceeds the income tax due on the income of the eligible taxpayer for the taxable year, the excess credit may not be carried forward and must be refunded to the eligible taxpayer.
(10) This section is repealed, effective December 31, 2038.
Source: L. 2023: Entire section added, (HB 23-1272), ch. 167, p. 785, � 6, effective May 11. L. 2024: (1)(a), (2)(e), IP(2)(f), (2)(f)(VIII), and (2)(f)(IX) amended and (2)(f)(X), (2)(f.5), (2)(h), (2)(i), and (2)(j) added, (SB 24-214), ch. 191, p. 1101, � 16, effective May 17.
Cross references: For the legislative declaration in HB 23-1272, see section 1 of chapter 167, Session Laws of Colorado 2023.
39-22-553. Geothermal electricity generation production tax credit - tax preference performance statement - legislative declaration - definitions - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credit provided in this section is to induce certain designated behavior by taxpayers and to provide a reduction in income tax liability for certain businesses or individuals by providing a financial incentive for production of geothermal electricity generation and related infrastructure.
(b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purpose specified in subsection (1)(a) of this section based on the information required to be maintained by and reported to the state auditor by the office pursuant to subsection (4)(b)(I) of this section and based on the number and value of the credits claimed.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) Colorado energy office or office means the Colorado energy office created in section 24-38.5-101.
(b) Department means the department of revenue.
(c) Qualified entity means any of the following people or entities that produce electricity derived from geothermal energy for sale or use:
(I) A person engaged in a trade or business that is subject to tax pursuant to this article 22;
(II) A person or political subdivision of this state that is exempt from tax pursuant to section 39-22-112 (1); or
(III) A tribal government.
(d) Tribal government means a federally recognized Indian tribe, including its business operations and wholly owned entities, with reservation lands within the state of Colorado or operating within the state.
(3) For income tax years commencing on or after January 1, 2024, but before January 1, 2033, a qualified entity is allowed a credit against the income taxes imposed by this article 22 in an amount equal to three one-thousandths of a dollar per kilowatt hour of geothermal electricity that is produced by the qualified entity in the state in the tax year. In order to claim the credit, the qualified entity shall apply for and receive a tax credit certificate from the office pursuant to subsection (4) of this section.
(3.5) The office shall annually review and evaluate the effectiveness of the tax credit and may modify the amounts set forth in subsection (3) of this section. The office shall maintain the current applicable tax credit on its website and shall provide the applicable tax credit in writing to the department no later than December 31, 2024, and each December 31 thereafter through December 31, 2031.
(4) (a) A qualified entity shall submit an application to the office for a tax credit certificate to claim the tax credit allowed by this section on a form and in a manner prescribed by the office. The application must include sufficient information to allow the office to determine that the applicant is a qualified entity and to certify the amount of the tax credit for which the tax credit certificate is applied.
(b) (I) The office shall maintain a database of any information necessary to evaluate the effectiveness of the tax credit allowed by this section in meeting the purpose set forth in subsection (1)(a) of this section, and shall provide such information, and any other information that may be needed, if available, to the state auditor as part of the state auditor's evaluation of this tax expenditure pursuant to section 39-21-305.
(II) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report of each qualified entity to which the office issues a tax credit certificate for the preceding tax year that includes the following information:
(A) The taxpayer's name;
(B) The amount of the credit; and
(C) The taxpayer's social security number or the taxpayer's Colorado account number and federal employer identification number.
(5) In order to claim the credit authorized by this section, the qualified entity shall file the tax credit certificate with the qualified entity's state income tax return and, if the qualified entity is exempt from tax pursuant to section 39-22-112 (1), the qualified entity shall file a return pursuant to section 39-22-601 (7)(b). The amount of the credit that the qualified entity may claim pursuant to this section is the amount stated on the tax credit certificate.
(6) A qualified entity that claims the credit allowed by this section may not claim the credit allowed by section 39-30-104 for the same project.
(7) If a credit authorized in this section exceeds the income tax due on the income of the qualified entity for the taxable year, the excess credit may not be carried forward and must be refunded to the qualified entity.
(8) This section is repealed, effective December 31, 2038.
Source: L. 2023: Entire section added, (HB 23-1272), ch. 167, p. 790, � 7, effective May 11. L. 2024: (2)(c) and (3) amended and (2)(d) and (3.5) added, (SB 24-214), ch. 191, p. 1102, � 17, effective May 17.
Cross references: For the legislative declaration in HB 23-1272, see section 1 of chapter 167, Session Laws of Colorado 2023.
39-22-554. Heat pump technology and thermal energy network tax credit - tax preference performance statement - legislative declaration - definitions - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credit provided in this section is to induce certain designated behavior by taxpayers and to provide a reduction in income tax liability for certain businesses or individuals by providing a financial incentive for the installation of heat pump technology and the use of heat pump technology and thermal energy networks.
(b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purpose specified in subsection (1)(a) of this section based on the number and value of the credits claimed.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) (I) Air-source heat pump system means a system that:
(A) Is certified pursuant to the federal environmental protection agency's energy star program;
(B) Repealed.
(C) Is listed in the Air-conditioning, Heating, and Refrigeration Institute directory of certified product performance as a matched system;
(D) Conforms to all applicable municipal, state, and federal codes, standards, regulations, and certifications; and
(E) Is installed in accordance with the manufacturer's specifications.
(II) Air-source heat pump system may include supplemental heat so long as:
(A) The air-source heat pump is used as the primary source of a building's heat and is designed to supply at least eighty percent of total annual heating for the building; and
(B) The system is capable of distributing produced heat to all conditioned areas of the building.
(III) Repealed.
(b) Applicable percentage means a percentage annually established by the office as specified in subsection (4) of this section.
(c) (I) Campus means a collection of two or more buildings that are owned and operated by the same person, that have a shared purpose and function as a single property, that do not lease space to tenants, and that do not provide energy or heat services for a fee.
(II) Campus includes two or more of the buildings that comprise the capitol complex, as defined in section 24-82-101 (3)(f).
(c.5) Cold-climate heat pump means a type of air-source heat pump system that:
(I) Meets the qualification criteria of the federal environmental protection agency's Energy Star program's cold-climate heat pump designation or meets the highest tier of the Consortium for Energy Efficiency's northern air-source heat pump specifications, not including an advanced tier;
(II) Is installed with controls that set a crossover temperature specified by guidelines established by the office pursuant to subsection (7) of this section;
(III) Conforms to all applicable municipal, state, and federal codes, standards, regulations, and certifications;
(IV) Is installed in accordance with the manufacturer's specifications; and
(V) Is listed in the Air-conditioning, Heating, and Refrigeration Institute directory of certified product performance as a matched system.
(d) Colorado energy office or office means the Colorado energy office created in section 24-38.5-101.
(d.5) Crossover temperature means the point that a heat-pump-based HVAC system switches either partially or fully from the heat pump to a supplementary heating source.
(e) Department means the department of revenue.
(f) Eligible taxpayer means a taxpayer that meets the requirements for and is included on the list of eligible taxpayers described in subsection (5) of this section.
(g) (I) Ground-source heat pump system means a system that:
(A) Is certified pursuant to the federal environmental protection agency's energy star program;
(B) Conforms to all applicable municipal, state, and federal codes, standards, regulations, and certifications;
(C) Has blowers that are high-efficiency motors that meet or exceed efficiency levels listed in the National Electrical Manufacturers Association MG 1-1993 publication;
(D) Complies with all state and local drinking water guidelines and regulations and public water system requirements; and
(E) Is installed in accordance with the manufacturer's specifications.
(II) Ground-source heat pump system may include supplemental heat so long as:
(A) The ground-source heat pump is used as the primary source of a building's heat and is designed to supply at least eighty percent of total annual heating for the building; and
(B) The system is capable of distributing produced heat to all conditioned areas of the building.
(III) and (IV) Repealed.
(h) Heat pump technology means an air-source heat pump system, ground-source heat pump system, water-source heat pump system, variable refrigerant flow heat pump system, any combination of these systems, or a heat pump water heater.
(i) (I) Heat pump water heater means an electric water heater that uses heat pump technology to transfer heat from the surrounding air to water in a tank and that is certified pursuant to the federal environmental protection agency's Energy Star program.
(II) Heat pump water heater may include:
(A) An electric resistance heating element; and
(B) Mechanical and electrical equipment central to the operation of a heat pump water heater, including an upgraded electrical panel if necessary.
(i.5) Heat pump means an electrically powered mechanical device that uses the refrigeration cycle to transfer thermal energy from one location to another.
(j) List means the list of eligible taxpayers created by the office as specified in subsection (5) of this section.
(k) Multifamily property means a building with multiple separate housing units for residential inhabitants including a residential building that is a duplex, triplex, or multi-structure of four or more units.
(l) Taxpayer means a person subject to tax pursuant to this article 22 or a person or political subdivision of this state that is exempt from tax pursuant to section 39-22-112 (1).
(m) (I) Thermal energy means piped, noncombustible fluids used for adding or removing heat from buildings for the purpose of efficient building temperature control and domestic hot water, including space heating and cooling and refrigeration.
(II) Thermal energy includes methods of exchanging the piped, noncombustible fluids through the ground, wastewater treatment facilities, or other sources that achieve desired fluid temperatures; except that any source of thermal energy for this purpose must:
(A) Not cause incremental greenhouse gas emissions or rely on increased, long-term combustion of fossil fuels; and
(B) Be evaluated by the office to protect against increased emissions of harmful co-pollutants, negative impacts to communities including to disproportionately impacted communities, as defined in section 24-4-109 (2)(b)(II), and the risk of stranded assets, if the thermal energy is from any industrial source including a system for which the primary purpose is to generate electricity, including any process involving engine-driven generation.
(n) Thermal energy network:
(I) Means all real estate, fixtures, and personal property that are operated, owned, used, or intended to be used for, in connection with or to facilitate, a distribution infrastructure project that supplies thermal energy to two or more buildings that are not a campus and that assists in reducing greenhouse gas emissions in the state;
(II) Consists of pipe loops between multiple buildings and energy sources carrying piped, noncombustible fluids at the desired thermal temperature;
(III) Includes a network that can be used for heating, cooling, and other building services; and
(IV) May also be known as a geothermal exchange district, networked geothermal system, geoexchange system, geogrid system, community geothermal heating and cooling district, or geothermal heating district.
(o) Thermal energy system includes a geothermal system or other method of exchanging the piped, noncombustible fluids through the ground, wastewater treatment facilities, or other sources of thermal energy that achieve desired fluid temperatures.
(p) (I) Variable refrigerant flow heat pump system means a system that:
(A) Is certified pursuant to the federal environmental protection agency's energy star program;
(B) Conforms to all applicable municipal, state, and federal codes, standards, regulations, and certifications;
(C) Has blowers that are high-efficiency motors that meet or exceed efficiency levels listed in the National Electrical Manufacturers Association MG 1-1993 publication;
(D) Complies with all state and local drinking water guidelines and regulations and public water system and wastewater system requirements; and
(E) Is installed in accordance with the manufacturer's specifications.
(II) Variable refrigerant flow system may include supplemental heat so long as:
(A) The variable refrigerant flow system is used as the primary source of a building's heat and is designed to supply at least eighty percent of the total annual heating for the building; and
(B) The system is capable of distributing produced heat to all conditioned areas of the building.
(III) Repealed.
(q) (I) Water-source heat pump system means a system that:
(A) Is certified pursuant to the federal environmental protection agency's Energy Star program;
(B) Conforms to all applicable municipal, state, and federal codes, standards, regulations, and certifications;
(C) Has blowers that are high-efficiency motors that meet or exceed efficiency levels listed in the National Electrical Manufacturers Association MG 1-1993 publication;
(D) Complies with all state and local drinking water guidelines and regulations and public water system and wastewater system requirements; and
(E) Is installed in accordance with the manufacturer's specifications.
(II) Water-source heat pump system may include supplemental heat so long as:
(A) The water-source heat pump is used as the primary source of a building's heat and is designed to supply at least eighty percent of the total annual heating for the building; and
(B) The system is capable of distributing produced heat to all conditioned areas of the building.
(III) Repealed.
(3) (a) For income tax years commencing on or after January 1, 2024, but before January 1, 2033, an eligible taxpayer that installs heat pump technology in a building in the state, on a campus in the state, or develops, through purchase and installation of necessary equipment, a thermal energy network in the state is allowed a credit against the tax imposed under this article 22 in an amount set forth in subsection (3)(c) of this section in the tax year that the heat pump technology or thermal energy network is placed into service.
(b) In order to qualify for the tax credit allowed under this section the eligible taxpayer shall provide a discount from the amount charged for the installation of heat pump technology or a thermal energy network in an amount equal to the amount of the credit set forth in subsection (3)(c) of this section minus the applicable percentage of the credit, and shall show the discount as a separate item on the receipt or invoice; except that the requirement in this subsection (3)(b) does not apply to an eligible taxpayer who installs their own heat pump technology or thermal energy network.
(c) Subject to the modifications set forth in subsection (3)(d) of this section and the annual review required pursuant to subsection (3)(e) of this section and except as otherwise provided in subsection (3)(f) of this section, the amount of the credit allowed pursuant to this section is calculated as follows:
(I) For the installation of an air-source heat pump system or for a variable refrigerant flow heat pump system:
(A) For tax years commencing on or after January 1, 2024, but before January 1, 2026, one thousand five hundred dollars;
(B) For tax years commencing on or after January 1, 2026, but before January 1, 2029, one thousand dollars; and
(C) For tax years commencing on or after January 1, 2029, but before January 1, 2033, five hundred dollars;
(II) For the installation of a ground-source heat pump system, water-source heat pump system, a combined air-source and ground-source heat pump system, a combined water-source and ground-source heat pump system, a combined variable refrigerant flow and ground-source heat pump system, or a combined variable refrigerant flow and water-source heat pump system:
(A) For tax years commencing on or after January 1, 2024, but before January 1, 2026, three thousand dollars;
(B) For tax years commencing on or after January 1, 2026, but before January 1, 2029, two thousand dollars; and
(C) For tax years commencing on or after January 1, 2029, but before January 1, 2033, one thousand dollars; and
(III) For the installation of a heat pump water heater:
(A) For tax years commencing on or after January 1, 2024, but before January 1, 2026, five hundred dollars; and
(B) For tax years commencing on or after January 1, 2026, but before January 1, 2033, two hundred fifty dollars.
(d) Notwithstanding the amounts set forth in subsection (3)(c) of this section, the amount of the credit allowed by this section may be modified as follows:
(I) For heat pump technology installed at a multifamily property, unless the heat pump technology is installed for an individual unit by the eligible taxpayer for use by the occupant of the individual unit, the amount of the credit is the amount of the credit permitted pursuant to subsection (3)(c) of this section multiplied by the number of units in the multifamily property that will utilize the heat pump technology;
(II) For a nonresidential building, the amount of the credit is the amount of the credit permitted pursuant to subsection (3)(c) of this section multiplied by the number of increments of four tons of heating capacity; and
(III) For a thermal energy network or for a campus, the amount of the credit is the amount of the credit permitted pursuant to subsection (3)(c) of this section multiplied by the total number of residential buildings and multifamily property units networked in a single system, plus the credit determined for each nonresidential building networked in the system pursuant to subsection (3)(d)(II) of this section.
(e) The office shall annually review and evaluate the effectiveness of the tax credits and may, for the subsequent tax year:
(I) Modify the amounts set forth in subsection (3)(c) of this section; and
(II) Establish, modify, or remove limits on the credits calculated pursuant to subsection (3)(d) of this section.
(f) If the June 2025 revenue forecast, and each June revenue forecast through the June 2031 revenue forecast as prepared by either legislative council staff or the office of state planning and budgeting, projects that state revenues, as defined in section 24-77-103.6 (6)(c), will not increase by at least four percent for the next fiscal year, the amount of the credit allowed pursuant to subsection (3)(c)(I)(B), (3)(c)(I)(C), (3)(c)(II)(B), (3)(c)(II)(C), or (3)(c)(III)(B) of this section, as may be modified by subsections (3)(d) and (3)(e) of this section, for any tax year commencing in the calendar year that begins during said next fiscal year is reduced by fifty percent if the heat pump technology is installed at an existing residential or nonresidential building; except that if the amount of the reduced credit is equal to or less than two hundred fifty dollars, then no credit is available for such a tax year.
(4) An eligible taxpayer may retain an applicable percentage of the amount of the tax credit allowed under subsection (3)(c) of this section to support the industry-wide adoption and deployment of heat pump technologies in the state. The office shall annually determine the applicable percentage, which must be the same for each eligible taxpayer, pursuant to guidelines established by the office. The office shall maintain the current applicable percentage on its website and shall provide the applicable percentage in writing to the department no later than December 31, 2023, and each December 31 thereafter through December 31, 2031.
(5) (a) The office shall create, and update at least annually, a list containing the names and contact information of eligible taxpayers. To become an eligible taxpayer, and be included on the list described in this subsection (5), a taxpayer shall demonstrate to the office that the taxpayer and any of its employees who will be installing heat pump technology or thermal energy networks:
(I) Are licensed as required by the state;
(II) Are knowledgeable of and agree to follow the relevant system requirements set forth in subsections (2)(a), (2)(c.5), (2)(g), (2)(h), (2)(i), (2)(m), (2)(n), (2)(p), and (2)(q) of this section;
(III) Repealed.
(III.5) Have received training pursuant to the guidelines issued by the office pursuant to subsection (7) of this section;
(IV) Will, where applicable, ensure that all piping for a split system is installed by technicians certified to the NITC R78 brazing procedure and trained in the safe handling of flammable refrigerants; and
(V) Will meet any additional standards established by the office in its guidelines.
(b) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, annually provide a secure electronic copy of the list described in subsection (5)(a) of this section to the department that includes the social security number or Colorado account number and federal employer identification number of each eligible taxpayer.
(c) The office shall maintain a current copy of the list on its website.
(d) (I) Every eligible taxpayer shall keep and maintain for a period of four years such books and records as may be necessary to determine that:
(A) It is an eligible taxpayer;
(B) It and any of its employees who will be installing heat pump technology or thermal energy networks meet the requirements described in subsection (5)(a) of this section;
(C) The credit it claimed pursuant to this section was for the installation of heat pump technology or thermal energy networks in this state; and
(D) The amount of the credit was properly calculated under subsection (3) of this section.
(II) (A) The office shall periodically examine a sample of the eligible taxpayers on the list described in this subsection (5) to substantiate that the eligible taxpayers are meeting the office's standards and properly claiming the credit allowed by this section. Every eligible taxpayer shall produce the books and records described in subsection (5)(d)(I) of this section for examination at any time by the office.
(B) If the office determines that an eligible taxpayer is no longer meeting the standards, the office shall notify the taxpayer in writing that they are no longer eligible, remove the ineligible taxpayer from the list, update the list on its website, and promptly notify the department in writing of its decision.
(C) If the office determines that a taxpayer was not eligible for all or part of the credit claimed, the office shall notify the department in writing of its decision. The department shall issue the taxpayer a notice of deficiency for the unpaid tax owed, together with applicable penalties and interest, and proceed to collect the deficiency in the same manner as other tax deficiencies.
(6) The office shall maintain a database of any information necessary to evaluate the effectiveness of the tax credit allowed in this section in meeting the purpose set forth in subsection (1)(a) of this section, and shall provide such information, and any other information that may be needed, to the state auditor as part of the state auditor's evaluation of this tax expenditure pursuant to section 39-21-305.
(7) The office may establish guidelines to implement this section. All guidelines established by the office must be posted on the office's website.
(8) If a credit authorized by this section exceeds the income tax due on the income of the eligible taxpayer for the taxable year, the excess credit may not be carried forward and must be refunded to the eligible taxpayer or the installer.
(9) This section is repealed, effective December 31, 2038.
Source: L. 2023: Entire section added, (HB 23-1272), ch. 167, p. 792, � 8, effective May 11. L. 2024: (2)(a)(I)(B), (2)(a)(III), (2)(g)(III), (2)(g)(IV), (2)(p)(III), (2)(q)(III), and (5)(a)(III) repealed, (2)(a)(I)(C), (2)(g)(I)(C), (2)(g)(I)(D), (2)(p)(I)(C), (2)(p)(I)(D), (2)(q)(I)(C), (2)(q)(I)(D), IP(3)(c)(I), (3)(d)(II), (3)(e), (5)(a)(II), (5)(a)(V), and (5)(d)(II)(A) amended, and (2)(a)(I)(D), (2)(a)(I)(E), (2)(c.5), (2)(d.5), (2)(g)(I)(E), (2)(i.5), (2)(p)(I)(E), (2)(q)(I)(E), and (5)(a)(III.5) added, (SB 24-214), ch. 191, p. 1103, � 18, effective May 17.
Cross references: For the legislative declaration in HB 23-1272, see section 1 of chapter 167, Session Laws of Colorado 2023.
39-22-555. Electric bicycle tax credit - tax preference performance statement - legislative declaration - definitions - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credit provided in this section is to induce certain designated behavior by taxpayers, specifically the purchase of electric bicycles, and to provide tax relief to certain businesses, specifically retailers, that provide a discount on the sale of an electric bicycle.
(b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purpose specified in subsection (1)(a) of this section based on the information required to be maintained by and reported to the state auditor by the office and the department pursuant to subsection (4)(b) of this section.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) Colorado energy office or office means the Colorado energy office created in section 24-38.5-101.
(b) Department means the department of revenue.
(c) Electric bicycle has the same meaning as electrical assisted bicycle as set forth in section 42-1-102 (28.5). Electric bicycle includes an electric adaptive bicycle.
(d) Purchase price has the same the meaning as set forth in section 39-26-102 (7).
(e) Qualified electric bicycle means an electric bicycle that satisfies the standards for approval developed by the Colorado energy office pursuant to subsection (4)(a)(I) of this section.
(f) Qualified purchaser means a person who is a resident of the state and who has not previously purchased a qualified electric bicycle that was discounted by a qualified retailer claiming a tax credit allowed by this section for the retail sale in the same income tax year.
(g) Qualified retailer means a retailer that sells qualified electric bicycles and:
(I) Holds a state sales tax license;
(II) Has timely filed a monthly sales tax return showing a tax liability for at least twelve months;
(III) Has paid the taxes due on the monthly sales tax return; and
(IV) Has registered with the department pursuant to subsection (3)(e)(III) of this section.
(h) Retailer has the same meaning as set forth in section 39-26-102 (8).
(3) (a) Except as otherwise provided in subsection (6) of this section, for income tax years commencing on or after January 1, 2024, but before January 1, 2033, a qualified retailer is allowed a credit against the tax imposed pursuant to this article 22 in an amount equal to five hundred dollars for each retail sale of new qualified electric bicycles sold in the state during the income tax year to a qualified purchaser; except that for the income tax year commencing on January 1, 2024, the credit is allowed only for retail sales made on or after April 1, 2024, but on or before December 31, 2024.
(b) In order to qualify for the tax credit allowed pursuant to this section, the qualified retailer shall provide to the qualified purchaser at the time of the retail sale of the new qualified electric bicycle a discount on the purchase price of the qualified electric bicycle equal to the lesser of four hundred fifty dollars or the purchase price and shall show the discount as a separate item on the receipt or invoice provided to the qualified purchaser. Except as otherwise provided in subsection (4)(a)(II) of this section, the qualified retailer shall, at the time of the retail sale, collect from a purchaser an affidavit on forms prescribed by the office affirming that the purchaser is a qualified purchaser.
(c) To determine whether a qualified retailer sold new qualified electric bicycles in the state, the rules set forth in section 39-26-104 (3)(a) apply.
(d) The qualified retailer may retain from the credit allowed in this section an administrative fee not to exceed fifty dollars for providing the discount.
(e) (I) The qualified retailer shall electronically submit a report to the department on a quarterly basis in a form and manner required by the department that details the number of new qualified electric bicycles sold by the qualified retailer in the reporting period for which the qualified retailer provided a discount as described in subsection (3)(b) of this section, and that includes any other information the executive director of the department may require. The qualified retailer shall submit with the quarterly report required by this subsection (3)(e)(I) the affidavits from qualified purchasers that the qualified retailer is required to collect pursuant to subsection (3)(b) of this section and the office shall inspect the affidavits to determine that retail sales have been made to qualified purchasers.
(II) For income tax years commencing on or after January 1, 2025, the qualified retailer may elect advance payments of the credit allowed pursuant to this section as specified in section 39-22-629.
(III) Prior to selling a qualified electric bicycle for which a retailer intends to claim a credit pursuant to this section, the retailer shall register as a qualified retailer by filing with the department a registration statement in the form and manner prescribed by the department.
(4) (a) (I) The office shall develop standards for determining allowable electric bicycle manufacturers for purposes of determining the type of electric bicycle that is a qualified electric bicycle eligible for the tax credit allowed pursuant to this section. The office shall consider the design and manufacture of allowable electric bicycles and certification of allowable electric bicycles for compliance with consensus safety standards, such as the ANSI/CAN/UL 2849 standard for safety for electrical systems for electric bicycles or similar, in order to determine that an electric bicycle is a qualified electric bicycle. The office may annually review the standards. The standards must be posted on the office's website.
(II) If on or before June 30, 2025, the office determines, in connection with its inspection of the affidavits required pursuant to subsection (3)(b) of this section, that a registration process is needed and would be cost effective in curtailing fraud or abuse related to claiming the credit allowed under this section, the office shall develop a process in lieu of the affidavits for purchasers to register as qualified purchasers, through the office and prior to purchasing a qualified electric bicycle from a qualified retailer, by affirming the purchaser's residency and that the purchaser has not previously purchased a qualified electric bicycle that was discounted pursuant to this section in the same income tax year. The process must allow for a qualified retailer to access qualified purchaser information in order to confirm a purchaser is a qualified purchaser.
(b) Pursuant to section 39-21-304 (3), and for the purpose of providing data that allows the effectiveness of the tax credit allowed pursuant to this section to be measured, the department, on or before January 1, 2025, and on or before January 1 of each year thereafter through January 1, 2034, shall provide to the state auditor information that details the number of sales of new qualified electric bicycles for which credits are claimed as reported by taxpayers claiming the credit for consideration during the state auditor's evaluation of this tax expenditure pursuant to section 39-21-305.
(5) If a credit authorized by this section exceeds the income tax due on the income of the qualified retailer for the taxable year, the excess credit may not be carried forward and must be refunded to the qualified retailer.
(6) If the June 2025 revenue forecast, and each June revenue forecast through the June 2031 revenue forecast as prepared by either legislative council staff or the office of state planning and budgeting, projects that state revenues, as defined in section 24-77-103.6 (6)(c), will not increase by at least four percent for the next fiscal year, the amount of the credit allowed pursuant to this section, the discount required pursuant to subsection (3)(b) of this section, and the administrative fee allowed pursuant to subsection (3)(d) of this section for any tax year commencing in the calendar year that begins during said next fiscal year, is reduced by fifty percent.
(7) The office shall provide technical assistance to ensure that qualified retailers have access to low-cost financing to support them in claiming the credit allowed under this section.
(8) This section is repealed, effective December 31, 2038.
Source: L. 2023: Entire section added, (HB 23-1272), ch. 167, p. 800, � 9, effective May 11. L. 2024: (1)(b) amended, (HB 24-1450), ch. 490, p. 3426, � 84, effective August 7.
Cross references: For the legislative declaration in HB 23-1272, see section 1 of chapter 167, Session Laws of Colorado 2023.
39-22-556. Tax credit for sustainable aviation fuel production facility - tax preference performance statement - legislative declaration - definitions - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of this tax expenditure is to induce certain designated behavior by taxpayers, specifically the construction of sustainable aviation fuel production facilities in the state, by providing tax relief for certain businesses and individuals that construct or operate these facilities in the state.
(b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purposes specified in subsection (1)(a) of this section based on the information required by and reported to the department pursuant to subsection (7) of this section.
(2) As used in this section, unless the context otherwise requires:
(a) Colorado energy office or office means the Colorado energy office created in section 24-38.5-101.
(b) Department means the department of revenue.
(c) Qualified taxpayer means a taxpayer that is an aviation business, a sustainable aviation fuel producer, or an airport.
(d) Sustainable aviation fuel has the same meaning as set forth in section 40B (d) of the internal revenue code.
(e) Sustainable aviation fuel production facility means:
(I) A facility which produces sustainable aviation fuel; or
(II) A facility directly related to enabling the production or distribution of sustainable aviation fuel as determined under the standards established by the office.
(f) Taxpayer means a person subject to tax pursuant to this article 22.
(3) (a) For tax years commencing on or after January 1, 2024, but before January 1, 2033, a qualified taxpayer is allowed a credit against the income tax imposed under this article 22 for an amount of the actual cost paid to construct, reconstruct, or erect a sustainable aviation fuel production facility in the state equal to:
(I) Thirty percent for a facility for which construction begins on or after January 1, 2024, but before January 1, 2027;
(II) Twenty-four percent for a facility for which construction begins on or after January 1, 2027, but before January 1, 2028;
(III) Eighteen percent for a facility for which construction begins on or after January 1, 2028, but before January 1, 2029; and
(IV) Twelve percent for a facility for which construction begins on or after January 1, 2029, but before January 1, 2033.
(b) The credit allowed by subsection (3)(a) of this section is allowed for the tax year in which the sustainable aviation fuel production facility is placed in service.
(4) (a) A qualified taxpayer shall submit an application to the office for a tax credit certificate to claim the credit allowed by this section on a form and in a manner prescribed by the office. The application must include information to allow the office to make a determination that the applicant is a qualified taxpayer and that the amount for which the tax credit certificate is applied is the actual cost paid to construct, reconstruct, or erect a sustainable aviation fuel production facility in the state for which a credit is allowed by this section.
(b) The aggregate amount of all tax credit certificates issued by the office pursuant to this subsection (4) must not exceed one million dollars for the 2024 income tax year, two million dollars per year for the 2025 and 2026 income tax years, and three million dollars per year for income tax years 2027 through 2032.
(c) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report of each qualified taxpayer that the office approved for the income tax credit allowed in this section for the preceding calendar year that includes the following information:
(I) The taxpayer's name;
(II) The taxpayer's social security number or the taxpayer's Colorado account number and federal employer identification number; and
(III) The amount of the tax credit certificate.
(5) (a) The office shall develop standards for the approval of qualified taxpayers for which a tax credit under this section is allowed.
(b) The office shall develop standards for the approval of the construction, reconstruction, or erection of a sustainable aviation fuel production facility in the state and for reviewing the cost certification for the costs related to the construction, reconstruction, or erection of the sustainable aviation fuel production facility. In the standards, the office shall determine the manner in which a taxpayer will demonstrate actual costs for purposes of calculating the amount of the tax credit set forth in the tax credit certificate issued by the office to the taxpayer; except that actual costs must not include legal fees, land cost, or design costs.
(c) The standards developed by the office under this subsection (5) must be posted on the office's website.
(6) (a) A qualified taxpayer shall submit a report to the office by the end of the first month after the end of any income tax year in which the qualified taxpayer received a tax credit under this section and shall annually submit a report for three years thereafter reporting sustainable aviation fuel production and total fuel production for the facility.
(b) If the sustainable aviation fuel production of a facility for which a qualified taxpayer was allowed a credit under this section comprises less than sixty percent of the total fuel production of the facility in any of the three taxable years immediately following the taxable year in which the facility was placed in service, the office shall notify the department in writing that the credit allowed in this section must be disallowed for that qualified taxpayer. The qualified taxpayer shall add the amount of the disallowed credit to its return as a recaptured credit for the tax year in which the credit is disallowed pursuant to this subsection (6).
(7) Notwithstanding the requirement in section 24-1-136 (11)(a)(I), for the purpose of providing data that allows the general assembly and the state auditor to measure the effectiveness of the credit created in subsection (3) of this section pursuant to section 39-21-304 (3), the office on or before January 1, 2026, and on or before January 1 of each year thereafter until January 1, 2034, shall submit to the general assembly and the state auditor a report detailing the construction, reconstruction, and erection of sustainable aviation fuel production facilities as reported by qualified taxpayers claiming the credit in this section. The tax credit meets its purpose if the construction, reconstruction, and erection of sustainable aviation fuel production facilities in the state increase significantly in tax years for which the credit is allowed.
(8) If the credit authorized by this section exceeds the income tax due on the income of the qualified taxpayer for the taxable year, the excess credit may not be carried forward and must be refunded to the qualified taxpayer.
(9) This section is repealed, effective December 31, 2038.
Source: L. 2023: Entire section added, (HB 23-1272), ch. 167, p. 804, � 10, effective May 11.
Cross references: For the legislative declaration in HB 23-1272, see section 1 of chapter 167, Session Laws of Colorado 2023.
39-22-557. Clean hydrogen tax credit - qualified uses - tax preference performance statement - definitions - legislative declaration - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credit provided in this section is to induce certain designated behavior by taxpayers. Specifically, the tax expenditure is intended to provide tax relief for certain businesses or individuals for purposes of encouraging them to engage in certain qualified uses of clean hydrogen.
(b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purpose specified in subsection (1)(a) of this section based on the information required to be maintained by and reported to the state auditor by the office pursuant to subsection (4)(b) of this section.
(2) As used in this section, unless the context otherwise requires:
(a) Clean hydrogen has the meaning set forth in section 40-2-138 (1)(a).
(b) Department means the department of revenue.
(c) Hard to decarbonize end use has the meaning set forth in section 40-2-138 (1)(e).
(d) Lifecycle greenhouse gas emissions rate means lifecycle greenhouse gas emissions, as defined in 26 U.S.C. sec. 45V (c)(1)(A), as amended, measured in accordance with any applicable federal internal revenue service regulations or guidance, subject to the rules adopted by the public utilities commission pursuant to section 40-2-138 (3)(a)(II).
(e) Office means the Colorado energy office created in section 24-38.5-101.
(f) Qualified use has the meaning set forth in section 40-2-138 (1)(i).
(g) Taxpayer means a person subject to tax pursuant to this article 22 or a person or political subdivision of the state that is exempt from tax pursuant to section 39-22-112 (1).
(h) Tier one greenhouse gas emissions rate means a qualified use of hydrogen that results in lifecycle greenhouse gas emissions rates that are within the range set forth in 26 U.S.C. sec. 45V (b)(2)(D), as amended.
(i) Tier two greenhouse gas emissions rate means a qualified use of hydrogen that results in lifecycle greenhouse gas emissions rates that are within the range set forth in 26 U.S.C. sec. 45V (b)(2)(C), as amended.
(3) (a) Subject to the limitations set forth in subsection (3)(b) of this section, for income tax years commencing on or after January 1, 2024, but before January 1, 2033, a taxpayer is allowed a credit against the income taxes imposed by this article 22 in an amount equal to:
(I) One dollar per kilogram of clean hydrogen used for a qualified use that results in a tier one greenhouse gas emissions rate in the income tax year; or
(II) Thirty-three cents per kilogram of clean hydrogen used for a qualified use that results in a tier two greenhouse gas emissions rate in the income tax year.
(b) In order to claim the credit, the taxpayer must annually apply for and receive a tax credit certificate from the office pursuant to subsection (4) of this section. If the office determines that an applicant is not entitled to a tax credit certificate under this section, the office shall notify the applicant of its disapproval in writing.
(c) (I) For income tax years commencing on and after January 1, 2024, but before January 1, 2026, and not before the public utilities commission adopts rules pursuant to section 40-2-138 (3)(a)(II), the office shall not issue a tax credit certificate to a taxpayer indicating eligibility for a tax credit for an amount exceeding one million dollars in a tax year.
(II) For income tax years commencing on and after January 1, 2026, but before January 1, 2029, the office shall not issue a tax credit certificate to a taxpayer indicating eligibility for a tax credit for an amount exceeding five hundred thousand dollars in a tax year.
(III) For income tax years commencing on and after January 1, 2029, but before January 1, 2033, the office shall not issue a tax credit certificate to a taxpayer indicating eligibility for a tax credit for an amount exceeding two hundred fifty thousand dollars in a tax year.
(4) (a) (I) A taxpayer shall submit an application to the office for a tax credit certificate to claim the credit allowed by this section on a form and in a manner prescribed by the office. The application must include information to allow the office to make a determination that the use is a qualified use and that the hydrogen used meets the definition of clean hydrogen pursuant to subsection (2)(a) of this section and to verify the amount for which the tax credit certificate is applied. A taxpayer is entitled to receive one tax credit certificate per income tax year.
(II) The application described in subsection (4)(a)(I) of this section must also include verification from the hydrogen producer passed to the user at the point of sale that the hydrogen used meets the definition of clean hydrogen pursuant to subsection (2)(a) of this section.
(b) (I) The office shall maintain a database of any information determined necessary by the office to evaluate the effectiveness of the income tax credit allowed in this section in meeting the purpose set forth in subsection (1)(a) of this section and shall provide such information, and any other information that may be needed, if available, to the state auditor as part of the state auditor's evaluation of this tax expenditure required by section 39-21-305.
(II) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report for the preceding tax year listing each taxpayer to which the office issued a tax credit certificate and that includes the following information:
(A) The taxpayer's name;
(B) The amount of the income tax credit that the certificate indicates the taxpayer is eligible to claim; and
(C) The taxpayer's social security number or the taxpayer's Colorado account number and federal employer identification number.
(III) The office shall develop standards for the qualified uses for which an income tax credit under this section is allowed. The office shall post the standards on the office's website.
(5) In order to claim the credit authorized by this section, a taxpayer shall file the tax credit certificate with the taxpayer's state income tax return, and, if the taxpayer is exempt from tax pursuant to section 39-22-112 (1), the taxpayer shall file a return pursuant to section 39-22-601 (7)(b). The amount of the credit that the taxpayer may claim pursuant to this section is the amount stated on the tax credit certificate.
(6) If an income tax credit authorized in this section exceeds the income tax due on the income of the taxpayer for the taxable year, the excess credit may not be carried forward and must be refunded to the taxpayer.
(7) This section is repealed, effective December 31, 2036.
Source: L. 2023: Entire section added, (HB 23-1281), ch. 237, p. 1279, � 3, effective August 7. L. 2024: (2)(d) and (3)(c)(I) amended, (SB 24-214), ch. 191, p. 1106, � 19, effective May 17.
Cross references: For the legislative declaration in HB 23-1281, see section 1 of chapter 237, Session Laws of Colorado 2023.
39-22-558. Tax credit for employer's contribution to employee for eligible expenses in connection with a qualifying home purchase - tax preference performance statement - legislative declaration - definitions - repeal. (1) (a) In accordance with section 39-21-304 (1), the general assembly finds and declares that the purpose of this tax expenditure is to induce certain designated behavior by taxpayers to encourage home ownership by providing tax relief to employers who contribute money to an employee for a down payment and related closing costs on a home purchase.
(b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purposes specified in subsection (1)(a) of this section based on the information required to be maintained by and reported to the state auditor upon request by the department pursuant to subsection (4) of this section.
(2) As used in this section, unless the context otherwise requires:
(a) Department means the department of revenue.
(b) Eligible expenses means a down payment and any closing costs included on a real estate settlement statement, including but not limited to appraisal fees, mortgage origination fees, and inspection fees.
(c) Employee contribution means the amount an employee authorizes an employer to withhold from the employee's earnings for deposit into the savings account established pursuant to subsection (3)(b)(I) of this section for use by an employee for eligible expenses in connection with a qualifying home purchase.
(d) Employer means a private, nonpublic person that employs one or more employees within the state.
(e) Employer contribution means the amount an employer contributes to a savings account established pursuant to subsection (3)(b)(I) of this section for use by an employee for eligible expenses in connection with a qualifying home purchase.
(f) Qualifying home purchase means a property purchased by an employee as a primary residence.
(3) (a) For any income tax year commencing on or after January 1, 2024, but before January 1, 2027, if an employer makes a contribution of money to an employee during the income tax year for use by the employee for eligible expenses in connection with a qualifying home purchase, then the employer is allowed a credit against the income taxes imposed by this article 22 in an amount equal to five percent of the amount of the employer contribution; except that an employer cannot claim a credit of more than five thousand dollars for any one employee and the maximum total credit that an employer may claim in a taxable year is five hundred thousand dollars.
(b) (I) In order to claim the tax credit allowed by this section, the employer shall establish one or more savings accounts for the purpose of depositing the money for the employer's contribution to an employee.
(II) The employer shall establish policies concerning the contribution, including how the employer contribution is to be made and procedures for an employee to follow to withdraw money for qualifying expenses and for an employer to follow to withhold an employee's earnings as an employee contribution.
(III) An employee may authorize an employer to withhold a specified portion of the employee's earnings as an employee contribution, which money shall be deposited in a savings account established pursuant to subsection (3)(b)(I) of this section.
(c) If an employee ends the employee's employment with the employer or if the employee chooses to use money in a savings account established pursuant to subsection (3)(b)(I) of this section that is an employee contribution for something other than an eligible expense, the employee is not entitled to any unexpended amount of the employer contribution, and the employer shall remit to the employee any amount in the savings account which is all or the remaining amount of the employee contribution, plus any interest earned on the amount. The employer shall pay the entire amount of the credit received for the employer contribution. The employer shall report the recapture required by this subsection (3)(c) by increasing their income tax liability by the amount of the total credit claimed for the year in which the recapture occurs.
(4) (a) To claim the credit for an income tax year, an employer must keep records related to the credit as required by the department. The executive director of the department may promulgate rules to implement this section. Notwithstanding any other requirements of the department, records maintained by an employer must show:
(I) The number of employees to whom the employer made employer contributions in the tax year;
(II) The amount the employer contributed to each employee in the tax year as employer contributions;
(III) The number of employees who expended money from a savings account established pursuant to subsection (3)(b)(I) of this section on eligible expenses for a home purchase in the tax year; and
(IV) The total amount of any employer contributions made by the employer for use by the employee for eligible expenses in connection with a qualifying home purchase that an employee has forfeited pursuant to subsection (3)(c) of this section in the tax year.
(b) Upon request by the state auditor, the department shall provide to the state auditor the information contained in records required by subsection (4)(a) of this section.
(5) If the amount of the credit allowed under this section exceeds the amount of income taxes otherwise due on the employer's income in the income tax year for which the credit is claimed, the amount of the credit not used as an offset against income taxes in the current income tax year may be carried forward and used as a credit against income tax liability in subsequent years for a period not to exceed five years and must be applied first to the earliest income tax year possible. Any credit remaining after the period may not be refunded or credited to the employer.
(6) (a) Nothing in this section is intended to preclude an employee who receives a contribution from their employer in accordance with subsection (3) of this section from having a first-time home buyer savings account pursuant to part 47 of this article 22.
(b) This subsection (6) is repealed, effective December 31, 2028.
Source: L. 2023: Entire section added, (HB 23-1189), ch. 446, p. 2626, � 1, effective August 7. L. 2024: (6) amended, (HB 24-1036), ch. 373, p. 2532, � 23, effective August 7.
Cross references: For the legislative declaration in HB 24-1036, see section 1 of chapter 373, Session Laws of Colorado 2024.
39-22-559. Film incentive tax credit - tax preference performance statement - review - legislative declaration - definitions - repeal. (1) (a) The general assembly hereby finds and declares that:
(I) Colorado is home to many talented film industry members, many of whom travel out of state for work as they cannot find enough work locally to support them;
(II) With a competitive film incentive that is comparable to surrounding western states with similar beautiful landscapes, Colorado will have the ability to attract high-profile projects that will bring in more film tourism and increase Colorado's impact on the global film industry; and
(III) Colorado's film industry has the ability to be a true economic driver in the state.
(b) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credit provided for in this section is to induce certain designated behavior by taxpayers and to provide a reduction in income tax liability for certain business or individuals by allowing production companies to receive a credit against income tax for qualified expenditures if certain criteria are met. Specifically, this tax expenditure is intended to incentivize production companies to film in Colorado and attract more film projects, in particular high-budget film projects, that will employ more Coloradans.
(c) The general assembly and the state auditor shall measure the effectiveness of the tax credit in achieving the purposes specified in subsection (1)(b) of this section based on the number and value of the credits claimed and, when available, taking into consideration the results of the review performed by the office of economic development and the office pursuant to subsection (8) of this section.
(2) As used in this section, unless the context otherwise requires:
(a) Credit means the credit against income tax created in this section.
(b) Film has the same meaning as set forth in section 24-48.5-114 (1).
(c) Obscene has the same meaning as set forth in section 18-7-101 (2).
(d) Office has the same meaning as set forth in section 24-48.5-114.
(e) Office of economic development means the office of economic development created in section 24-48.5-101 (1).
(f) Originates means that a production company has been a resident of the state or registered with the secretary of state for at least twelve consecutive months and, as of the date of applying for a tax credit as specified in subsection (3) of this section, has engaged in production activities in the state for other projects in the past twelve consecutive months; except that if the production company creates a business entity for the sole purpose of conducting production activities in the state, then such business entity need not be registered with the secretary of state for twelve consecutive months, but the manager of the business entity must be a resident of the state for at least twelve consecutive months as of the date of applying for a tax credit as specified in subsection (3) of this section. As used in this subsection (2)(f), manager of the business entity means a manager with decision-making authority to make financial or legal commitments on behalf of the production company or business entity.
(g) Production activities means the shooting of a film, support activities related to such shooting, and any preshooting or postshooting activities that commence on or after January 1, 2024, and that are necessary to produce a finished film, including but not limited to editing and the creation of sets, props, costumes, and special effects.
(h) Production company means a person, including a corporation or other business entity, that engages in production activities for the purpose of producing all or any portion of a film in Colorado.
(i) Qualified local expenditure means a payment made by a production company operating in Colorado to a person or business in Colorado in connection with production activities in Colorado. Qualified local expenditure includes, but need not be limited to:
(I) Payments made in connection with developing or purchasing the story and scenario to be used for a film;
(II) Payments made for the costs of set construction and operations, wardrobe, accessories, and related services;
(III) Payments made for the costs of photography, sound recording and synchronization, lighting, and related services;
(IV) Payments made for the costs of editing, postproduction, music, and related services;
(V) Payments made for the costs of renting facilities and equipment, including location fees, leasing vehicles, and providing food and lodging to people working on the film production;
(VI) Payments for airfare purchased through a Colorado-based travel agency or company;
(VII) Payments for insurance and bonding purchased through a Colorado-based insurance agent;
(VIII) Payments for other direct costs incurred by the film production company that are deemed appropriate by the office;
(IX) Payments of up to one million dollars per employee or contractor, made by a production company to pay the wages or salaries of employees or contractors who participate in the production activities. In order for any wage or salary to be considered a qualified local expenditure, all Colorado income taxes shall be withheld and paid either by the production company or the individual. Any payments in excess of one million dollars per employee or contractor shall be excluded.
(X) Payments of up to one million dollars per calendar year per personal service corporation, as defined in section 24-48.5-114 (4.5)(a), made by a production company to a personal service corporation to pay the wages or salaries of an employee-owner of a personal service corporation, as defined in section 24-48.5-114 (4.5)(b), who participates in the production activities. In order for any wage or salary to be considered a qualified local expenditure, the production company must file an information return pursuant to section 39-22-604 (21) regarding the payments made to the personal service corporation. Any payments in excess of one million dollars per personal service corporation are excluded.
(3) Subject to the limitations set forth in subsections (5) and (6) of this section, for income tax years commencing on or after January 1, 2024, but before January 1, 2032, there shall be allowed a film incentive tax credit with respect to income taxes imposed pursuant to this article 22 to any production company making at least one hundred thousand dollars in actual qualified local expenditures and employing a workforce for any in-state production activity made up of at least fifty percent Colorado residents in an amount not to exceed twenty-two percent of the actual qualified local expenditures.
(a) to (c) (Deleted by amendment, L. 2024.)
(4) The director of the office of economic development may, in the director's discretion, approve a tax credit in an amount that exceeds twenty percent or twenty-two percent, as applicable, of qualified local expenditures for a production company that qualifies for a tax credit under subsection (3) of this section.
(5) (a) For the 2024 calendar year, and for each calendar year thereafter, the maximum aggregate amount of all tax credits that the office may reserve pursuant to subsection (6) of this section is five million dollars per calendar year.
(b) Repealed.
(c) A production company shall not apply for and the office shall not approve a tax credit allowed under subsection (3) of this section for any qualified local expenditures for which the production company has applied or been awarded a performance-based incentive pursuant to section 24-48.5-116.
(6) (a) For a production company to claim a tax credit pursuant to subsection (3) of this section, the production company must apply to the office for a tax credit reservation, in a manner to be determined by the office prior to beginning production activities in the state for the project for which the production company is seeking a tax credit. The application for a tax credit reservation must include a statement of intent by the production company to produce a film in Colorado for which the production company will be eligible to receive the tax credit. The production company must submit, in conjunction with the application, any documentation necessary to demonstrate that:
(I) The production company's projected qualified local expenditures will satisfy the minimum expenditure requirement specified in subsection (3) of this section; and
(II) If the production company seeks a tax credit specified in subsection (3) of this section, the production company will originate production activities in Colorado, including copies of income tax forms, proof of voter registration, or copies of utility bills, to provide documentary evidence that, as of the date of applying for a tax credit:
(A) The production company engaged in production activities in the state for other projects in the past twelve consecutive months; or
(B) If the production company created a business entity for the sole purpose of conducting production activities in the state, the manager of the business entity was a resident in the state for the past twelve consecutive months.
(b) (I) The office shall review each application for a tax credit reservation submitted by a production company before the production company begins work on a film in Colorado. Based on the information provided in the production company's application for a tax credit reservation, the office may determine that a production company is entitled to a tax credit reservation in accordance with the provisions of this section. The office shall issue tax credit reservations subject to the limitations set forth in this subsection (6) and in subsection (5) of this section. The office shall not issue tax credit reservations after December 31, 2029.
(II) If the office reserves a tax credit for the benefit of a production company, the office shall notify the production company in writing of the reservation and the amount reserved. The reservation of a tax credit by the office for a production company does not entitle the production company to the issuance of a tax credit certificate until the production company complies with all of the other requirements specified in this section for the issuance of the tax credit certificate. When the office approves a tax credit reservation, the office may also impose additional requirements, which a production company shall satisfy as part of completing the production activities before a tax credit certificate is issued to the production company.
(III) If approved, the office may issue a tax credit reservation to a production company in an amount not to exceed twenty-two percent of the estimated qualified local expenditures.
(c) (I) (A) A production company shall complete the production activities in Colorado on or before December 31, 2031. Upon completion of the production activities in Colorado, a production company that received a tax credit reservation from the office must retain a certified public accountant licensed to practice in the state or a certified public accounting firm that is registered in the state to review and report in writing, and in accordance with professional standards, regarding the accuracy of the financial documents that detail the expenses incurred in the course of the film production activities in Colorado. The certified public accountant's written report must include documentation of the production company's actual expenditures, including its actual qualified local expenditures, and any documentation necessary to show that the production company employed a workforce for the in-state production activities made up of at least fifty percent Colorado residents. When the production company provides a copy of the certified public accountant's written report and the production company certifies in writing to the office that the amount of the production company's actual qualified local expenditures equals or exceeds the applicable minimum total amount of the production company's qualified local expenditures as specified in subsection (3) of this section, the office shall conduct a review of the certified public accountant's written report to ensure the requirements of this section are met. If the office is satisfied that the requirements of this section are met, and the office confirms that the certified public accountant who provided the written report is from the list described in subsection (6)(c)(II)(B) of this section, then the office shall issue to the production company a tax credit certificate that evidences the production company's right to claim the tax credit allowed under subsection (3) of this section. The tax credit certificate must include the taxpayer's name, the taxpayer's social security number or federal employer identification number, the approved tax credit amount, the income tax year for which the tax credit is being allowed, and any other information that the executive director of the department of revenue may require.
(B) If the office determines that a production company has failed to comply with the requirements of this subsection (6), the office shall notify the production company and may rescind the tax credit reservation. If the office rescinds the tax credit reservation, the production company may submit a new tax credit reservation application pursuant to this subsection (6). When the office rescinds a tax credit reservation in a calendar year, the maximum aggregate amount of all tax credits that the office may reserve in that calendar year set forth in subsection (5)(a) of this section is increased by the amount of the rescinded tax credit reservation.
(II) (A) Any services provided by a certified public accountant to meet the requirements of this subsection (6)(c) must be performed in Colorado.
(B) The office shall develop a list of certified public accountants that meet the requirements of this section. Such list must be made available to all production companies and must be posted on the office of economic development's website.
(d) The office shall develop procedures for the administration of this section, including application guidelines for production companies applying to receive a tax credit reservation.
(7) (a) A production company shall claim the credit allowed under subsection (3) of this section by including the credit certificate issued to the production company by the office pursuant to subsection (6)(c)(I) of this section with its income tax return for the income tax year for which the certificate was issued. If the amount of the tax credit exceeds the production company's income taxes due on the income of the production company for the income tax year, the excess credit is not carried forward and shall be refunded to the taxpayer.
(b) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report of each production company to which the office issued a tax credit certificate for the preceding income tax year that includes the following information:
(I) The production company's name;
(II) The amount of the income tax credit; and
(III) The production company's social security number or the production company's Colorado account number and federal employer identification number.
(8) The office of economic development and the office shall jointly review the effectiveness of the credit and report the results of the review to the house of representatives finance committee and the senate finance committee, or their successor committees, no later than July 1, 2028.
(9) This section is repealed, effective December 31, 2034.
Source: L. 2023: Entire section added, (HB 23-1309), ch. 379, p. 2271, � 1, effective August 7. L. 2024: (2)(i)(VIII), (2)(i)(IX), (3), (5)(a), IP(6)(a), (6)(a)(I), IP(6)(a)(II), (6)(b), (6)(c)(I), (6)(c)(II)(A), (6)(d), (7), and (8) amended, (2)(i)(X) added, and (5)(b) repealed, (HB 24-1358), ch. 260, p. 1722, � 1, effective August 7; (6)(c)(II)(A) amended, (HB 24-1450), ch. 490, p. 3426, � 85, effective August 7.
39-22-560. Tax credit for certification of aircraft to use unleaded aviation gasoline - tax preference performance statement - review - legislative declaration - definitions - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credit provided in this section is to induce certain designated behavior by taxpayers, specifically the modification of aircraft that are powered by leaded aviation gasoline so that such aircraft can be certified to be powered by unleaded aviation gasoline and no longer use leaded aviation gasoline.
(b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purpose specified in subsection (1)(a) of this section based on the number of credits claimed.
(2) As used in this section, unless the context otherwise requires:
(a) Aircraft has the same meaning as set forth in section 43-10-102 (1).
(b) Aviation gasoline means gasoline-based fuel that is used to power an aircraft.
(c) Leaded aviation gasoline means any aviation fuel containing tetraethyl lead additives.
(d) Qualifying aircraft means an aircraft that has been powered by leaded aviation gasoline and for which a supplemental type certificate or any other authorization that approves the completed modification of the aircraft to be powered by unleaded aviation gasoline has been issued.
(e) Qualifying expenses means any actual out-of-pocket expenses incurred and paid by a qualifying taxpayer for the purpose of modifying an aircraft registered with the federal aviation administration in this state so that it is a qualifying aircraft.
(f) Qualifying taxpayer means a person subject to tax under this article 22 who is the owner of an aircraft as indicated on the aircraft registry maintained by the federal aviation administration.
(g) Supplemental type certificate means a type certificate issued by the federal aviation administration to an applicant that has modified an aeronautical product from its original design with federal aviation administration approval.
(h) Unleaded aviation gasoline means aviation gasoline that does not include lead.
(3) For any income tax year commencing on or after January 1, 2025, but before January 1, 2030, a qualifying taxpayer who incurs qualifying expenses is allowed a credit against the income taxes imposed by this article 22 in the tax year in which the qualifying aircraft is registered by the federal aviation administration in this state in an amount equal to fifty percent of all qualifying expenses incurred; except that the maximum amount of the credit that may be claimed for qualifying expenses incurred in modifying any one aircraft is five hundred dollars.
(4) If the amount of a credit authorized by this section exceeds the amount of income taxes otherwise due on the income of the qualifying taxpayer claiming the credit in the income tax year for which the credit is being claimed, the amount of the credit not used as an offset against income taxes in that income tax year may not be carried forward and must be refunded to the qualifying taxpayer.
(5) This section is repealed, effective December 31, 2039.
Source: L. 2024: Entire section added, (HB 24-1235), ch. 190, p. 1077, � 2, effective May 17.
Cross references: For the legislative declaration in HB 24-1235, see section 1 of chapter 190, Session Laws of Colorado 2024.
39-22-561. Agricultural stewardship tax credit - tax preference performance statement - legislative declaration - definitions - rules - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly declares that the purpose of the tax credit created in this section is to induce certain designated behavior by taxpayers, specifically to encourage an individual to actively practice one or more qualified stewardship practices on a farm or ranch, including any practice that increases soil health, improves water efficiency, or creates more diverse and beneficial ecosystems while maintaining the productivity of the farm or ranch.
(b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purpose specified in subsection (1)(a) of this section based on the information required to be maintained by and reported to the state auditor by the department of agriculture pursuant to subsection (4)(b) of this section.
(2) As used in this section, unless the context otherwise requires:
(a) Credit certificate means a certificate issued by the department of agriculture certifying that a qualified taxpayer qualifies for an income tax credit authorized in this section and specifying the amount of the credit allowed and the income tax year for which the credit may be claimed.
(b) Qualified stewardship practice means any agricultural practice, as specified by rules issued by the commissioner of the department of agriculture, that may include a grazing or cropping practice that improves soil health, improves water retention and drought resilience, or creates more diverse and beneficial ecosystems while maintaining the productivity of the farm or ranch, including rotational crops, reduced tillage, no tillage, cover cropping, integrating managed livestock grazing on cropland, range improvements, interseeding, or compost application.
(c) Qualified taxpayer means a person subject to tax pursuant to this article 22 who actively practices a qualified stewardship practice on a farm or ranch located in the state during an income tax year, whether the qualified stewardship practice is newly practiced during the income tax year or is being continued from a prior income tax year.
(3) (a) Subject to the limitations set forth in subsection (3)(b) of this section, for income tax years commencing on or after January 1, 2026, but before January 1, 2031, a qualified taxpayer is allowed a credit against the income taxes imposed by this article 22 in an amount equal to:
(I) A minimum of five dollars and a maximum of seventy-five dollars per acre of land subject to one qualified stewardship practice, as specified by rule issued by the commissioner of the department of agriculture, limited to a maximum credit amount of one hundred fifty thousand dollars per income tax year;
(II) A minimum of ten dollars and a maximum of one hundred dollars per acre of land subject to two qualified stewardship practices, as specified by rule issued by the commissioner of the department of agriculture, limited to a maximum credit amount of two hundred thousand dollars per income tax year; and
(III) A minimum of fifteen dollars and a maximum of one hundred fifty dollars per acre of land subject to three or more qualified stewardship practices, as specified by rule issued by the commissioner of the department of agriculture, limited to a maximum credit amount of three hundred thousand dollars per income tax year.
(b) The department of agriculture may only issue tax credit certificates to a qualified taxpayer:
(I) For three income tax years; and
(II) If the qualified taxpayer has not received a tax credit, tax deduction, or grant related to the agricultural land and the qualifying stewardship practice during an income tax year for which a tax credit is claimed pursuant to this section from any other source.
(4) (a) A qualified taxpayer shall submit an application to the department of agriculture for a tax credit certificate to claim the credit allowed by this section on a form and in a manner prescribed by the department of agriculture. The application must include a means for the taxpayer to note whether the taxpayer files income taxes on a calendar year or fiscal year basis and information to allow the department of agriculture to make a determination that the stewardship practice is a qualified stewardship practice, that the qualified taxpayer is actively practicing the qualified stewardship practice, and to verify the amount for which the tax credit certificate is applied. A qualified taxpayer may receive only one tax credit certificate per income tax year.
(b) (I) The department of agriculture shall maintain a database of any information determined necessary by the department of agriculture to evaluate the effectiveness of the income tax credit allowed in this section in meeting the purpose set forth in subsection (1) of this section and shall provide such information, and any other information that may be needed, if available, to the state auditor as part of the state auditor's evaluation of this tax expenditure required by section 39-21-305.
(II) The department of agriculture shall, in a sufficiently timely manner to allow the department of revenue to process returns claiming the income tax credit allowed in this section, provide the department of revenue with an electronic report for the preceding tax year that lists each qualified taxpayer to which the department of agriculture issued a tax credit certificate and includes the following information:
(A) The qualified taxpayer's name;
(B) The amount of the income tax credit that the certificate indicates the qualified taxpayer is eligible to claim; and
(C) The qualified taxpayer's social security number or the qualified taxpayer's Colorado account number and federal employer identification number.
(5) In order to claim the credit authorized by this section, a qualified taxpayer shall file the tax credit certificate with the qualified taxpayer's state income tax return. The amount of the credit that the qualified taxpayer may claim pursuant to this section is the amount stated on the tax credit certificate.
(6) The department of agriculture shall issue certificates for credit claims received in the order submitted, but shall not issue credit certificates that exceed three million dollars in a calendar year. After certificates have been issued for credits in an aggregate amount of three million dollars for all qualified taxpayers during a calendar year, any additional claims must be placed on a wait list, with priority first given to a qualified taxpayer who has been issued a tax certificate in the calendar year preceding the calendar year in which the qualified taxpayer is placed on the wait list and second to a qualified taxpayer who applied for the tax credit authorized in this section but was placed on the wait list, and a certificate must be issued for use of the credit in the next calendar year; except that no more than two million dollars in claims shall be placed on the wait list in any given calendar year. No claim for a credit is allowed for any income tax year unless a certificate has been issued by the division. If all other requirements of this section are met, the right to claim the credit is vested in a qualified taxpayer at the time a credit certificate is issued.
(7) If an income tax credit authorized in this section exceeds the income tax due on the income of the qualified taxpayer for the taxable year, the excess credit may not be carried forward and must be refunded to the qualified taxpayer.
(8) The commissioner of the department of agriculture may issue rules to administer this section, including specifying requirements for implementing and demonstrating qualified stewardship practices, and may issue tax credit certificates pursuant to this section. Before promulgating any rules, the commissioner shall initiate a public stakeholder process to advise the commissioner about the requirements for implementing and demonstrating qualified stewardship practices.
(9) This section is repealed, effective December 31, 2034.
Source: L. 2024: Entire section added, (HB 24-1249), ch. 244, p. 1609, � 1, effective August 7.
39-22-562. Apprenticeship tax credit - tax preference performance statement - legislative declaration - definitions - rules - repeal. (1) (a) The general assembly finds and declares that:
(I) Colorado is committed to accelerating new apprenticeship program growth on a diverse basis, especially in new and emerging industries that have been traditionally underrepresented in registered apprenticeships; and
(II) Many employers are interested in providing high-quality registered apprenticeships to address their skilled worker shortages but face financial barriers, especially small businesses.
(b) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credit provided for in this section is to induce certain designated behavior by taxpayers and to provide a reduction in income tax liability for certain businesses that hire apprentices. Specifically, this tax expenditure is intended to incentivize the hiring of apprentices and growth of registered apprenticeship programs in new and emerging industries.
(c) The general assembly and the state auditor shall measure the effectiveness of the tax credit in achieving the purposes specified in subsection (1)(b) of this section based on the number and value of the credits claimed.
(2) As used in this section, unless the context otherwise requires:
(a) Apprentice has the same meaning as set forth in section 8-15.7-101 (1).
(b) Certificate of registration has the same meaning as set forth in section 8-15.7-101 (6).
(c) Credit means the credit against income tax created in this section.
(d) Department means the department of revenue.
(e) Employee has the same meaning as set forth in section 39-22-604 (2)(a); except that employee includes only those individuals who perform services for the taxpayer for at least one thousand forty hours per income tax year.
(f) New and emerging industry does not include the building and construction trades as described in section 8-15.7-105 (4).
(g) Qualified taxpayer or taxpayer means a person subject to tax pursuant to this article 22 that is doing business in this state and that employs an apprentice in the relevant tax year.
(h) Registered apprenticeship program has the same meaning as set forth in section 8-15.7-101 (13).
(i) Small business means a business with fewer than fifty employees.
(j) State apprenticeship agency or SAA has the same meaning as set forth in section 8-15.7-101 (16).
(3) (a) Subject to the limitations set forth in subsection (3)(b) of this section, for income tax years commencing on or after January 1, 2025, but before January 1, 2035, a qualified taxpayer in a new and emerging industry is allowed an apprenticeship tax credit against the income tax imposed by this article 22 for each apprentice who is an employee of the taxpayer in this state for no less than six months during the taxpayer's income tax year. The credit is equal to up to six thousand three hundred dollars for six months of employment plus up to one thousand fifty dollars for each additional month of employment, for a maximum of twelve thousand six hundred dollars per apprentice per income tax year; except that the taxpayer shall not claim a credit for:
(I) More than ten apprentices per income tax year;
(II) The same apprentice for more than two consecutive income tax years; and
(III) An apprentice for months when the apprentice did not receive wages from the taxpayer.
(b) A qualified taxpayer must either:
(I) Have established a registered apprenticeship program in good standing with the SAA and received a certificate of registration from the state apprenticeship agency; or
(II) Be an employer-partner of a registered apprenticeship program in good standing with the SAA as verified by the qualified taxpayer's inclusion on the Colorado state apprenticeship resource directory pursuant to section 8-83-308.
(c) To claim the credit, the taxpayer must reserve the credit as set forth in subsection (4) of this section and annually apply for and receive an income tax credit certificate from the state apprenticeship agency pursuant to subsection (5) of this section.
(4) (a) To claim a credit pursuant to this section, a taxpayer must submit an application for the reservation of a tax credit to the SAA in the form and manner prescribed by the SAA.
(b) The SAA shall review all submitted applications to:
(I) Determine whether the applicant is a qualified taxpayer;
(II) Determine whether the applicant has complied with the requirements of subsection (3)(b) of this section;
(III) Determine whether the individual for whom the application is submitted is an apprentice, is an employee, and complies with any standards set forth in article 15.7 of title 8; and
(IV) Calculate the number of months each prospective apprentice is expected to be employed.
(c) (I) Based upon the number of apprentices the qualified taxpayer expects to employ, and the number of months each apprentice is expected to be employed, the SAA may reserve for the benefit of each qualified taxpayer all or part of the credit amount requested by the qualified taxpayer; except that the SAA shall not reserve an amount in excess of the credit allowed by subsection (3)(a) of this section.
(II) The aggregate amount of credits reserved for all qualified taxpayers must not exceed fifteen million dollars per calendar year. The SAA may reserve credits for the current or any future calendar year based upon the expected employment dates indicated in a qualified taxpayer's application. For a qualified taxpayer whose income tax year is not a calendar year, the reservation is effective for the income tax year that begins during the calendar year for the reservation.
(III) If, for any calendar year, the aggregate amount of reservations for tax credits the SAA has approved is equal to the total amount of tax credits available for reservation for a current or future calendar year, the SAA shall notify all qualified taxpayers that have submitted applications then awaiting approval or that have submitted applications for approval after the calculation is made that additional approvals of applications for reservations of tax credits shall not be granted for the calendar year. The pending applications must remain pending in the order received for up to two years after the date the original application is received by the SAA and shall be considered for reservations of tax credits in the event that additional credits become available pursuant to subsection (5)(b) of this section.
(d) (I) If the SAA reserves credits for the benefit of a qualified taxpayer, the SAA shall notify the qualified taxpayer of the reservation and the amount reserved. The reservation of tax credits does not entitle the qualified taxpayer to an issuance of a tax credit certificate until the qualified taxpayer complies with all of the requirements of this section or standards of the SAA for the issuance of a tax credit certificate.
(II) The SAA shall notify any qualified taxpayer for which the SAA did not reserve a credit under subsection (4)(c) of this section of its decision in writing. If the SAA determines that a qualified taxpayer's application is incomplete or that the application does not comply with the requirements of this section or the standards established by the SAA, the SAA shall remove the application from the review process and notify the qualified taxpayer in writing of its decision.
(5) (a) (I) A qualified taxpayer shall submit an application to the SAA for an income tax credit certificate to claim the credit allowed by this section on a form and in a manner prescribed by the SAA. The application must include identifying information for each apprentice employed in the state for which the qualified taxpayer is submitting an application for a tax credit, the amount of credit requested, and sufficient information to allow the SAA to make a determination that:
(A) The taxpayer meets the requirements set forth in this section;
(B) The apprentice for whom the application is submitted meets the standards set forth in article 15.7 of title 8; and
(C) The apprentice for whom the application is submitted has not been the subject of a taxpayer's application for more than two income tax years.
(II) Except as provided in subsection (5)(b)(II) of this section, the SAA:
(A) May issue one income tax credit certificate per income tax year to each qualified taxpayer that, at a minimum, specifies the taxpayer's identifying information and the total amount of the credit allowed; and
(B) Shall not issue an income tax credit certificate in excess of the amount reserved for the qualified taxpayer for the calendar year pursuant to subsection (4) of this section.
(b) If the actual aggregate amount of income tax credit certificates issued for a calendar year is less than the maximum aggregate amount of credits allowed to be reserved for all qualified taxpayers, the SAA shall apply the remaining balance in the following order:
(I) Reserve the remaining balance for any applications pending in order of priority pursuant to subsection (4)(c)(III) of this section; and
(II) Issue an additional tax credit certificate up to the amount allowed pursuant to subsection (3)(a) of this section to any qualified taxpayer whose actual credit earned exceeded the amount reserved pursuant to subsection (4) of this section.
(c) (I) The SAA shall maintain a database of any information determined necessary by the SAA to evaluate the effectiveness of the income tax credit allowed in this section in meeting the purpose set forth in subsection (1)(b) of this section and shall provide such information, and any other information that may be needed, if available, to the state auditor as part of the state auditor's evaluation of the tax expenditure required by section 39-21-305.
(II) The SAA shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report for the preceding tax year listing each qualified taxpayer to which the SAA issued an income tax credit certificate and that includes the following information:
(A) The taxpayer's name;
(B) The amount of the income tax credit that the tax credit certificate indicates the taxpayer is eligible to claim; and
(C) The taxpayer's social security number or the taxpayer's Colorado account number and federal employer identification number.
(III) (A) The SAA shall prescribe forms and promulgate rules pursuant to article 4 of title 24 establishing the standards for which an income tax credit certificate under this subsection (5) is issued.
(B) In establishing the standards required by subsection (5)(c)(III)(A) of this section, the SAA shall obtain input from employers and apprentices on elements of program quality for registered apprenticeship programs in new and emerging industries.
(C) Qualified taxpayers that have previously claimed the income tax credit and seek to claim the income tax credit in future tax years shall provide information regarding how they have satisfied the standards issued pursuant to subsection (5)(c)(III)(A) of this section related to program quality in their reapplication for the income tax credit.
(IV) The SAA shall conduct outreach to small businesses to ensure they are aware of the tax credit and provide technical assistance to minimize the administrative burden of submitting an application for the reservation of a tax credit.
(6) To claim the credit authorized by this section, a taxpayer shall file the income tax credit certificate with the taxpayer's state income tax return. The amount of the credit that the taxpayer may claim pursuant to this section is the amount stated on the income tax credit certificate.
(7) If a taxpayer claims the credit allowed in this section, the taxpayer shall not claim a credit for the same apprentice pursuant to section 39-22-531, 39-30-105.1, or 39-30.5-105.
(8) If an income tax credit authorized in this section exceeds the income tax due on the income of the taxpayer for the taxable year, the excess credit shall not be carried forward and must be refunded to the taxpayer.
(9) This section is repealed, effective December 31, 2037.
Source: L. 2024: Entire section added, (HB 24-1439), ch. 163, p. 770, � 1, effective May 10.
39-22-563. Tax credit for freight rail use - tax preference performance statement - legislative declaration - definitions - repeal. (1) Tax preference performance statement. (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purposes of the tax credit provided in this section are to provide tax relief to certain businesses, specifically those businesses engaged in new or expanded manufacturing, repair or refurbishing, agriculture, recycling, distribution centers for consumer products, or energy production that will utilize freight rail that is in danger of going out of service due to coal production reductions and closures, and to induce certain designated behaviors by taxpayers, specifically expenditures on freight rail transportation service in a coal transition community.
(b) The general assembly and the state auditor shall measure the effectiveness of the tax credits awarded pursuant to this section in achieving the purposes specified in subsection (1)(a) of this section based on the number and value of tax credits claimed pursuant to this section.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) Certified freight rail use means the use of freight rail transportation:
(I) Of freight either originating or terminating at a business located in a coal transition community; and
(II) On a rail line in this state that the department of transportation has determined is at risk of inactivity or abandonment due to a lack of demand resulting from coal transition.
(b) Coal transition community has the same meaning as set forth in section 8-83-502 (1).
(c) Department means the department of revenue.
(d) Freight rail use plan means a plan submitted by a qualified applicant to the office pursuant to subsection (4) of this section.
(e) Office means the Colorado office of economic development created in section 24-48.5-101.
(f) Qualified applicant means a person subject to tax under this article 22 whose engagement in manufacturing, agriculture, repairing or refurbishing, recycling, distribution centers for consumer products, or energy production with a regular demand for substantial new or expanded rail freight transportation causes the person to incur a qualified expenditure.
(g) Qualified expenditure means the amount paid by a qualified applicant for certified freight rail use.
(3) Reservation of tax credit and tax credit allowed. (a) On or after January 1, 2025, but prior to January 1, 2036, the office may reserve the allocation of a credit against the income taxes imposed by this article 22 for a qualified applicant pursuant to subsection (5) of this section.
(b) In order to claim a tax credit reserved pursuant to subsection (5) of this section, a qualified applicant must, on or before December 31, 2038, execute the freight rail use plan that it submits to the office pursuant to subsection (4) of this section.
(c) For income tax years commencing on or after January 1, 2026, and before January 1, 2039, a qualified applicant is allowed a credit against the income taxes imposed by this article 22 in the amount set forth in the tax credit certificate issued by the office pursuant to subsection (6) of this section.
(4) Submission and review of application, freight rail use plan, and qualified expenditures estimate. (a) To receive a tax credit reservation pursuant to subsection (4)(b) of this section, a qualified applicant must submit an application, freight rail use plan, and qualified expenditures estimate to the office in accordance with policies and procedures created by the office. At a minimum, the application must include an estimate of the amount of qualified expenditures that the qualified applicant expects to incur for one or more future tax years for which the applicant is applying for the tax credit reservation.
(b) The office shall review a qualified applicant's application, freight rail use plan, and qualified expenditures estimate to:
(I) Determine whether such information is complete;
(II) Make preliminary determinations of whether the applicant is a qualified applicant and whether the freight rail use plan will result in a certified freight rail use;
(III) Make final determinations of whether the applicant is a qualified applicant and whether the freight rail use plan will result in a certified freight rail use; and
(IV) Determine which freight rail use plans to approve in connection with the reservation of a tax credit as provided in subsection (5) of this section.
(c) For any application, freight rail use plan, and qualified expenditures estimate that the office determines pursuant to subsection (4)(b)(I) of this section is incomplete, the office shall notify the qualified applicant in writing of the office's determination and remove the application, freight rail use plan, and qualified expenditures estimate from the review process.
(d) The office shall make the preliminary determinations, pursuant to subsection (4)(b)(II) of this section, of whether the applicant is a qualified applicant and whether the freight rail use plan is a certified freight rail use within ninety days of receiving the application, freight rail use plan, and qualified expenditures estimate pursuant to subsection (4)(b) of this section.
(e) The office shall develop standards in consultation with the just transition office created in section 8-83-503 (1) and the department of transportation to inform the office's determinations, pursuant to subsection (4)(b)(III) of this section, of whether the applicant is a qualified applicant and whether the freight rail use plan will result in a certified freight rail use.
(f) In making the determination, pursuant to subsection (4)(b)(IV) of this section, of which freight rail use plans to approve for the reservation for the benefit of the qualified applicant of an allocation of a tax credit, the office shall prioritize freight rail use plans that:
(I) Specify regular, frequent, ongoing, and substantial long-term freight rail use;
(II) Provide substantial economic development benefits;
(III) Demonstrate financial viability;
(IV) Incorporate environmentally responsible and sustainable use of resources; and
(V) Incentivize a diverse group of businesses and sectors to use targeted rail lines.
(5) Reservation of tax credits. Subject to subsection (7) of this section, the office may reserve a tax credit for the benefit of a qualified applicant for any future tax year in an amount not to exceed seventy-five percent of the qualified applicant's qualified expenditure estimate submitted by the qualified applicant pursuant to subsection (4)(a) of this section. If the office reserves a tax credit for the benefit of a qualified applicant, the office shall notify the qualified applicant in writing of the reservation and the amount reserved. The reservation of a tax credit by the office for a qualified applicant does not entitle the qualified applicant to the issuance of a tax credit certificate until the qualified applicant complies with all the requirements specified in this section for the issuance of the tax credit certificate. When the office approves a reservation of tax credits, the office may also impose additional requirements that a qualified applicant shall satisfy as part of executing a freight rail use plan before the office issues a tax credit certificate to the applicant. The office may use the reservation of a tax credit in support of business recruitment and expansion.
(6) Deadline for incurring qualified expenditures - proof of compliance - audit of freight rail use plan execution - issuance of tax credit certificate. (a) A qualified applicant receiving a reservation of tax credits pursuant to subsection (5) of this section shall incur the qualified expenditures described in the qualified expenditures estimate submitted by the qualified applicant pursuant to subsection (4)(a) of this section in the tax years set forth in the qualified expenditures estimate and in the reservation made by the office pursuant to subsection (5) of this section.
(b) After executing a freight rail use plan, the qualified applicant shall notify the office that it has done so and shall annually certify the relevant qualified expenditures. In this notice, the applicant shall include a review of the certification that aligns with office policies for certification of qualified expenditures by a licensed certified public accountant that is not affiliated with the qualified applicant. The applicant shall also certify and provide documents demonstrating that the applicant satisfied any requirements imposed by the office pursuant to subsection (5) of this section. Within one hundred eighty days after receipt of such documentation from the qualified applicant, the office shall review the qualified applicant's documentation of qualified expenditures, determine whether the documentation satisfies the freight rail use plan and other requirements, and, if the office determines that the documentation satisfies the freight rail use plan and other requirements, the office shall issue a tax credit certificate in an amount equal to seventy-five percent of the amount of the actual qualified expenditures incurred by the qualified applicant, subject to subsection (6)(d) of this section.
(c) If the office determines that a qualified applicant has failed to comply with the requirements of subsection (6)(a) or (6)(b) of this section, the office shall promptly notify the qualified applicant and may rescind the issuance of the written notice it previously gave the qualified applicant granting the reservation of a tax credit in whole or in part. If the office so rescinds an issuance of the written notice, the qualified applicant may submit a new application, freight rail use plan, and qualified expenditures estimate in accordance with the requirements of subsection (4) of this section, and the total amount of tax credits made available for reservation in the calendar year during which the office rescinds the issuance of the written notice must increase by the amount of the tax credit reserved in the written notice.
(d) Notwithstanding subsection (6)(b) of this section, the total amount of the tax credit certificate issued for any particular freight rail use plan must not exceed the amount of the tax credit reserved by the office pursuant to subsection (5) of this section.
(e) To the extent that the actual qualified expenditures incurred by a qualified applicant are less than the amount described in the relevant reservation issued by the office for a tax year pursuant to subsection (5) of this section, the total amount of tax credits made available for reservation in the calendar year in which the qualified applicant filed the certification required by subsection (6)(b) of this section must increase by the difference between actual qualified expenditures incurred by the qualified applicant and the amount described in the relevant reservation issued by the office for a tax year pursuant to subsection (5) of this section.
(f) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report for the preceding tax year listing each taxpayer to which the office issued a tax credit certificate and that includes the following information:
(I) The taxpayer's name;
(II) The amount of the income tax credit that the certificate indicates the taxpayer is eligible to claim; and
(III) The taxpayer's social security number or the taxpayer's Colorado account number and federal employer identification number.
(7) Limit on aggregate amount of all tax credits that the office may reserve. (a) The aggregate amount of all tax credits that the office may reserve pursuant to this section must not exceed five million dollars in any calendar year, in addition to the amount of any previously reserved tax credits that were rescinded or not utilized pursuant to subsections (6)(c) and (6)(e) of this section during the calendar year and the amount described in subsection (7)(c) of this section. In the case of a tax credit reserved for the benefit of a qualified applicant that files an income tax return for a tax year other than a calendar year, the amount reserved must count against the limit for the calendar year in which the qualified applicant's income tax year begins.
(b) The amount of each tax credit that the office may reserve is determined pursuant to subsection (5) of this section; except that, if the office determines that reserving each tax credit certificate in an amount determined pursuant to subsection (5) of this section will cause the total amount of tax credits reserved by the office for a calendar year to exceed the limit set forth in subsection (7)(a) of this section, the office shall proportionally reduce the amount of each tax credit reservation so that the total amount of tax credits reserved by the office for that calendar year equals the limit set forth in subsection (7)(a) of this section.
(c) If the aggregate amount of all tax credits reserved by the office for any calendar year is less than the amount available as calculated pursuant to subsection (7)(a) of this section, then the aggregate amount of all tax credits that the office may reserve in the next calendar year is increased by the unreserved amount.
(8) Filing tax credit certificate with income tax return. In order to claim the tax credit authorized by this section, a qualified applicant shall file the tax credit certificate issued by the office pursuant to subsection (6) of this section with the qualified applicant's state income tax return. The amount of the tax credit that a qualified applicant may claim pursuant to this section is the amount stated on the tax credit certificate.
(9) Refundability. The entire tax credit to be issued pursuant to this section may be claimed by the qualified applicant for the qualified expenditures made in the taxable year in which the qualified applicant executes a freight rail use plan. If the amount of the tax credit allowed pursuant to this section exceeds the amount of income taxes otherwise due on the income of the qualified applicant in the income tax year for which the tax credit is being claimed, the entire amount of the tax credit not used as an offset against income taxes in the income tax year is refunded to the qualified applicant.
(10) Policies and procedures. The office may create and modify policies and procedures as necessary to further implement this section and shall solicit advice from the department in creating and modifying such policies and procedures.
(11) Insufficient taxpayer interest. Notwithstanding any law to the contrary, for calendar years beginning on or after January 1, 2031, the office may determine that there is insufficient taxpayer interest to continue offering the tax credit pursuant to this section. After the office makes such a determination, it shall not accept any more applications for tax credits pursuant to this section and it shall inform the department that it has discontinued the credit.
(12) Repeal. This section is repealed, effective December 31, 2045.
Source: L. 2024: Entire section added, (SB 24-190), ch. 280, p. 1862, � 5, effective August 7.
Editor's note: This section was numbered as � 39-22-560 in SB 24-190 but was renumbered on revision for ease of location.
Cross references: For the legislative declaration in SB 24-190, see section 1 of chapter 280, Session Laws of Colorado 2024.
39-22-564. New railroad operator tax credit - tax preference performance statement - legislative declaration - definitions - rules - repeal. (1) Tax preference performance statement. (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purposes of the tax credit provided in this section are to provide tax relief to certain businesses, specifically railroad operators, and to induce certain designated behavior by taxpayers, specifically maintaining rail line access to coal transition communities.
(b) The general assembly and the state auditor shall measure the effectiveness of the tax credit in achieving the purposes specified in subsection (1)(a) of this section based on the number and value of tax credits claimed pursuant to this section.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) Coal transition community means a tier one transition community as defined in section 8-83-502 (10).
(b) Department means the department of revenue.
(c) Qualified expenditure means direct operating and capital improvement expenditures necessary to maintain or improve a qualified rail line.
(d) Qualified rail line means a rail line in this state that the department of transportation has determined is both:
(I) At risk of inactivity or abandonment due to a lack of demand; and
(II) Covered by an access agreement for passenger rail access on the line between the qualified taxpayer and the state through at least January 1, 2038.
(e) Qualified taxpayer means a common carrier engaged in the transportation of freight on a qualified rail line.
(3) Tax credit allowed. For income tax years commencing on or after January 1, 2027, but before January 1, 2038, a qualified taxpayer is allowed a credit against the income taxes imposed by this article 22 in an amount equal to the amount stated on the tax credit certificate issued by the department of transportation pursuant to subsection (4)(c) of this section.
(4) Application - tax credit certificate issuance. (a) (I) In order to claim a tax credit pursuant to this section, a taxpayer must submit an application to the department of transportation on or before December 31 of the year for which the taxpayer wishes to claim the tax credit, and the taxpayer must submit the application in a form and manner determined by the department.
(II) A taxpayer's application submitted pursuant to subsection (4)(a)(I) of this section must include a certification of the taxpayer's qualified expenditures and a review of the certification that aligns with department of transportation policies for certification of qualified expenditures by a licensed certified public accountant that is not affiliated with the taxpayer.
(b) The department of transportation shall review a taxpayer's application submitted pursuant to subsection (4)(a) of this section to determine:
(I) Whether the taxpayer is a qualified taxpayer;
(II) Whether the taxpayer incurred qualified expenditures;
(III) The amount of the qualified expenditures incurred by the taxpayer; and
(IV) The amount of the tax credit that the taxpayer may claim for the relevant tax year, which amount must not exceed seventy-five percent of the amount of qualified expenditures incurred by the taxpayer.
(c) Upon approving a qualified taxpayer's application and making the determinations described in subsection (4)(b) of this section, and subject to the limitations set forth in subsection (5) of this section, the department of transportation shall issue a tax credit certificate to the qualified taxpayer in an amount equal to the amount determined by the department of transportation pursuant to subsection (4)(b)(IV) of this section.
(d) The department of transportation shall, in a sufficiently timely manner to allow the department to process returns claiming the tax credit allowed in this section, provide the department with an electronic report for the preceding tax year that lists each qualified taxpayer to which the department of transportation issued a tax credit certificate and includes the following information:
(I) The qualified taxpayer's name;
(II) The amount of the income tax credit that the certificate indicates the qualified taxpayer is eligible to claim; and
(III) The qualified taxpayer's social security number or the qualified taxpayer's Colorado account number and federal employer identification number.
(5) Limit on aggregate amount of all tax credits that the department of transportation may reserve. (a) The aggregate amount of all tax credit certificates that the department of transportation may issue pursuant to this section must not exceed five million dollars in any calendar year, in addition to the amount of any previously issued tax credit certificates that were rescinded or not utilized during the calendar year and the amount described in subsection (5)(c) of this section. In the case of a tax credit certificate issued for the benefit of a qualified taxpayer that files an income tax return for a tax year other than a calendar year, the amount in the tax credit certificate must count against the limit for the calendar year in which the qualified applicant's income tax year begins.
(b) The amount of each tax credit that the department of transportation may issue in a tax credit certificate is determined pursuant to subsection (4) of this section; except that, if the department of transportation determines that the issuing of each tax credit certificate in an amount determined pursuant to subsection (4) of this section will cause the total amount of tax credit certificates issued by the department of transportation for a calendar year to exceed the limit set forth in subsection (5)(a) of this section, the department of transportation shall proportionally reduce the amount of each tax credit certificate issued by the department of transportation so that the total amount of tax credit certificates issued by the department of transportation for that calendar year equals the limit set forth in subsection (5)(a) of this section.
(c) If the aggregate amount of all tax credit certificates issued by the department of transportation for any calendar year is less than the amount available as calculated pursuant to subsection (5)(a) of this section, then the aggregate amount of all tax credit certificates that the department of transportation may issue in the next calendar year is increased by the unissued amount.
(d) If, pursuant to section 39-22-563 (11), the Colorado office of economic development determines that there is insufficient interest in the tax credit offered pursuant to section 39-22-563, the aggregate amount of all tax credit certificates that the department of transportation may issue is increased by five million dollars for each of the following calendar years through calendar year 2037.
(6) Refundability. If the amount of the tax credit allowed pursuant to this section exceeds the amount of income taxes otherwise due on the income of the qualified taxpayer in the income tax year for which the credit is being claimed, the amount of the credit not used as an offset against income taxes in the income tax year is refunded to the qualified taxpayer.
(7) Filing tax credit certificate with income tax return. In order to claim the tax credit authorized by this section, a qualified taxpayer shall file the tax credit certificate issued by the department of transportation pursuant to subsection (4)(c) of this section with the qualified taxpayer's state income tax return. The amount of the tax credit that a qualified taxpayer may claim pursuant to this section is the amount stated on the tax credit certificate.
(8) Compliance monitoring and recapture. (a) If, as of the last day of any taxable year during the compliance period, the qualified rail line is not in good operating condition or the qualified taxpayer is not meeting one or more of the service criteria specified in access agreements to the qualified rail line for passenger operations, the department of transportation shall notify the qualified taxpayer and the department that all or a portion of the total amount of the tax credits allowed to the qualified taxpayer pursuant to this section for the tax year that preceded the compliance period and any tax year thereafter is disallowed. The qualified taxpayer shall add the amount of the tax credit that is disallowed to its return as a recaptured tax credit for the taxable year in which the tax credit is disallowed pursuant to this subsection (8).
(b) (I) The department of transportation shall establish reporting requirements to monitor compliance with this subsection (8), including requirements regarding the reporting of the status of a qualified rail line by the qualified taxpayer and whether the qualified taxpayer is or is not meeting any service criteria specified in access agreements.
(II) If a dispute arises about whether a qualified rail line is not in good operating condition or the qualified taxpayer is not meeting any service criteria specified in access agreements, the department of transportation shall resolve the dispute and notify the department of the resolution.
(c) As used in this subsection (8), unless the context otherwise requires, compliance period means the period of three years following any year in which the qualified taxpayer claimed a tax credit pursuant to this section.
(9) Application of tax credit. A qualified taxpayer who claims a tax credit pursuant to this section shall provide the state or other passenger rail operator full credit for the value of that tax credit against any costs, fees, or other charges that the qualified taxpayer may charge for passenger rail operations access, operations, or maintenance on the qualifying rail line pursuant to an access agreement between the qualified taxpayer and the state for passenger rail access.
(10) Rules. The department of transportation and the department may promulgate rules in accordance with article 4 of title 24 as may be necessary to effectuate the purposes of this section.
(11) Repeal. This section is repealed, effective December 31, 2045.
Source: L. 2024: Entire section added, (SB 24-190), ch. 280, p. 1867, � 5, effective August 7.
Editor's note: This section was numbered as � 39-22-561 in SB 24-190 but was renumbered on revision for ease of location.
Cross references: For the legislative declaration in SB 24-190, see section 1 of chapter 280, Session Laws of Colorado 2024.
39-22-565. Workforce shortage tax credit - tax preference performance statement - report - legislative declaration - definitions - repeal. (1) Tax preference performance statement. In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that:
(a) The general legislative purposes of the tax credit allowed by this section are:
(I) To induce certain designated behavior by taxpayers; and
(II) To provide tax relief for certain businesses or individuals.
(b) The specific legislative purpose of the tax credit allowed by this section is to encourage workforce development in industries that are facing worker shortages by providing financial assistance for facility improvement and equipment acquisition costs associated with training programs designed to alleviate worker shortages.
(c) The general assembly and the state auditor shall measure the effectiveness of the tax credit in achieving the purposes specified in subsections (1)(a) and (1)(b) of this section based on the information required to be maintained and reported by the office pursuant to subsection (12) of this section.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) Applicant means a person subject to tax pursuant to this article 22, an entity that is exempt from taxation pursuant to section 39-22-112 (1), or a political subdivision of the state.
(b) Application means an application in the form and manner approved by the office for the tax credit allowed in this section.
(c) Department means the department of revenue.
(d) Federal investments means the federal Infrastructure Investment and Jobs Act, Pub.L. 117-58, the federal Inflation Reduction Act of 2022, Pub.L. 117-169, and the federal CHIPS and Science Act of 2022, Pub.L. 117-167.
(e) Office means the Colorado office of economic development created in section 24-48.5-101.
(f) Potential qualified asset means an asset that may be a qualified asset upon the determination of the office.
(g) Qualified applicant means an applicant that makes a qualified investment to train individuals in a qualified industry and that is selected pursuant to subsection (5) of this section.
(h) (I) Qualified asset means:
(A) Land in this state;
(B) Buildings, fixtures, and other structural components of buildings in this state for which the applicant is allowed a deduction for depreciation pursuant to section 167 of the internal revenue code, including purchasing or constructing a facility, renovating a facility, making tenant improvements, and funding a capital lease with capitalized labor, construction, and installation costs;
(C) Tangible personal property acquired for use exclusively in this state for which the applicant is allowed a deduction for depreciation pursuant to section 167 of the internal revenue code; and
(D) Computer software acquired for use exclusively in this state for which the applicant is allowed a deduction for depreciation under section 167 of the internal revenue code.
(II) For purposes of this subsection (2)(h), if an applicant is not subject to federal income tax, the applicant is deemed to be allowed a deduction for depreciation if such a deduction would have been allowed were the applicant subject to federal income tax.
(i) Qualified industry means an industry affected by federal investments that has a demonstrated workforce shortage, as determined by the office as specified in the policies and procedures developed by the office pursuant to subsection (13) of this section.
(j) Qualified investment means the amount paid by a qualified applicant to acquire, construct, reconstruct, or erect a qualified asset to the extent the amount paid reflects new activity and to the extent the amount is required to be capitalized pursuant to the internal revenue code or the amount is allowed to be deducted under section 179 of the internal revenue code.
(k) Selection committee means a selection committee appointed by the office consisting of members who have expertise and experience as employers, in education, or in other relevant areas.
(3) Tax credit allowed. (a) Except as provided in subsection (3)(c) of this section, a qualified applicant is allowed to use a tax credit certificate issued by the office pursuant to subsection (8) of this section against the income taxes imposed by this article 22 in the income tax year that the qualified applicant places a qualified asset in service in the amount specified on the tax credit certificate issued by the office; except that the tax credit certificate may not be used in an income tax year commencing before January 1, 2026, and may not be used in an income tax year commencing on or after January 1, 2033.
(b) In order to claim the tax credit allowed pursuant to this section, the qualified applicant must submit an application as specified in subsection (5) of this section, place the qualified asset into service before January 1, 2033, obtain a tax credit certificate from the office as specified in subsection (8) of this section, and, once issued by the office, file the tax credit certificate with the qualified applicant's income tax return as specified in subsection (9) of this section.
(c) A tax credit is not allowed pursuant to this section if:
(I) The amount refunded pursuant to subsection (10) of this section is used to supplant local, state, or federal money that would otherwise be appropriated; or
(II) The qualified applicant expends money received from the state to offset at least half of a qualified investment, not including the amount refunded pursuant to subsection (10) of this section.
(4) Tax credit administration. Except as otherwise provided in subsection (7) of this section, the office is the administrator of the tax credit allowed by this section.
(5) Application submission and review. (a) An applicant that intends to claim a tax credit pursuant to this section shall submit an application to the office.
(b) The office shall accept applications for annual application periods by deadlines established in the policies and procedures developed by the office pursuant to subsection (13) of this section; except that the office may only receive applications between January 1, 2025, and December 31, 2029.
(c) The office shall review all submitted applications to determine whether:
(I) The applicant is a qualified applicant; and
(II) The application is complete and includes a description of a potential qualified asset and the estimated qualified investment.
(d) If the office determines that the application is complete and in compliance, the office shall add the application to an evaluation pool for the application period. Within a reasonable period after the end of the application period, the office shall forward the evaluation pool to the selection committee for the merit-based review described in subsection (7) of this section.
(e) If the office determines that the application is incomplete or that it does not comply with the requirements of this section or the policies and procedures developed by the office pursuant to subsection (13) of this section, the office shall remove the application from the review process and notify the applicant in writing of its decision. An applicant may resubmit a disapproved application to be evaluated in a future application period.
(6) Application and issuance fees. (a) (I) For an application for which the amount of the tax credit requested by an applicant pursuant to this section is two hundred fifty thousand dollars or more, the office may impose a reasonable application fee on an applicant that does not exceed five hundred dollars.
(II) For an application for which the amount of the tax credit requested by an applicant pursuant to this section is less than two hundred fifty thousand dollars, the office may impose a reasonable application fee on an applicant that does not exceed two hundred dollars.
(b) The office may impose on a qualified applicant a reasonable issuance fee of up to three percent of the amount of the tax credit specified on the tax credit certificate issued by the office as specified in subsection (8) of this section, which must be paid before the tax credit certificate is issued to the qualified applicant.
(c) Any fee revenue collected pursuant to this subsection (6) must be applied to the administration of the tax credit created by this section.
(7) Merit-based review and tax credit reservation. (a) (I) For each application period, the selection committee shall conduct a merit-based review of the applications that have been placed in the evaluation pool pursuant to subsection (5)(d) of this section. The selection committee shall complete its review and award reservations within a reasonable period after the end of the application period, not to exceed ninety days.
(II) Except as provided in subsection (7)(a)(IV) of this section, based upon the totality of the factors set forth in subsection (7)(c) of this section, the selection committee may reserve for the benefit of a qualified applicant a tax credit in an amount to be determined by the selection committee not to exceed fifty percent of the estimated qualified investment; except that the aggregate amount of tax credits reserved for all qualified applicants in an annual application period may not exceed fifteen million dollars.
(III) The selection committee may reserve tax credits to be used by a qualified applicant for income tax years commencing on or after January 1, 2026, but before January 1, 2033, based upon the anticipated date the qualified asset is placed into service.
(IV) If the September 2025 revenue forecast, and each September revenue forecast through the September 2028 revenue forecast as prepared by either legislative council staff or the office of state planning and budgeting, projects that state revenues, as defined in section 24-77-201 (4), will not increase by at least four percent for the current fiscal year, the aggregate amount of tax credits reserved for all qualified applicants in the application period commencing in the calendar year that begins during the current fiscal year is reduced by fifty percent; except that, if the amount of a reduced tax credit reservation is equal to or less than five hundred dollars, then the selection committee shall not issue a tax credit reservation.
(b) (I) If the selection committee reserves tax credits for the benefit of a qualified applicant under subsection (7)(a) of this section, the selection committee shall notify the office of the reservation and the amount of tax credits reserved. The office shall notify the qualified applicant of the tax credit reservation. The reservation of a tax credit does not entitle the qualified applicant to an issuance of a tax credit certificate until the qualified applicant complies with all the requirements specified in this section, by the selection committee or by the office, for the issuance of a tax credit certificate pursuant to subsection (8) of this section.
(II) The office shall notify any qualified applicant in writing for which the selection committee reserved no tax credit under subsection (7)(a) of this section.
(c) (I) In conducting the merit-based review pursuant to subsection (7)(a) of this section, the selection committee shall consider the factors set forth in this subsection (7)(c) in addition to any other factors the selection committee may request the office to include in its policies and procedures developed pursuant to subsection (13) of this section. The selection committee may weigh the factors equally or differently.
(II) The selection committee shall consider:
(A) Whether the qualified applicant's qualified investment will influence competitiveness in a qualified industry;
(B) Whether the qualified applicant's qualified investment will result in increased job placements in qualified industries or increased job placements with a living wage in qualified industries;
(C) The type, scope, and quality of the qualified applicant's qualified asset and the resulting training of individuals in a qualified industry; and
(D) Whether the qualified applicant's qualified investment will result in increased training and workforce development in a qualified industry.
(d) The selection committee may impose additional requirements on the qualified applicant as a condition of awarding the tax credit reservation pursuant to this subsection (7).
(8) Proof of compliance - audit of eligible expenditure certification - issuance of tax credit certificate. After a qualified applicant places a potential qualified asset in service, the qualified applicant shall notify the office that the potential qualified asset has been placed in service and shall certify the qualified investment, after which the office shall make a final determination whether the potential qualified asset is a qualified asset. The qualified applicant shall include a review of the certification by a licensed certified public accountant that is not affiliated with the qualified applicant and that aligns with office policies for certification of a qualified investment. The qualified applicant shall also certify and provide documents demonstrating that the qualified applicant satisfied any additional requirements imposed by the selection committee pursuant to subsection (7) of this section. Within a reasonable time after receipt of such documentation from the qualified applicant, the office shall review the qualified applicant's documentation of certified qualified investment and determine whether the documentation satisfies the requirements of the office, and, if the office determines that the documentation satisfies the requirements of the office, the office shall issue a tax credit certificate in the amount specified in the tax credit reservation, not to exceed fifty percent of the certified qualified investment, issued to the qualified applicant pursuant to subsection (7) of this section; except that a tax credit certificate may not be issued for an income tax year commencing before January 1, 2026, or for an income tax year commencing on or after January 1, 2033.
(9) Filing tax credit certificate with income tax return. (a) In order to claim the tax credit authorized by this section, a qualified applicant shall file the tax credit certificate issued by the office pursuant to subsection (8) of this section with the qualified applicant's state income tax return. If the qualified applicant is a political subdivision of the state or is exempt from tax pursuant to section 39-22-112 (1), the qualified applicant shall file a return pursuant to section 39-22-601 (7)(b). The amount of the tax credit that a qualified applicant may claim pursuant to this section is the amount stated on the tax credit certificate.
(b) A tax credit certificate issued to a partnership, a limited liability company taxed as a partnership, or multiple owners of a property must be passed through to the partners, members, or owners, including any nonprofit entity that is a partner, member, or owner, respectively, on a pro rata basis or pursuant to an executed agreement among the partners, members, or owners documenting an alternate distribution method.
(10) Refundability. If the amount of the tax credit allowed pursuant to this section exceeds the amount of income taxes otherwise due on the income of the qualified applicant in the income tax year for which the tax credit is being claimed, or the qualified applicant is a political subdivision of the state or a person who is exempt from taxation pursuant to section 39-22-112 (1), the amount of the tax credit not used as an offset against income taxes in the income tax year is refunded to the qualified applicant.
(11) Compliance monitoring and recapture. (a) Except as provided in subsection (11)(b) of this section, if, as of the last day of any taxable year during the compliance period, the equipment, building, structure, or facility that was deemed a qualified asset is not being used as a qualified asset, the office shall notify the qualified applicant and the department that the tax credit allowed in this section is disallowed. The qualified applicant shall add the full amount of the tax credit that was actually used to offset the qualified applicant's income tax or refunded to the qualified applicant to its return as a recaptured tax credit for the taxable year in which the tax credit is disallowed pursuant to this subsection (11).
(b) The potential increase in tax required pursuant to subsection (11)(a) of this section does not apply:
(I) If a building, structure, or facility is not a qualified asset as a result of a casualty loss if the loss is restored by reconstruction or replacement within a reasonable period established by the office;
(II) Solely by reason of the disposition of a building, structure, or facility, or an interest therein, if it is reasonably expected that the building, structure, or facility will continue to be operated as a qualified asset for the remainder of the compliance period; or
(III) If a qualifying asset is replaced or upgraded in the normal course of its use.
(c) (I) The office shall establish reporting requirements to monitor compliance with this subsection (11) that shall include:
(A) A disposition of a qualified asset by the qualified applicant;
(B) The number of annual trainees who have used a qualified asset;
(C) The geographic distribution of trainees who have used a qualified asset;
(D) Demographic information about the trainees who have used a qualified asset;
(E) The location and disposition of assets displaced by a qualified asset, if any; and
(F) To the extent a qualified asset is used to expand or create a training facility, an assessment of training capacity prior to implementation of the qualified asset.
(II) If a dispute arises about whether a potential qualified asset is a qualified asset, the office shall adjudicate the dispute and notify the department of the resolution.
(III) Notwithstanding section 39-21-107 (2), if a qualified asset is disposed of during any taxable year during the compliance period, and thereafter the asset is not a qualified asset:
(A) The qualified applicant shall add the full amount of the tax credit to its return as a recaptured tax credit for the taxable year in which the tax credit is disallowed pursuant to this subsection (11) notwithstanding the disposition of the qualified asset;
(B) The statutory period for the assessment of any deficiency with respect to the disallowed tax credit must not expire before the expiration of three years from the date the office is notified, in such a manner as the office determines, that the structure is not a qualified asset; and
(C) The department shall assess any deficiency before the expiration of such three-year period together with any applicable interest and penalty imposed pursuant to this article 22.
(d) As used in this subsection (11), unless the context otherwise requires, compliance period means the period of fifteen years following the taxable year in which the qualified applicant placed the qualified asset in service.
(12) Reporting. (a) No later than December 31, 2025, and, notwithstanding the requirement in section 24-1-136 (11)(a)(I), no later than December 31 of each year thereafter through 2033, the office shall provide a written report to the general assembly and shall further make the report available to the public. In connection with tax credits issued pursuant to this section, the report must include:
(I) The number of qualified assets placed in service;
(II) A description of the use or uses of each qualified asset and a statewide summary of the number of qualified assets for each use; and
(III) The amount of any disallowed tax credit recaptured pursuant to subsection (11) of this section.
(b) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report of each qualified applicant to which the office issues a tax credit certificate for the preceding tax year that includes the following information:
(I) The qualified applicant's name;
(II) The amount of the tax credit; and
(III) The qualified applicant's social security number or the qualified applicant's Colorado account number and federal employer identification number.
(c) The office, the office of the state auditor, or the office of the state controller may review the qualified applicant's finances, expenses, equipment, employment, and training documentation relating to a qualified investment in a qualified asset.
(13) Policies and procedures. (a) The office may create and modify policies, procedures, and guidelines as necessary to further administer the tax credits allowed pursuant to this section and shall solicit advice from the department in creating and modifying such policies, procedures, and guidelines.
(b) The office shall develop standards for determining which industries are included as a qualified industry for which a tax credit under this section is allowed to a qualified applicant.
(c) Any standards developed by the office pursuant to this subsection (13) must be posted on the office's website. The office may annually review and update as necessary standards developed pursuant to this subsection (13).
(d) The office shall determine the annual application period.
(14) Workforce development tax credit program cash fund. (a) The workforce development tax credit program cash fund is created in the state treasury. The fund consists of gifts, grants, donations, and fee revenue credited to the fund pursuant to subsection (6) of this section and any other money that the general assembly may appropriate, transfer, or require by law to be credited to the fund.
(b) The state treasurer shall credit all interest and income derived from the deposit and investment of money in the workforce development tax credit program cash fund to the fund.
(c) Money in the fund is continuously appropriated to the office for the purpose of administering the tax credit issued pursuant to this section.
(d) The state treasurer shall transfer all unexpended and unencumbered money in the fund on December 31, 2050, to the general fund.
(15) Repeal. This section is repealed, effective December 31, 2050.
Source: L. 2024: Entire section added, (HB 24-1365), ch. 478, p. 3352, � 7, effective August 7.
Cross references: For the legislative declaration in HB 24-1365, see section 1 of chapter 478, Session Laws of Colorado 2024.
39-22-566. Qualified care worker tax credit - tax preference performance statement - legislative declaration - definitions - repeal. (1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly declares that the general legislative purpose of the tax credit allowed by this section is to provide tax relief for certain businesses or individuals and that the specific legislative purpose of the tax credit allowed by this section is to provide tax relief to individuals working in the care workforce providing direct care.
(b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purpose specified in subsection (1)(a) of this section based on the number and value of credits that are claimed.
(2) As used in this section, unless the context otherwise requires:
(a) Certified home care agency has the same meaning as set forth in section 25-27.5-102 (1).
(b) Certified nurse aide means a person certified by the state board of nursing pursuant to part 2 of article 255 of title 12.
(c) Child care worker means a resident individual who is registered with the department of early childhood's Colorado shines professional development information system, or a successor system, and who provides care for at least seven hundred twenty hours during the income tax year as:
(I) A licensee and operator of an eligible program in this state;
(II) An employee of an eligible program in this state; or
(III) An informal family friend or neighbor child care worker in this state.
(d) Consumer-directed care employer means a person receiving care pursuant to parts 11 and 19 of article 6 of title 25.5 who employs a direct care worker.
(e) Direct care worker means a resident individual with the appropriate knowledge, skills, and training who provides hands-on care and services, including personal care, to participants receiving long-term care in this state. Direct care worker does not include a certified nurse aide.
(f) Eligible program means a licensed early childhood education program or a licensed family child care home. Eligible program includes only those licensed early childhood education programs and licensed family child care homes with at least a level one quality rating pursuant to the Colorado shines quality rating and improvement system created in section 26.5-5-101 for the entire income tax year, or that portion of the income tax year for which the licensed early childhood education program or licensed family child care home was licensed.
(g) Employee has the same meaning as set forth in section 39-22-604 (2)(a).
(h) Employer has the same meaning as set forth in section 39-22-604 (2)(b).
(i) Home- and community-based services means any services provided in this state pursuant to parts 3 to 13 or part 19 of article 6 of title 25.5.
(j) Informal family friend or neighbor child care worker means an individual described in section 26.5-5-304 (1)(f) who provides care for children other than their own who are five years of age or younger; except that an informal family friend or neighbor child care worker is not required to provide care in the individual's permanent place of residence.
(k) Licensed early childhood education program means an early childhood education program, as defined in section 26.5-2-202 (3), that held a valid license issued pursuant to part 3 of article 5 of title 26.5, during the income tax year.
(l) Licensed family child care home means a family child care home, as defined in section 26.5-5-303 (7), that held a valid license issued pursuant to part 3 of article 5 of title 26.5, during the income tax year.
(m) Long-term care means:
(I) Home- and community-based services;
(II) Care provided at a nursing facility; and
(III) Care provided by a certified home care agency.
(n) Long-term care employer means an employer who employs one or more direct care workers to provide long-term care in this state. Long-term care employer includes a consumer-directed care employer.
(o) Nursing facility has the same meaning as set forth in section 25.5-4-103 (14).
(p) Qualified direct care worker means a direct care worker who is an employee of one or more long-term care employers for at least seven hundred twenty hours in total during the tax year.
(3) (a) Subject to the requirements set forth in subsection (3)(b) of this section, for income tax years commencing on or after January 1, 2025, but before January 1, 2029, each child care worker and qualified direct care worker is allowed a credit against the income taxes imposed by this article 22 in the amount of one thousand two hundred dollars. In the case of a child care worker or qualified direct care worker who files a joint return with another resident individual who is also a child care worker or a qualified direct care worker, the credit allowed by this subsection (3)(a) is two thousand four hundred dollars.
(b) (I) The credit allowed by this section is not allowed to a resident individual whose adjusted gross income exceeds:
(A) In the case of a resident individual who files a single return, seventy-five thousand dollars; and
(B) In the case of two resident individuals who file a joint return, one hundred thousand dollars.
(II) The limit set forth in subsection (3)(b)(I)(B) of this section applies to a joint return regardless of whether one or both resident individuals are child care workers or qualified direct care workers.
(III) A resident individual who is both a child care worker and a qualified direct care worker is not allowed an additional credit pursuant to this section on account of such dual qualification.
(IV) In the case of a part-year resident, the credit allowed by this section is apportioned in the ratio determined in section 39-22-110 (1).
(4) (a) On or before September 30, 2025, and each September 30 thereafter, the department of health care policy and financing shall provide the department of revenue an electronic report of the name and federal employer identification number of every long-term care employer providing services in this state during the calendar year.
(b) On or before January 31, 2026, and each January 31 thereafter, the department of early childhood shall provide the department of revenue with an electronic report of child care workers eligible for the credit allowed by this section for the preceding calendar year.
(5) (a) On or before January 31, 2026, and each January 31 thereafter, every long-term care employer that employed one or more direct care workers shall make an information return to the executive director for the preceding calendar year. The return must include each direct care worker's social security number or individual taxpayer identification number, the total hours the direct care worker worked as such during the calendar year, and any other information the executive director may require. The long-term care employer shall report only those employees who are direct care workers as defined in this section.
(b) The return required by this subsection (5) must be filed electronically on or before January 31 in addition to the return required by section 39-22-604 (6). The executive director shall impose a penalty of five hundred dollars if the long-term care employer fails to file the return required by this subsection (5) on or before January 31, unless shown to have been due to reasonable cause, or willfully files a false or fraudulent return, which penalty is in addition to any criminal penalty otherwise provided for failure to file a return or for filing a false or fraudulent return. The executive director shall assess and collect the penalty imposed by this subsection (5)(b) in the same manner as an underpayment of the tax imposed by this article 22.
(c) In the case of a consumer-directed care employer, the department of health care policy and financing, or the department's fiscal agent, shall file the return required by this subsection (5).
(6) If the credit allowed by this section exceeds the income tax imposed by this article 22, the excess credit may not be carried forward and is refunded to the taxpayer.
(7) This section is repealed, effective December 31, 2034.
Source: L. 2024: Entire section added, (HB 24-1312), ch. 294, p. 2002, � 1, effective August 7. L. 2025: (2)(j), (2)(k), and (2)(l) amended, (HB 25-1296), ch. 202, p. 914, � 12, effective May 16; (2)(i) amended, (HB 25-1003), ch. 50, p. 223, � 5, effective July 1.
Editor's note: Subsections (2)(a), (2)(b), (2)(c), and (2)(d) were numbered as subsections (2)(c), (2)(d), (2)(a), and (2)(b), respectively, in HB 24-1312 but were renumbered on revision to conform to statutory format.
Cross references: For the legislative declaration in HB 25-1296, see section 1 of chapter 202, Session Laws of Colorado 2025.
39-22-567. Tax credit for investments in fixed capital assets for a shared quantum facility - tax preference performance statement - legislative declaration - definitions - report - repeal. (1) Tax preference performance statement. In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that:
(a) The general legislative purposes of the tax credit allowed by this section are:
(I) To induce certain designated behavior by taxpayers; and
(II) To improve industry competitiveness;
(b) The specific legislative purpose of the tax credit allowed by this section is to induce a qualified applicant to invest in fixed capital assets to create a hub that is a shared quantum facility that accomplishes translational research and incubation, low-volume manufacturing and fabrication and rapid prototyping in a laboratory environment and to provide related services and workforce development to support the development of quantum businesses and the quantum ecosystem in the state; and
(c) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purposes specified in subsections (1)(a) and (1)(b) of this section based on the information reported by the office pursuant to subsection (11) of this section.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) Consortium means a group of nonprofit or for-profit entities, or both, that are jointly making qualifying investments in an eligible project to create and operate a shared quantum facility. A consortium may include one or more members exempt from tax pursuant to section 39-22-112.
(b) Department means the department of revenue.
(c) Eligible project means a capital project undertaken in the state to create a shared quantum facility for which a qualified applicant makes qualifying investments and that is approved by the office in accordance with the policies, procedures, and guidelines for the implementation and administration of the tax credit allowed by this section adopted by the office pursuant to subsection (12) of this section.
(d) Office means the Colorado office of economic development created in section 24-48.5-101.
(e) (I) Qualified applicant means a nonprofit or for-profit entity that submits an application for the reservation and issuance of tax credits to the office pursuant to this section. An applicant may be a consortium as set forth in subsection (4) of this section.
(II) A qualified applicant includes a person that is exempt from taxation pursuant to section 39-22-112.
(f) (I) Qualifying fixed capital assets means:
(A) Land in this state;
(B) Buildings, fixtures, and other structural components of buildings in this state for which the qualified applicant is allowed a deduction for depreciation pursuant to section 167 of the internal revenue code, including purchasing or constructing a facility, renovating a facility, making tenant improvements, funding a capital lease, capitalized labor, construction, and installation costs;
(C) Tangible personal property acquired for use exclusively in this state for which the qualified applicant is allowed a deduction for depreciation pursuant to section 167 of the internal revenue code, including furniture, fixtures and equipment such as outfitting an office, laboratory machines, refrigeration, HVAC systems, piping, measuring, monitoring and instrumentation equipment, fabrication machines, tools and equipment, and any hardware and software developed by third parties necessary for quantum technology applications; and
(D) Computer software acquired for use exclusively in this state for which the qualified applicant is allowed a deduction for depreciation pursuant to section 167 of the internal revenue code.
(II) Qualifying fixed capital assets is limited to property acquired, constructed, reconstructed, or erected as part of a coordinated plan to create a shared quantum facility.
(III) For purposes of this subsection (2)(f), if a qualified applicant is not subject to federal income tax, the qualified applicant is deemed to be allowed a deduction for depreciation if such a deduction would have been allowed were the qualified applicant subject to federal income tax.
(IV) Qualifying fixed capital assets shall be acquired, constructed, reconstructed, or erected where possible by a certified contractor on a certified contractor list that is obtained from the Colorado department of labor and employment and that contains the information specified in section 40-3.2-105.6 (3)(a).
(g) Qualifying investment means the amount paid by a qualified applicant to acquire, construct, reconstruct, or erect qualifying fixed capital assets to the extent such amount is required to be capitalized pursuant to the internal revenue code or such amount is allowed to be deducted under section 179 of the internal revenue code. Qualifying investment includes an amount capitalized by a lessee of qualifying fixed capital assets for a lease that is treated as a sale for federal income tax purposes.
(h) Quantum business means a private for-profit trade or business or nonprofit organization that has quantum technology as a key part of its business model or organizational purpose, including but not limited to manufacturing, testing, production, research and development, or enhancement of hardware or software to perform or use quantum technology as a key input or output of its business model, and companies that produce goods or services that are key inputs for other quantum business.
(i) Shared quantum facility means a primary place in the state where an applicant performs activities and provides economic benefits related to supporting quantum businesses and the quantum ecosystem.
(3) Credit allowed. (a) Subject to the provisions of subsection (3)(c) of this section, for income tax years commencing on or after January 1, 2025, but prior to January 1, 2033, a qualified applicant is allowed a credit against the income taxes imposed by this article 22 for placing an eligible project in service in an amount specified on the credit certificate issued by the office pursuant to subsection (7) of this section.
(b) To claim the credit allowed pursuant to this section, the qualified applicant must submit an application for a tax credit reservation as specified in subsection (5) of this section, place the eligible project in service prior to January 1, 2031, obtain a tax credit certificate from the office as specified in subsection (7) of this section, and, once issued by the office, file the tax credit certificate with the qualified applicant's income tax return as specified in subsection (8) of this section.
(c) The tax credit created in this section is not allowed to any qualified applicant unless a Colorado-based entity receives a multimillion dollar federal grant from the economic development administration for the regional technology and innovation program or a comparable federal grant program. The office shall notify the department if a grant specified in this subsection (3)(c) is received.
(4) Consortium as qualified applicant - tax matters representative. If a qualified applicant is a consortium:
(a) The basis of the credit allowed by this section includes the aggregate qualifying investment by all the members of the consortium as described in subsection (7)(a)(II) of this section.
(b) Whether the applicant performs the activities and provides the economic benefits related to quantum business is based upon the activities performed by and the benefits provided by all the members of the consortium.
(c) The members of the consortium shall designate one member to be the tax matters representative. The tax matters representative shall disclose to the office that it is the tax matters representative acting on behalf of the consortium. The tax matters representative shall also disclose to the office the name and taxpayer identification number of each member of the consortium.
(d) The tax matters representative is responsible for representing and binding the consortium with respect to all issues affecting the credit, including submitting the application for a tax credit reservation, representing the consortium before the office with respect to the application, notifying the office that the eligible project has been placed in service, submitting proof of compliance, submitting ongoing compliance reports, submitting any other report or document required by the office or the department, adjudicating any disputes, and taking any other action required of a qualified applicant by this section. The acts of the tax matters representative are binding upon all members of the consortium.
(e) The office shall issue a tax credit certificate to, and in the name of, the tax matters representative. The tax matters representative shall file the return and claim the full amount of the tax credit pursuant to subsection (8) of this section. The department shall pay any amount refunded pursuant to subsection (9) of this section to the tax matters representative.
(f) If the credit allowed by this section is recaptured pursuant to subsection (10) of this section, the tax matters representative shall add the recaptured credit, plus any applicable penalties and interest, to its return. Nevertheless, every member of the consortium is jointly and severally liable for any resulting deficiency.
(5) Application submission and review for tax credit reservation. (a) An applicant may submit an application for a tax credit reservation to the office on or after January 1, 2024, but no later than December 31, 2025; except that, if the federal government has not announced the grant recipient described in subsection (3)(c) of this section by June 30, 2025, the office may extend the application deadline to no more than six months after an announcement that a Colorado-based entity has received the grant described in subsection (3)(c) of this section. The application shall include a project plan for a shared quantum facility.
(b) The office shall review all submitted applications for a tax credit reservation to:
(I) Determine whether the applicant is a qualified applicant;
(II) Determine whether the application for a tax credit reservation is complete and includes a plan to make investments in qualifying fixed capital assets for the creation of a shared quantum facility;
(III) Make a preliminary determination whether the project plan for a shared quantum facility is for an eligible project based on the policies and procedures developed by the office pursuant to subsection (12) of this section; and
(IV) Determine whether the eligible project is entitled to a tax credit reservation as specified in subsection (6) of this section.
(c) The office shall make the determinations specified in subsection (5)(b) of this section within ninety days of the date the office receives the complete application for a tax credit reservation.
(d) If the office determines that an application for a tax credit reservation is incomplete or that it is unable to make the determination specified in subsection (5)(b) of this section, the office shall notify the applicant in writing of the office's decision and may remove the application for a tax credit reservation from the review process.
(e) As part of the application review process required pursuant to subsection (5)(b) of this section, the office may request clarifications and modifications to the application.
(f) The office may include performance requirements and criteria that a qualified applicant is required to satisfy before the office will issue a tax credit reservation pursuant to subsection (6) of this section or a tax credit certificate pursuant to subsection (7) of this section. The office must document in writing any requirements created pursuant to this subsection (5)(f).
(6) Tax credit reservation. (a) Based on the factors specified in subsection (6)(d) of this section, the office may determine that a qualified applicant is entitled to a tax credit reservation in accordance with the provisions of this section. The office shall issue tax credit reservations subject to the limitations set forth in this subsection (6) and in accordance with the policies and procedures established pursuant to subsection (12) of this section.
(b) If the office reserves a tax credit for the benefit of a qualified applicant, the office shall notify the qualified applicant in writing of the reservation and the amount reserved. The reservation of a tax credit by the office for a qualified applicant does not entitle the qualified applicant to issuance of a credit certificate until the qualified applicant complies with all the other requirements specified in this section for the issuance of the tax credit. When the office approves a tax credit reservation, the office may also impose additional requirements, which a qualified applicant shall satisfy as part of completing the qualifying investment, before a tax credit certificate is issued to the qualified applicant.
(c) (I) Subject to the limitations in this subsection (6)(c), if approved, the office may issue a tax credit reservation to a qualified applicant for an eligible project in an amount equal to the qualified applicant's estimated qualifying investment.
(II) The aggregate amount of all fixed asset investment tax credit reservations that the office may issue pursuant to this section must not exceed forty-four million dollars.
(III) The office may establish policies and procedures to cap the total amount of any tax credit reservation issued to a qualified applicant pursuant to this subsection (6).
(d) In making the final determination of which project plan to issue tax reservations to pursuant to this subsection (6), the office may prioritize a project plan that:
(I) Is submitted by a qualified applicant that is a consortium that includes the following or is submitted by a qualified applicant that is not a consortium and that collaborates with the following:
(A) A nonprofit entity created by institutions of higher education of high research activity, classified as R1 universities, led by a public R1 university with a demonstrated history of quantum-related research and investment in Colorado; and
(B) A nonprofit entity that has received a substantial federal award for the purposes of cultivating and expanding a quantum-related ecosystem within Colorado;
(II) Is submitted by a qualified applicant that demonstrates an ability to meet application requirements designated by the office, including:
(A) The submission of a budget for the project plan that includes the sources of funding for the project and anticipated uses of the funding;
(B) The submission of an explanation for the ways in which the shared quantum facility will be used and how it will benefit the quantum industry in this state; and
(C) The submission of a community benefits plan developed by a nonprofit entity described in subsection (6)(d)(I)(B) of this section, through engagement with the community surrounding the shared quantum facility and labor organizations;
(III) Is submitted by a qualified applicant that:
(A) Demonstrates that the project plan is agreed upon by the entities described in subsections (6)(d)(I)(A) and (6)(d)(I)(B) of this section;
(B) Demonstrates an intent to equitably and effectively distribute the tax credits or the refund proceeds of the tax credit;
(C) Demonstrates an intent to leverage the proceeds of the refundable tax credit pursuant to this section for the purpose of creating and financing a shared quantum facility to accomplish the goals specified in subsection (1)(b) of this section;
(D) Includes a summary of any third-party resources apart from the tax credits allowed pursuant to this section that will be used to create or finance the shared quantum facility; and
(E) Includes a proposed collaboration plan that outlines the operational and governance plan for the shared quantum facility;
(IV) Proposes a suitable location for the shared quantum facility; and
(V) Is made by a qualified applicant that is a newly created nonprofit organization dedicated to the purpose of promoting the quantum ecosystem and its commercial growth.
(e) As part of the tax credit reservation process pursuant to this subsection (6), the office may request clarifications or modifications to the application submitted pursuant to subsection (5) of this section.
(f) The applicant, at the applicant's own risk, may begin making investments in qualifying fixed capital assets before a tax credit reservation is awarded to the qualified applicant pursuant to this subsection (6). If a tax credit reservation application is approved for a qualified applicant, investments in qualifying fixed capital assets that the qualified applicant made up to twelve months before the date the tax credit reservation was submitted may be included in the calculation of qualifying fixed capital assets for the purpose of determining the amount of the tax credit certificate issued pursuant to subsection (7) of this section.
(7) Proof of compliance - audit of qualifying investments certification - issuance of tax credit certificate. (a) (I) After a qualified applicant completes a project or a phase of a project, the qualified applicant shall notify the office that the project or phase of the project has been placed in service and shall certify the types and amount of the qualifying investments and how the investments were used in an eligible project, after which the office shall make a final determination as to whether the project is an eligible project. The applicant shall include a review of the certification by a licensed certified public accountant that is not affiliated with the qualified applicant that aligns with office policies for certification of qualifying investments. The applicant shall also certify and provide documents demonstrating that the applicant satisfied any additional requirements imposed by the office pursuant to subsections (6) and (12) of this section.
(II) Qualifying investment expenditures that are eligible for the tax credit allowed pursuant to this section may be made by the applicant, members of a consortium, if applicable, or other entities contracted to make the expenditures on behalf of the applicant or members of a consortium as part of a coordinated plan to create the shared quantum facility. The source of money for the qualifying investment expenditures that are eligible for the tax credit can be from any source of money that the applicant or members of a consortium or other entities have available for making the investments.
(III) Within ninety days after receipt of the complete documentation required in subsection (7)(a)(I) of this section from the qualified applicant, the office shall review the qualified applicant's documentation of certified qualifying investments, determine whether the documentation satisfies the project plan and other requirements, and, if the office determines that the documentation satisfies the project plan and other requirements, the office shall issue a tax credit certificate for the lesser of the amount specified in the tax credit reservation issued to the qualified applicant pursuant to subsection (6) of this section or the amount of the qualifying investment.
(b) If there are any unreserved amounts of tax credits available under subsection (6) of this section, and if the amount of certified qualifying investments incurred by the qualified applicant would have resulted in the qualified applicant being issued a tax credit certificate that exceeds the amount of the tax credit reservation issued to the qualified applicant, the qualified applicant may apply to the office for the issuance of an additional tax credit certificate in an amount equal to the difference between the amount that would have been issued as a result of the certified qualifying investments if that amount was not limited to the amount of the tax credit reservation pursuant to subsection (7)(a)(III) of this section and the amount of the tax credit reservation by submitting an application in a form and manner determined by the office. The office shall review the application as specified in subsection (5) of this section and, if approved, shall issue a separate tax credit certificate awarding the qualified applicant the additional credit.
(c) The first application for tax credit issuance may include qualifying investments for the entire eligible project or just the initial phase and must be submitted by the qualified applicant no later than December 31, 2028.
(d) A qualified applicant may submit additional applications for tax credit issuance pursuant to this subsection (7) as the qualified applicant completes additional phases of the project that are placed in service. The qualified applicant may submit such applications through December 31, 2030, and up to the amount of tax credits reserved by the applicant.
(8) Filing tax credit certificate with income tax return. (a) To claim the credit authorized by this section, a qualified applicant shall file the tax credit certificate issued by the office pursuant to subsection (7) of this section with the qualified applicant's state income tax return. If the qualified applicant is exempt from tax pursuant to section 39-22-112 (1), the qualified applicant shall file a return pursuant to section 39-22-601 (7)(b). The amount of the tax credit that a qualified applicant may claim pursuant to this section is the amount stated on the tax credit certificate.
(b) A qualified applicant may not use a tax credit certificate issued pursuant to this subsection (8) before the income tax year that begins on or after January 1, 2026, but must use the tax credit certificate before the last income tax year that commences before January 1, 2033.
(c) A tax credit certificate issued to a partnership, a limited liability company taxed as a partnership, or multiple owners of a property must be passed through to the partners, members, or owners, including any nonprofit entity that is a partner, member, or owner, respectively, on a pro rata basis or pursuant to an executed agreement among the partners, members, or owners documenting an alternate distribution method.
(9) Refundability. (a) Except as otherwise provided in subsection (9)(b) of this section, not more than the aggregate of twenty-four million dollars of credits to be issued to all qualified applicants pursuant to this section may be claimed by the qualified applicants in the taxable year in which the eligible project is placed in service. If the qualified applicants are issued more than an aggregate of twenty-four million dollars in credits pursuant to this section, not more than twenty million dollars of the total amount of credits to be issued may be claimed in any single future taxable year; except that credits may not be claimed for any income tax year that begins on or after January 1, 2033.
(b) If the amount of the credit allowed to be claimed in the applicable taxable year pursuant to this section exceeds the amount of income taxes otherwise due on the income of the qualified applicant in the income tax year for which the credit is being claimed, or the qualified applicant is a person who is exempt from taxation pursuant to section 39-22-112 (1), one hundred percent of the amount of the credit that is allowed to be claimed for the applicable tax year that is not used as an offset against income taxes in the income tax year is refunded to the qualified applicant.
(10) Compliance monitoring and recapture. (a) Except as provided in subsection (10)(b) of this section, if, during the compliance period, the qualified applicant sells, transfers, abandons, or repurposes a substantial portion of the qualifying fixed capital assets for which the qualified applicant was allowed a credit pursuant to this section, or otherwise ceases to operate the shared quantum facility in this state, the office shall notify the qualified applicant and the department that the credit allowed in this section is disallowed. The qualified applicant shall add the full amount of the credit that was actually used to offset the qualified applicant's income tax or refunded to the qualified applicant to its return as a recaptured credit for the taxable year in which the credit is disallowed pursuant to this subsection (10).
(b) The potential increase in tax required pursuant to subsection (10)(a) of this section does not apply if:
(I) All or part of the shared quantum facility experiences a casualty loss and if the qualifying fixed capital assets lost are restored within a reasonable period established by the office;
(II) Solely by reason of the disposition of land, a building, a structure, or a facility, or an interest therein, the shared quantum facility is relocated within this state to a property approved by the office; or
(III) A qualifying fixed capital asset is replaced or upgraded in the normal course of its use.
(c) (I) The office shall establish reporting requirements to monitor compliance with this subsection (10), including requirements regarding the reporting of a disposition of a building, structure, or facility by the qualified applicant.
(II) If a dispute arises about whether a building, structure, or facility is a shared quantum facility, the office shall adjudicate the dispute and notify the department of the resolution.
(III) Notwithstanding section 39-21-107 (2), if a building, structure, or facility, or an interest therein, is disposed of during any taxable year during the compliance period, and thereafter the building, structure, or facility or any replacement for the building, structure, or facility is not a shared quantum facility, then:
(A) The qualified applicant shall add the full amount of the credit to its return as a recaptured credit for the taxable year in which the credit is disallowed pursuant to this subsection (10) notwithstanding the disposition of the building, structure, or facility;
(B) The statutory period for the assessment of any deficiency with respect to the disallowed credit must not expire before the expiration of three years from the date the office is notified, in such a manner as the office determines, that the project is not an eligible project; and
(C) The department shall assess any deficiency before the expiration of such three-year period together with any applicable interest and penalty imposed pursuant to this article 22.
(d) As used in this subsection (10), unless the context otherwise requires, compliance period means the period of fifteen years following the taxable year in which the qualified applicant placed the eligible project or the initial phase of the eligible project in service.
(11) Reporting. (a) No later than December 31, 2027, and, notwithstanding the requirement in section 24-1-136 (11)(a)(I), no later than December 31 of each two years thereafter through 2033, the office shall provide a written report to the general assembly and shall further make the report available to the public. In connection with tax credits issued pursuant to this section, the report must include:
(I) A description of each eligible project placed in service;
(II) A description of the use or uses of the eligible project;
(III) The number and quality of jobs supported in the quantum industry as a result of the eligible project;
(IV) The number of quantum businesses that have been supported through the eligible project;
(V) An overview of the types of intellectual property that have been advanced through the eligible project; and
(VI) The amount of federal money that has been awarded to the eligible facility.
(b) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report of each qualified applicant to which the office issues a tax credit certificate for the preceding tax year that includes the following information:
(I) The qualified applicant's name;
(II) The amount of the credit; and
(III) The qualified applicant's social security number or the qualified applicant's Colorado account number and federal employer identification number.
(12) Policies and procedures. (a) The office may create and modify policies, procedures, and guidelines as necessary to further implement the tax credits to be claimed for the completion of eligible projects pursuant to this section and shall solicit advice from the department and quantum industry participants in creating and modifying such policies, procedures, and guidelines.
(b) With respect to making the preliminary determination as to whether a project plan is a plan for an eligible project pursuant to subsection (5)(b)(III) of this section, the office shall develop standards that include, but are not limited to:
(I) Performance standards and guidelines for a shared quantum facility;
(II) A detailed cost estimate for the project plan;
(III) Evidence of site control of the site where the project will occur; and
(IV) The financing or funding that is available for the project plan.
(c) With respect to making the preliminary determination as to whether a project plan is a plan for an eligible project pursuant to subsection (5)(b)(III) of this section, the office shall consider job quality standards and guidelines for the shared quantum facility that adhere to the Good Jobs Principles established by the United States department of labor and United States department of commerce.
(13) Repeal. This section is repealed, effective December 31, 2050.
Source: L. 2024: Entire section added, (HB 24-1325), ch. 273, p. 1782, � 2, effective May 28.
Cross references: For the legislative declaration in HB 24-1325, see section 1 of chapter 273, Session Laws of Colorado 2024.
39-22-568. Quantum business loan loss reserve income tax credit - tax preference performance statement - cash fund - legislative declaration - definitions - report - repeal. (1) Tax preference performance statement. In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that:
(a) The general legislative purposes of the tax credit allowed by this section are:
(I) To induce certain designated behavior by taxpayers; and
(II) To improve industry competitiveness;
(b) The specific legislative purpose of the tax credit allowed by this section is to support and facilitate the development of the quantum business ecosystem and high-quality jobs in the state by encouraging qualified applicants to make loans that the qualified applicants might not otherwise make or at more favorable terms than they would otherwise make to borrowers that have limited access to capital; and
(c) The general assembly and state auditor shall measure the effectiveness of the credit in achieving the purposes specified in subsections (1)(a) and (1)(b) of this section based on the information reported by the administrator pursuant to subsection (11) of this section.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) Administrator means the office, a third party selected by the office, or the third party working in combination with the office to administer the tax credit created in this section.
(b) Borrower means a quantum company doing business in Colorado that is an early-stage or growth-stage company at the time a qualified applicant makes a loan to the company and that, except as otherwise provided in subsection (12)(c) of this section, had an annual revenue of less than one hundred million dollars in the year prior to the year in which a qualified applicant made a loan to the company.
(c) Department means the Colorado department of revenue.
(d) Eligible loan means a loan made by a qualified applicant to a borrower.
(e) Office means the Colorado office of economic development created in section 24-48.5-101.
(f) Qualified applicant means a commercial bank, depository institution, private lending fund, or other entity that makes loans for commercial purposes and makes a loan to a borrower.
(g) Quantum company means a private for-profit or nonprofit organization that has quantum technology as a key part of its business model, including but not limited to manufacturing, testing, production, research and development, or enhancement of hardware or software to perform or use quantum technology as a key input or output of its business model, and companies that produce goods or services that are key inputs for other quantum companies.
(h) Registered loan means an eligible loan made to a borrower that is registered with the administrator pursuant to subsection (7)(a) of this section.
(3) Credit allowed. (a) Subject to the provisions of subsection (3)(c) of this section, for income tax years commencing on or after January 1, 2026, but prior to January 1, 2046, a qualified applicant is allowed a credit against the income taxes imposed by this article 22 to offset losses incurred in connection with one or more registered loans in an amount specified on the registered loan loss certificate issued by the administrator pursuant to subsection (8) of this section; except that, if a qualified taxpayer claims more than one registered loan loss, in no event may the aggregate registered loan losses claimed by the qualified taxpayer exceed the total amount specified on the tax credit certificates issued pursuant to subsection (7) of this section.
(b) To claim the credit allowed pursuant to this section, the qualified applicant must submit an application as specified in subsection (5) of this section, make an eligible loan and register the eligible loan prior to June 30, 2036, obtain a tax credit certificate from the administrator as specified in subsection (7) of this section, incur a loss in connection with a registered loan and obtain a registered loan loss certificate from the administrator as specified in subsection (8) of this section prior to January 1, 2045, and, once issued by the administrator, file the tax credit certificate and the registered loan loss certificate with the qualified applicant's income tax return as specified in subsection (9) of this section.
(c) The administrator shall determine the method it will use to distribute tax credit certificates to qualified applicants pursuant to subsection (7) of this section. In selecting the distribution method used to distribute the tax credit certificates, the administrator may consult with quantum industry participants. The distribution method may be:
(I) On a first-come, first-served basis to qualified applicants who apply to the administrator for a tax credit pursuant to subsection (5) of this section for one or more eligible loans each, after the qualified applicant has made the loan;
(II) Based on a competitive lender selection process where the administrator chooses which lenders are eligible to apply for the tax credit allowed by this section in advance of accepting applications and requests to register loans and in advance of issuing tax credits. In selecting lenders to be allowed a tax credit pursuant to this section, the administrator may allocate some or all of the credits solely to selected lenders. If the administrator uses this distribution method, the selected lenders are the only qualified applicants that are allowed to apply to the administrator, request registration of the loan, and be issued a tax credit certificate and registered loan loss certificate pursuant to this section.
(III) A combination of the methods described in subsections (3)(c)(I) and (3)(c)(II) of this section.
(d) The tax credit created in this section is not allowed to any qualified applicant unless a Colorado-based entity receives a multi-million dollar federal grant from the economic development administration for the regional technology and innovation program or a comparable federal grant program.
(4) Credit administration. (a) Except as otherwise provided in subsection (4)(b) of this section, the office is the administrator of the credit allowed pursuant to this section. The office may work with a third-party program administrator selected by the office to assist in administering the credit. In addition, the office may contract with the Colorado housing and finance authority created in section 29-4-704 without recourse to a competitive process to provide services to the office in its role as the administrator.
(b) In lieu of the office serving as the administrator pursuant to subsection (4)(a) of this section, the office may contract with another entity to be the administrator. However, if the office contracts with another entity to be the administrator, then the office must select the third-party administrator using a competitive selection process.
(5) Application submission and request for loan registration. (a) An applicant that has made a loan for the purposes of the tax credit allowed pursuant to this section may submit an application for a tax credit certificate described in subsection (7) of this section and request that the administrator register the loan pursuant to this subsection (5) on or after January 1, 2025, but no later than June 30, 2036.
(b) (I) The administrator shall review all submitted applications to:
(A) Determine whether the applicant is a qualified applicant;
(B) Determine whether the quantum company that is the loan recipient is a borrower;
(C) Determine whether the application is complete and includes a description of the loan that the qualified applicant made or will make to a borrower and a description of the purposes for which the borrower will use the loan;
(D) Make a determination of whether the loan is an eligible loan and whether the administrator may register the loan pursuant to subsection (5)(c) of this section; and
(E) Determine whether, based on the eligible loan, the qualified applicant is entitled to a tax credit certificate as specified in subsection (7) of this section.
(II) If the administrator determines that an application is incomplete or that it is unable to make the determinations specified in subsection (5)(b)(I) of this section, the administrator shall notify the applicant in writing of the administrator's decision and shall not review any loan to determine whether the loan may be registered pursuant to subsection (5)(c) of this section.
(c) (I) To be eligible to receive a tax credit certificate pursuant to subsection (7) of this section, a qualified applicant must request that the administrator register the loan for which the tax credit application was submitted pursuant to this subsection (5). To register a loan, a qualified applicant must provide the following information to the administrator:
(A) The name of the borrower and the location where the borrower is doing business;
(B) The amount and terms of the loan issued to the borrower by the qualified applicant;
(C) The purposes for which the borrower will use the loan;
(D) An affidavit regarding how the tax credit allowed pursuant to this section induced the qualified applicant to make the loan to the borrower or improve the terms of the loan beyond what normal market conditions would provide;
(E) Certification from the borrower that the borrower will primarily use the proceeds of the loan from the qualified applicant to continue or expand the borrower's quantum business operations in Colorado;
(F) An affidavit from the borrower confirming that the borrower will adhere to existing labor protection laws; and
(G) Any other information that the administrator deems necessary.
(II) The administrator shall review the information submitted pursuant to subsection (5)(c)(I) of this section and determine whether the loan is an eligible loan. If the administrator determines that the loan that is the basis of the application submitted pursuant to this subsection (5) is an eligible loan, the administrator shall determine the amount of the registration and issuance fee described in subsection (6)(a) of this section as up to eight percent of the amount that will be specified on the tax credit certificate as described in subsection (7)(d)(I) of this section, and shall collect the fee from the qualified applicant or the borrower to which a qualified applicant made an eligible loan. Once the registration and issuance fee is collected, the administrator shall register the loan and keep records of the loan pursuant to subsection (8)(a) of this section and may issue the tax credit certificate as specified in subsection (7) of this section. If the administrator determines that the loan that is the basis of the application submitted pursuant to this subsection (5) is not an eligible loan, the administrator shall notify the qualified applicant and shall not register the loan.
(III) The administrator may establish policies and procedures that specify additional requirements for loans to be designated as eligible loans and for loans to be registered pursuant to this subsection (5)(c).
(d) The administrator shall make the determinations specified in subsections (5)(b) and (5)(c) of this section within ninety days of the date the administrator receives the complete application and request for loan registration.
(e) The administrator may develop a process that allows a potential applicant for a tax credit pursuant to this section to provide information to the administrator regarding a loan that it plans to make to a borrower and to request that the administrator advise the potential applicant regarding whether the loan, if made, is an eligible loan that can be registered pursuant to subsection (5)(c) of this section. Any potential applicant that requests advice from the administrator pursuant to this subsection (5)(e) and then makes a loan is required to submit an application and request that the loan be registered pursuant to this subsection (5) before the administrator issues a tax credit certificate pursuant to subsection (7) of this section.
(6) Registration and issuance fee. (a) The administrator shall impose on and collect from a qualified applicant or the borrower to which a qualified applicant made an eligible loan a reasonable registration and issuance fee pursuant to subsection (5)(c)(II) of this section.
(b) The administrator shall transfer any fee revenue collected or paid to the office pursuant to this subsection (6) to the quantum business loan loss reserve cash fund created in subsection (13) of this section.
(7) Tax credit certificate - loan registration - pooled loan loss reserve. (a) To receive a tax credit certificate pursuant to this subsection (7), a qualified applicant must first apply to the administrator for the issuance of a tax credit certificate and register the loan for which the tax credit application was submitted pursuant to subsection (5) of this section.
(b) (I) On the basis of any loan that is registered pursuant to subsection (5)(c) of this section, the administrator may determine that a qualified applicant is entitled to a tax credit certificate in accordance with the provisions of this section. The administrator shall issue the tax credit certificate subject to the limitations set forth in this subsection (7) and in accordance with the policies and procedures established pursuant to subsection (12) of this section. The administrator shall not issue tax credit certificates after September 30, 2036.
(II) The administrator may, before issuing a tax credit certificate pursuant to this subsection (7), establish additional policies or procedures for a qualified applicant to be eligible for the issuance of a tax credit certificate.
(c) If the administrator issues a tax credit certificate to a qualified applicant, the administrator shall notify the qualified applicant in writing of the certificate and the amount of the certificate. The issuance of a tax credit certificate by the administrator for a qualified applicant does not entitle the qualified applicant to claim the credit until the qualified applicant has been issued a registered loan loss certificate pursuant to subsection (8) of this section.
(d) (I) Subject to the limitations in this subsection (7)(d), if approved, the administrator may issue a tax credit certificate to a qualified applicant for one or more eligible loans in an amount up to fifteen cents for every dollar of an eligible loan that the qualified applicant has made or will make.
(II) The aggregate amount of all tax credit certificates that the administrator may issue pursuant to this section must not exceed thirty million dollars.
(III) The administrator may establish policies and procedures to set the amount of the tax credit certificate issued on the basis of a registered loan at or below fifteen cents for every dollar of the registered loan or change the amount of the credit allowed from time to time for credit certificates that have not yet been issued. The administrator may also cap the total amount of any tax credit certificates issued to a qualified applicant pursuant to this subsection (7), determine a cap on the total amount of a tax credit certificate allowed to a qualified applicant for a single eligible loan to a single borrower or in the aggregate for multiple eligible loans to one or more borrowers, or determine any other caps deemed necessary by the administrator. The administrator shall make the policies and procedures specified in this subsection (7)(d)(III) based on market conditions and other factors determined to be relevant by the administrator. If the office is not the administrator, the office shall approve the administrator's final decisions on policies and procedures.
(e) The administrator shall distribute the tax credit certificates in the manner that the administrator determines pursuant to subsection (3)(c) of this section.
(f) Each qualified applicant that is issued more than one tax credit certificate pursuant to this subsection (7) shall hold the credit certificates issued to the qualified applicant in a pooled loan loss reserve of all tax credit certificates issued to that qualified applicant. A qualified applicant may use all or any portion of the credit certificates issued to that qualified applicant to offset any loss incurred by that qualified applicant in connection with one or more registered loans, subject to the provisions of subsection (8) of this section.
(g) The administrator may allow a qualified applicant to register an eligible loan pursuant to subsection (5)(c) of this section after the administrator has issued the total amount of tax credit certificates allowed pursuant to subsection (7)(d)(II) of this section or the amount of credits allowed pursuant to any other cap determined by the administrator pursuant to subsection (7)(d)(III) of this section. The administrator shall not issue a credit certificate for any loan registered pursuant to this subsection (7)(g), but the qualified lender may use any amount of tax credit certificates already issued to the qualified lender and not already claimed pursuant to subsection (9) of this section to offset any loss incurred in connection with the registered loan pursuant to subsection (8) of this section.
(8) Status of registered loans - proof of registered loan loss - issuance of registered loan loss certificate. (a) (I) A qualified applicant that was issued a tax credit certificate pursuant to subsection (7) of this section shall provide periodic updates to the administrator, in a form, manner, and frequency to be determined by the administrator, regarding the status of the registered loan that is the basis of the credit certificate. In addition to periodic updates, the qualified applicant shall notify the administrator when any registered loan is paid off, extended, renewed, restructured or refinanced, or has become past due or nonperforming. A qualified applicant that incurs a loss associated with a registered loan shall notify the administrator and comply with the requirements of subsection (8)(b) of this section before the qualified applicant is eligible to receive a loan loss certificate pursuant to subsection (8)(d) of this section.
(II) The administrator shall keep a record of the status of all registered loans made by each qualified applicant for which the administrator issued a credit certificate pursuant to subsection (7) of this section.
(b) (I) A qualified applicant that incurs a loss in connection with one or more registered loans may apply to the administrator for issuance of a registered loan loss certificate pursuant to subsection (8)(d) of this section. Before applying for a registered loan loss certificate, a qualified applicant that has incurred a loss associated with one or more registered loans shall charge off all or a portion of the outstanding balance of the registered loan in accordance with the qualified applicant's customary policies and procedures and in accordance with the requirements of federal or state regulatory agencies. The qualified applicant shall cease to assess interest on the registered loan in accordance with generally accepted accounting principles and as required by federal and state regulatory agencies and shall take reasonable actions, as determined by the administrator, to obtain partial payments and recovery, including accessing collateral and loan guarantors.
(II) A qualified applicant shall submit to the administrator, with the qualified applicant's application for a registered loan loss certificate, evidence of the qualified applicant's compliance with the provisions of subsection (8)(b)(I) of this section and evidence of the amount of the loss incurred in connection with one or more registered loans, including out-of-pocket expenses incurred by the qualified applicant in pursuing recovery of the registered loan. The applicant shall also provide documents to the administrator demonstrating that the qualified applicant satisfied any additional requirements imposed by the administrator pursuant to subsection (12) of this section.
(c) (I) Within ninety days after receipt of the complete application from the qualified applicant submitted pursuant to subsection (8)(b) of this section, the administrator shall review the qualified applicant's documentation of the loss incurred in connection with a registered loan and determine whether the documentation satisfies the requirements of subsection (8)(b) of this section. If the administrator determines that a qualified applicant has failed to comply with the requirements of subsection (8)(b) of this section, the administrator shall promptly notify the qualified applicant in writing and shall not issue a registered loan loss certificate to the qualified applicant.
(II) If the administrator determines that the documentation provided by the qualified applicant satisfies the requirements of subsection (8)(b) of this section, the administrator shall determine the total amount of the loss incurred in connection with the registered loan and certify the amount of the registered loan loss. The amount of the certified loan loss determined by the administrator shall be an amount equal to the total of the outstanding and unrecovered principal and accrued interest on the registered loan or loans and the amount of reasonable out-of-pocket expenses incurred by the qualified applicant in pursuing recovery under the registered loan or loans; except that the amount of the certified loan loss determined by the administrator shall not exceed the original principal amount of the registered loan as stated in the documentation provided when the qualified applicant registered the eligible loan. The amount of the certified loan loss shall not include any amount attributable to damages paid by the qualified applicant as a result of a legal claim against the qualified applicant for negligence, misconduct, or any other allegation of wrongdoing or any amount of late charges or unpaid default interest charges imposed on the borrower by the qualified applicant.
(d) The administrator shall issue a registered loan loss certificate to any qualified applicant that has satisfied the requirements of subsection (8)(b) of this section in the amount of the certified loan loss calculated pursuant to subsection (8)(c) of this section; except that the administrator shall not issue a registered loan loss certificate that exceeds the total amount of unclaimed tax credit certificates issued to the qualified applicant pursuant to subsection (7) of this section. The administrator shall not issue a registered loan loss certificate before January 1, 2026, or after December 31, 2045.
(9) Filing tax credit certificate and registered loan loss certificate with income tax return. (a) To claim the credit authorized by this section, a qualified applicant shall file the tax credit certificate issued by the administrator pursuant to subsection (7) of this section and the registered loan loss certificate issued by the administrator pursuant to subsection (8) of this section with the qualified applicant's state income tax return for the income tax year in which the registered loan loss occurs. If the qualified applicant is exempt from tax pursuant to section 39-22-112 (1), the qualified applicant shall file a return pursuant to section 39-22-601 (7)(b). The amount of the tax credit that a qualified applicant may claim pursuant to this section is the amount stated on the registered loan loss certificate.
(b) A qualified applicant may not claim a credit pursuant to this section for any income tax year commencing before January 1, 2026, or after December 31, 2045. Any tax credit certificates and registered loan loss certificates that the administrator issued, but for which a tax credit has not been claimed pursuant to subsection (9)(a) of this section before the tax year commencing on January 1, 2046, expire and no longer have value.
(c) A qualified applicant may claim an income tax credit allowed pursuant to this section more than once, so long as the qualified applicant has remaining tax credit certificates that it has not yet filed with the department pursuant to this subsection (9), incurs an additional loss in connection with a registered loan, and is issued a registered loan loss certificate for the additional loss pursuant to subsection (8) of this section.
(d) A registered loan loss certificate issued to a partnership, a limited liability company taxed as a partnership, or multiple owners of a property must be passed through to the partners, members, or owners, including any nonprofit entity that is a partner, member, or owner, respectively, on a pro rata basis or pursuant to an executed agreement among the partners, members, or owners documenting an alternate distribution method.
(10) Refundability. The entire tax credit to be issued pursuant to this section may be claimed by the qualified applicant in the taxable year in which the qualified applicant incurs a loss in connection with a registered loan. If the amount of the credit allowed pursuant to this section exceeds the amount of income taxes otherwise due on the income of the qualified applicant in the income tax year for which the credit is being claimed, or the qualified applicant is a person who is exempt from taxation pursuant to section 39-22-112 (1), one hundred percent of the amount of the credit not used as an offset against income taxes in the income tax year is refunded to the qualified applicant.
(11) Reporting. (a) No later than November 1, 2027, and, notwithstanding the requirement in section 24-1-136 (11)(a)(I), no later than November 1 of each year thereafter through 2046, the administrator shall provide a written report to the general assembly about the activity in connection with the tax credit allowed pursuant to this section in the previous fiscal year and shall further make the report available to the public. In connection with tax credits issued pursuant to this section, the report must include, but need not be limited to:
(I) The number of eligible loans that have been registered pursuant to subsection (7)(a) of this section;
(II) The number of registered loans for which a qualified applicant notified the administrator of a loan loss pursuant to subsection (8)(a) of this section;
(III) A list of each quantum business in the state that is a borrower pursuant to this section; and
(IV) A summary of the borrower's use or uses of each registered loan and the impact that the loans have had on the development of quantum businesses in this state.
(b) The administrator shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report of each qualified applicant to which the office issues a tax credit certificate and a registered loan loss certificate for the preceding tax year that includes the following information:
(I) The qualified applicant's name;
(II) The amount of the credit as stated in the registered loan loss certificate; and
(III) The qualified applicant's social security number or the qualified applicant's Colorado account number and federal employer identification number.
(12) Policies and procedures. (a) The administrator may create and modify policies, procedures, and guidelines and specify additional requirements as necessary to further implement the tax credits to be claimed for making eligible loans pursuant to this section and shall solicit advice from the department and from quantum industry participants in creating and modifying such policies, procedures, and guidelines.
(b) The administrator shall develop standards to:
(I) Make the determination of whether a loan is an eligible loan pursuant to subsection (5)(c) of this section;
(II) Determine whether an eligible loan may be registered with the administrator and whether the administrator may issue a tax credit certificate pursuant to subsection (7) of this section; and
(III) Determine the amount of a certified loan loss pursuant to subsection (8)(c)(II) of this section.
(c) The administrator may clarify the definition of quantum company when needed based on input from quantum industry companies, researchers, trade associations, and other sector participants. In addition, the administrator may waive the annual income requirement for a quantum company to be a borrower if the administrator determines that waiving that requirement is in the best interest of this state.
(13) Quantum business loan loss reserve cash fund - creation. (a) The quantum business loan loss reserve cash fund is created in the state treasury. The fund consists of money credited to the fund pursuant to subsection (6)(b) of this section and any other money that the general assembly may appropriate or transfer to the fund.
(b) The state treasurer shall credit all interest and income derived from the deposit and investment of money in the quantum business loan loss reserve cash fund to the fund.
(c) Money in the quantum business loan loss reserve cash fund is continuously appropriated to the office for the administration of the quantum business loan loss reserve tax credit created in this section.
(d) The state treasurer shall transfer all unexpended and unencumbered money in the fund on January 1, 2051, to the general fund.
(14) Repeal. This section is repealed, effective December 31, 2050.
Source: L. 2024: Entire section added, (HB 24-1325), ch. 273, p. 1793, � 2, effective May 28.
Cross references: For the legislative declaration in HB 24-1325, see section 1 of chapter 273, Session Laws of Colorado 2024.
39-22-569. Community revitalization tax credit - community revitalization tax credit program cash fund - tax preference performance statement - legislative declaration - definitions - report - repeal. (1) Tax preference performance statement. In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that:
(a) The general legislative purposes of the tax credit allowed by this section are:
(I) To induce certain designated behavior by taxpayers; and
(II) To provide tax relief for certain businesses or individuals;
(b) The specific legislative purpose of the tax credit allowed by this section is to revitalize communities by providing financial support and a financial incentive for capital improvement projects in creative districts that support creative industries and creative industry workers by providing affordable housing and live-work spaces for such workers and other mixed-use and creative-use spaces for both such workers and the general public that enjoys and benefits from their work;
(c) The general assembly and the state auditor shall measure the effectiveness of the tax credit in achieving the purposes specified in subsections (1)(a) and (1)(b) of this section based on the information required to be maintained by and reported by the office pursuant to subsection (11) of this section.
(2) Definitions. As used in this section, unless the context otherwise requires:
(a) Application means an application in the form and manner approved by the office for the credit allowed in this section that includes the project plan and estimated eligible expenditures.
(b) Creative district has the same meaning as set forth in section 24-48.5-314 (2)(b).
(c) Department means the department of revenue.
(d) Eligible expenditures means reasonable and necessary expenditures, in accordance with guidelines developed by the office, actually paid by a taxpayer in completing an eligible project.
(e) Eligible project means a capital improvement project undertaken in the state within a creative district, a historic district, or a neighborhood commercial center or on a main street that involves the construction, rehabilitation, conversion, remodeling, or other improvement of one or more buildings, structures, or facilities for uses that support creative industries and creative industry workers, including affordable housing and live-work spaces for such workers and other mixed-use, creative-use, performance, and exhibition spaces for such workers and for the general public and that is approved by the office in accordance with the policies, procedures, and guidelines for the implementation and administration of the tax credit allowed by this section adopted by the office pursuant to subsection (12) of this section.
(f) Office means the office of economic development.
(g) (I) Qualified applicant means a person that:
(A) Has a contractual or real property interest in an existing or planned building, structure, or facility that is to be constructed, rehabilitated, converted, remodeled, or otherwise improved through the completion of an eligible project; and
(B) Makes eligible expenditures.
(II) A qualified applicant may be a person subject to tax pursuant to this article 22 or a person or political subdivision of the state that is exempt from such taxation pursuant to section 39-22-112 (1).
(3) Credit allowed. (a) For income tax years commencing on or after January 1, 2026, but prior to January 1, 2033, a qualified applicant is allowed a credit against the income taxes imposed by this article 22 for placing an eligible project in service in an amount specified on the credit certificate issued by the office pursuant to subsection (7) of this section.
(b) In order to claim the credit allowed pursuant to this section, the qualified applicant must submit an application as specified in subsection (4) of this section, place the eligible project in service prior to January 1, 2033, obtain a tax credit certificate from the office as specified in subsection (7) of this section, and, once issued by the office, file the tax credit certificate with the qualified applicant's income tax return as specified in subsection (8) of this section.
(4) Application submission and review. (a) An applicant may submit an application to the office on or after January 1, 2025, but no later than October 3, 2029.
(b) The office shall review all submitted applications to:
(I) Determine whether the applicant is a qualified applicant;
(II) Determine whether the application is complete and includes a property address, legal description, or other specific location identifier;
(III) Make a preliminary determination whether the project plan is a plan for an eligible project based on the policies and procedures developed by the office pursuant to subsection (12) of this section;
(IV) Determine whether the eligible project is entitled to a tax credit reservation as specified in subsection (6) of this section;
(V) Once the eligible project is placed in service, make a final determination whether the project is an eligible project based on the policies and procedures developed by the office pursuant to subsection (12) of this section; and
(VI) If the project is an eligible project, review the certified eligible expenditures and, if approved, issue a credit certificate to the qualified applicant, as specified in subsection (7) of this section.
(c) The office shall make the determinations specified in subsections (4)(b)(I) to (4)(b)(V) of this section within ninety days of the date the office receives the application.
(d) (I) If the office determines that an application is incomplete or that it is unable to make the determinations specified in subsections (4)(b)(I) to (4)(b)(V) of this section, the office shall notify the applicant in writing of the office's decision and shall remove the application from the review process.
(II) If an applicant resubmits an application, the office may charge a new application fee in an amount specified in subsection (5) of this section.
(5) Application and issuance fees. (a) (I) For an application for which the amount of the tax credit requested by an applicant pursuant to this section is two hundred fifty thousand dollars or more, the office may impose a reasonable application fee on an applicant that does not exceed five hundred dollars.
(II) For an application for which the amount of the tax credit requested by an applicant pursuant to this section is less than two hundred fifty thousand dollars, the office may impose a reasonable application fee on an applicant that does not exceed two hundred dollars.
(b) The office may impose on a qualified applicant a reasonable issuance fee of up to three percent of the amount of the tax credit specified on the tax credit certificate issued by the office as specified in subsection (7) of this section, which must be paid before the tax credit certificate is issued to the qualified applicant.
(c) Any fee revenue collected pursuant to this subsection (5) must be credited to the community revitalization tax credit program cash fund created in subsection (13) of this section and applied to the administration of the tax credit created by this section.
(6) Tax credit reservation. (a) Based on the factors specified in subsection (6)(d) of this section, the office may determine that a qualified applicant is entitled to a tax credit reservation in accordance with the provisions of this section. The office shall issue tax credit reservations subject to the limitations set forth in this subsection (6) and in accordance with the policies and procedures established pursuant to subsection (12) of this section. The office shall not issue tax credit reservations after January 1, 2030.
(b) If the office reserves a tax credit for the benefit of a qualified applicant, the office shall notify the qualified applicant in writing of the reservation and the amount reserved. The reservation of a tax credit by the office for a qualified applicant does not entitle the qualified applicant to issuance of a credit certificate until the qualified applicant complies with all the other requirements specified in this section for the issuance of the tax credit. When the office approves a tax credit reservation, the office may also impose additional requirements, which a qualified applicant shall satisfy as part of completing the eligible project, before a tax credit certificate is issued to the qualified applicant.
(c) (I) Subject to the limitations in this subsection (6)(c), if approved, the office may issue a tax credit reservation to a qualified applicant for a single eligible project in an amount equal to the lesser of twenty-five percent of the qualified applicant's estimated eligible expenditures or three million dollars.
(II) Except as provided in subsections (6)(c)(III) and (6)(c)(IV) of this section, the aggregate amount of all tax credit reservations that the office may issue pursuant to this section must not exceed ten million dollars in any calendar year plus the amount of any previously issued tax credit reservations that were rescinded pursuant to subsection (7)(a)(II) of this section from previous calendar years.
(III) If the office's issuance of a tax credit reservation in a calendar year would cause the office to exceed the aggregate limit specified in subsection (6)(c)(II) of this section for that calendar year, then the aggregate amount of all tax credit reservations that the office may issue in the following calendar year is decreased by the amount of the tax credit reservations issued in the previous calendar year that exceeded the limitation set forth in subsection (6)(c)(II) of this section.
(IV) If the office's issuance of tax credit reservations by the end of a calendar year is less than the aggregate limit specified in subsection (6)(c)(II) of this section for that calendar year, then the aggregate amount of tax credit reservations that the office may issue in the next calendar year is increased by the unreserved amount from the previous calendar year.
(d) In making the final determination of which project plans to issue tax reservations for pursuant to this subsection (6), the office may prioritize eligible project plans in accordance with:
(I) The number of new affordable housing units to be created by the eligible project;
(II) The number of live-work spaces to be created by the eligible project;
(III) The geographic diversity of the applications and project plans that qualified applicants have submitted to the office;
(IV) The quality and accessibility of makerspace to be provided for creative industry workers by the eligible project;
(V) Demonstration of community engagement in identifying how the project will satisfy unmet needs and drive the local creative economy;
(VI) Demonstration of strong evidence that the eligible project has or can attract diverse sources of funding and broad local government support;
(VII) Demonstration of how the project serves rural, under-resourced, or underserved communities;
(VIII) Whether the project plan is receiving property tax abatements, credits, rebates, grants, or other incentives from a local taxing jurisdiction;
(IX) Whether the project will occur without the issuance of a tax credit pursuant to this section;
(X) Whether the qualified applicant will receive a federal incentive for the project;
(XI) The proximity of the project to public transportation; and
(XII) The expected qualification of the building, structure, or facility that is the subject of the eligible project for a certifiable sustainable program both before and after the completion of the project.
(7) Deadline for incurring specified amount of estimated eligible expenditures - proof of compliance - audit of eligible expenditure certification - issuance of tax credit certificate. (a) (I) A qualified applicant receiving a reservation of tax credits pursuant to subsection (6) of this section shall incur twenty percent or more of the estimated eligible expenditures contained in the application and project plan not later than eighteen months after the date of issuance of the written notice from the office to the qualified applicant granting the reservation of a tax credit.
(II) A qualified applicant for whom the office has reserved a tax credit shall submit evidence of compliance with the provisions of subsection (7)(a)(I) of this section. If the office determines that a qualified applicant has failed to comply with the requirements of subsection (7)(a)(I) of this section, the office shall promptly notify the qualified applicant and may rescind the issuance of the written notice it previously gave the qualified applicant granting the reservation of a tax credit. If the office so rescinds an issuance of the written notice, the qualified applicant may submit a new application, project plan, and estimate of eligible expenditures for which the office may charge a new application fee in accordance with subsection (5) of this section, and the total amount of tax credits made available for reservation in the calendar year during which the office rescinds the issuance of written notice must increase by the amount of the tax credit reserved in the written notice.
(b) After a qualified applicant completes a project, the qualified applicant shall notify the office that the project has been placed in service and shall certify the eligible expenditures, after which the office shall make a final determination whether the project is an eligible project as required in subsection (4)(b)(V) of this section. The applicant shall include a review of the certification by a licensed certified public accountant that is not affiliated with the qualified applicant that aligns with office policies for certification of eligible expenditures. The applicant shall also certify and provide documents demonstrating that the applicant satisfied any additional requirements imposed by the office pursuant to subsection (6) of this section. Within ninety days after receipt of such documentation from the qualified applicant, the office shall review the qualified applicant's documentation of certified eligible expenditures, determine whether the documentation satisfies the project plan and other requirements, and, if the office determines that the documentation satisfies the project plan and other requirements, the office shall issue a tax credit certificate in the amount specified in the tax credit reservation issued to the qualified applicant pursuant to subsection (6) of this section; except that a credit certificate may not be issued for any income tax year commencing before January 1, 2026.
(c) If there are any unreserved amounts of tax credits available under subsection (6) of this section, and if the amount of certified eligible expenditures incurred by the qualified applicant would have resulted in the qualified applicant being issued a tax credit certificate that exceeds the amount of the tax credit reservation issued to the qualified applicant, the qualified applicant may apply to the office for the issuance of an additional tax credit certificate in an amount equal to the difference between the tax credit reservation and what would have been issued as a result of the certified eligible expenditures by submitting an application in a form and manner determined by the office; except that the aggregate of the two tax credit certificates for the eligible project may not exceed three million dollars. The office shall review the application as specified in subsection (4) of this section and, if approved, shall issue a separate tax credit certificate awarding the qualified applicant the additional credit.
(8) Filing tax credit certificate with income tax return. (a) In order to claim the credit authorized by this section, a qualified applicant shall file the tax credit certificate issued by the office pursuant to subsection (7) of this section with the qualified applicant's state income tax return. If the qualified applicant is exempt from tax pursuant to section 39-22-112 (1), the qualified applicant shall file a return pursuant to section 39-22-601 (7)(b). The amount of the tax credit that a qualified applicant may claim pursuant to this section is the amount stated on the tax credit certificate.
(b) A tax credit certificate issued to a partnership, a limited liability company taxed as a partnership, or multiple owners of a property must be passed through to the partners, members, or owners, including any nonprofit entity that is a partner, member, or owner, respectively, on a pro rata basis or pursuant to an executed agreement among the partners, members, or owners documenting an alternate distribution method.
(9) Refundability. The entire tax credit to be issued pursuant to this section may be claimed by the qualified applicant in the taxable year in which the eligible project is placed in service. If the amount of the credit allowed pursuant to this section exceeds the amount of income taxes otherwise due on the income of the qualified applicant in the income tax year for which the credit is being claimed, or the qualified applicant is a person who is exempt from taxation pursuant to section 39-22-112 (1), ninety percent of the amount of the credit not used as an offset against income taxes in the income tax year is refunded to the qualified applicant. The remainder of the credit is not carried forward and may not be used by the taxpayer.
(10) Compliance monitoring and recapture. (a) Except as provided in subsection (10)(b) of this section, if, as of the last day of any taxable year during the compliance period, the building, structure, or facility that is the subject of an eligible project is not being used as an eligible project, the office shall notify the qualified applicant and the department that the credit allowed in this section is disallowed. The qualified applicant shall add the full amount of the credit that was actually used to offset the qualified applicant's income tax or refunded to the qualified applicant to its return as a recaptured credit for the taxable year in which the credit is disallowed pursuant to this subsection (10).
(b) The potential increase in tax required pursuant to subsection (10)(a) of this section does not apply:
(I) If a building, structure, or facility is not an eligible project as a result of a casualty loss if the loss is restored by reconstruction or replacement within a reasonable period established by the office; or
(II) Solely by reason of the disposition of a building, structure, or facility, or an interest therein, if it is reasonably expected that the building, structure, or facility will continue to be operated as an eligible project for the remainder of the compliance period.
(c) (I) The office shall establish reporting requirements to monitor compliance with this subsection (10), including requirements regarding the reporting of a disposition of a building, structure, or facility by the qualified applicant and the reporting required for such a building, structure, or facility for the remainder of the compliance period.
(II) If a dispute arises about whether a building, structure, or facility is an eligible project, the office shall adjudicate the dispute and notify the department of the resolution.
(III) Notwithstanding section 39-21-107 (2), if a building, structure, or facility, or an interest therein, is disposed of during any taxable year during the compliance period, and thereafter the building, structure, or facility is not an eligible project:
(A) The qualified applicant shall add the full amount of the credit to its return as a recaptured credit for the taxable year in which the credit is disallowed pursuant to this subsection (10) notwithstanding the disposition of the qualified residential structure;
(B) The statutory period for the assessment of any deficiency with respect to the disallowed credit must not expire before the expiration of three years from the date the office is notified, in such a manner as the office determines, that the structure is not a qualified residential structure; and
(C) The department shall assess any deficiency before the expiration of such three-year period together with any applicable interest and penalty imposed pursuant to this article 22.
(d) As used in this subsection (10), unless the context otherwise requires, compliance period means the period of fifteen years following the taxable year in which the qualified applicant placed the eligible project in service.
(11) Reporting. (a) No later than December 31, 2027, and, notwithstanding the requirement in section 24-1-136 (11)(a)(I), no later than December 31 of each year thereafter through 2033, the office shall provide a written report to the general assembly and shall further make the report available to the public. In connection with tax credits issued pursuant to this section, the report must include:
(I) The number of eligible projects placed in service;
(II) A description of the use or uses of each eligible project and a statewide summary of the number of eligible projects for each use;
(III) For eligible projects that create affordable housing or live-work spaces for creative industry workers, the number of affordable housing or live-work units planned or created;
(IV) The occupancy rate of created affordable housing and live-work units;
(V) The counties in which qualified commercial structures were converted to qualified commercial residential structures; and
(VI) The amount of any disallowed tax credit recaptured pursuant to subsection (10) of this section.
(b) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report of each qualified applicant to which the office issues a tax credit certificate for the preceding tax year that includes the following information:
(I) The qualified applicant's name;
(II) The amount of the credit; and
(III) The qualified applicant's social security number or the qualified applicant's Colorado account number and federal employer identification number.
(12) Policies and procedures. (a) The office may create and modify policies, procedures, and guidelines as necessary to further implement the tax credits to be claimed for the completion of eligible projects pursuant to this section and shall solicit advice from the department in creating and modifying such policies, procedures, and guidelines.
(b) With respect to making the preliminary determination whether a project plan is a plan for an eligible project pursuant to subsection (4)(b)(III) of this section, the office shall develop standards that include, but are not limited to:
(I) A detailed cost estimate for the project plan;
(II) Evidence of site control of the site where the project will occur; and
(III) The financing or funding that is available for the project plan.
(13) Community revitalization tax credit program cash fund. (a) The community revitalization tax credit program cash fund is created in the state treasury. The fund consists of gifts, grants, donations, fee revenue credited to the fund pursuant to subsection (5) of this section, and any other money that the general assembly may appropriate, transfer, or require by law to be credited to the fund.
(b) The state treasurer shall credit all interest and income derived from the deposit and investment of money in the community revitalization tax credit program cash fund to the fund.
(c) Money in the fund is continuously appropriated to the office for the purpose of administering the tax credit issued pursuant to this section.
(d) The state treasurer shall transfer all unexpended and unencumbered money in the fund on December 31, 2050, to the general fund.
(14) Repeal. This section is repealed, effective December 31, 2050.
Source: L. 2024: Entire section added, (HB 24-1295), ch. 268, p. 1755, � 6, effective May 28. L. 2025: (1)(c) amended, (SB 25-300), ch. 428, p. 2456, � 57, effective August 6.
39-22-570. Tuition and fee tax incentive for qualifying students - tax preference performance statement - report - legislative declaration - definitions - repeal. (1) (a) The general assembly finds, determines, and declares that:
(I) The cost of higher education and student debt can be a deterrent for many students to pursue postsecondary credentials;
(II) Colorado's postsecondary matriculation rate was less than fifty percent in 2021 with a large share going out of state. Postsecondary education helps students achieve economic mobility, and students are more likely to stay in Colorado if they attend institutions in Colorado. By incentivizing students to attend institutions in Colorado, students will see more economic mobility while benefiting the state workforce.
(III) It is the intent of the general assembly that in the event of a recession, existing support of need-based financial aid be a potential backstop for this incentive;
(IV) The costs of higher education are a barrier to many students. Reducing those costs and student debt can help students not only attend college but also be financially successful. Targeted incentives for attending public institutions of higher education, which have lower tuition, help more students complete higher education with less or no debt and help Colorado retain our own talent.
(V) Building bridges to higher education supports our state's students and economic health;
(VI) To continue to strengthen the educational pipeline, a financial incentive should be provided to low- and middle- income postsecondary Colorado students.
(b) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the general legislative purposes of this tax expenditure are to induce certain designated behavior by taxpayers and provide tax relief for certain individuals. Specifically, this tax expenditure is intended to encourage students to attend public Colorado institutions of higher education and reduce student debt by providing a yearly refundable incentive to students in their first two years of higher education against the tuition and fees paid to a Colorado public institution of higher education.
(c) The tax incentive provides a yearly refundable credit to students against the tuition and fee costs paid to a public two-year or four-year institution, area technical college, or local district college in their first two years of higher education. Eligible students are those who are classified as in-state students, enroll in at least six credit hours in a semester or term, have at least a 2.5 grade point average in a semester or term, matriculated in college within two years of high school graduation, and have a federal adjusted gross household income of ninety thousand dollars or less as indicated on the free application for federal student aid or Colorado application for state financial aid.
(d) The 2022 American community survey conducted by the United States census bureau found that the median household income in Colorado is eighty-nine thousand three hundred two dollars. A ninety-thousand-dollar income threshold ensures that all Colorado households at or below median income will be able to benefit from this incentive.
(e) The general assembly and the state auditor shall measure the effectiveness of the incentive in achieving the purposes specified in subsection (1)(b) of this section based on the number of incentives that are claimed.
(2) As used in this section, unless the context otherwise requires:
(a) Academic year means the period beginning with a Colorado public institution of higher education's fall semester or term and ending the following calendar year at the conclusion of the Colorado public institution of higher education's summer semester or term.
(b) Colorado public institution of higher education means:
(I) A public, postsecondary institution that is governed by the board of governors of the Colorado state university system, the board of regents of the university of Colorado, the board of trustees of the Colorado school of mines, the board of trustees of the university of northern Colorado, the board of trustees of Adams state university, the board of trustees of Western Colorado university, the board of trustees of Colorado Mesa university, the board of trustees of Fort Lewis college, the board of trustees of Metropolitan state university of Denver, or the state board for community colleges and occupational education;
(II) An area technical college, as defined in section 23-60-103 (1); or
(III) Colorado mountain college and AIMS community college.
(b.5) Dependent student means a student who is not an independent student.
(c) Eligible student means an individual who:
(I) Completed high school graduation or an equivalent on or after January 1, 2024, or is currently enrolled as of fall 2024;
(I.5) Has matriculated at a Colorado public institution of higher education within two academic years after completion of high school graduation or an equivalent;
(II) Is designated as a degree- or credential-seeking undergraduate student at a Colorado public institution of higher education for the semester or term for which an incentive is claimed;
(III) Qualifies for in-state tuition, as described in article 7 of title 23, for the semester or term for which the incentive is claimed;
(IV) Has completed a free application for federal student aid (FAFSA) or Colorado application for state financial aid (CASFA) for the semester or term for which an incentive is claimed; and
(V) Has a household adjusted gross income for the second preceding income tax year that is ninety thousand dollars or less.
(c.5) (I) Household adjusted gross income means:
(A) In the case of a dependent student, the sum of the student's and the parent's or parents', as applicable, adjusted gross incomes to the extent that the parent's or parents' income is taken into account for purposes of 20 U.S.C. sec. 1087oo (f);
(B) In the case of a single independent student, the student's adjusted gross income; and
(C) Except as otherwise provided in subsection (2)(c.5)(II) of this section, in the case of a married independent student, the sum of the student's and the spouse's adjusted gross incomes.
(II) In the case of a student who is divorced or separated, or whose spouse has died, the spouse's adjusted gross income is disregarded.
(d) Incentive means the refundable credit allowed by this section.
(d.5) Independent student has the same meaning as set forth in 20 U.S.C. sec. 1087vv (d), as amended.
(e) Qualifying semester or term means a semester or term that the eligible student:
(I) Begins with fewer than sixty-six credit hours accumulated, including all credits transferred to the Colorado public institution of higher education, except those credits earned through prior learning assessment, concurrent enrollment, advanced placement, the international baccalaureate program, military credits, or any other credits accumulated prior to matriculation at any institution of higher education; and
(II) Completes earning at least six credit hours or equivalent with a grade point average of 2.5 or higher.
(f) Scholarships or grants means the sum of any amount paid for the benefit of an eligible student that are required to be taken into account pursuant to section 25A (g)(2) of the internal revenue code.
(g) Tuition and fees has the same meaning as qualified tuition and related expenses as defined in section 25A (f)(1) of the internal revenue code that are paid by or for the benefit of an eligible student..
(3) (a) (I) For the income tax year commencing on or after January 1, 2025, but prior to January 1, 2026, an eligible student is allowed an incentive against the income taxes imposed by this article 22 for every qualifying semester or term completed during the academic year ending during the income tax year and any other qualifying semester or term completed during the income tax year.
(II) For each income tax year commencing on or after January 1, 2026, but prior to January 1, 2033, an eligible student is allowed an incentive against the income taxes imposed by this article 22 for every qualifying semester or term completed during the income tax year.
(b) The amount of incentive allowed to an eligible student for each qualifying semester or term is equal to the amount paid by or for the benefit of the eligible student in tuition and fees to a Colorado public institution of higher education minus any scholarships or grants for the qualifying semesters or terms.
(c) With regard to whether an individual is an eligible student or whether a semester or term is a qualifying semester or term, a Colorado public institution of higher education shall take into account the facts and circumstances determined on or before January 15 following the income tax year and shall disregard any change in facts or circumstances occurring thereafter.
(4) (a) Each Colorado public institution of higher education is required by January 31, 2026, and every January 31 thereafter until 2033, to electronically report each eligible student, unless prohibited by federal law, in which case each Colorado public institution of higher education shall instead report each student who satisfies the qualifications for being an eligible student set forth in subsections (2)(c)(I) to (2)(c)(IV) of this section without regard to whether the student's household adjusted gross income exceeds the limit set forth in subsection (2)(c)(V) of this section, for any qualifying semester or term for which an incentive is allowed pursuant to this section for the prior calendar year to the department of higher education in a format prescribed by the department of higher education that includes:
(I) The student's tax identification number or social security number; and
(II) The amount of tuition and fees paid minus any scholarships or grants.
(b) By January 31, 2026, and every January 31 thereafter through 2033, the Colorado public institution of higher education shall provide each eligible student, unless prohibited by federal law, in which case each Colorado public institution of higher education shall instead provide each student who satisfies the qualifications for being an eligible student set forth in subsections (2)(c)(I) to (2)(c)(IV) of this section without regard to whether the student's household adjusted gross income exceeds the limit set forth in subsection (2)(c)(V) of this section, with a statement containing the information pertaining to that student's eligibility and the amount reported to the department of higher education pursuant to subsection (4)(a)(II) of this section. A Colorado public institution of higher education may provide the statement electronically and is not required to provide it in physical form.
(c) The department of higher education is required by February 15, 2026, and every February 15 thereafter through 2034, to electronically report the information received pursuant to subsection (4)(a) of this section along with any later corrections or additions to the department of revenue in a format prescribed by the executive director.
(5) The amount of the incentive allowed under this section that exceeds the eligible student's income taxes due is refunded to the taxpayer.
(6) (a) The department of higher education, in consultation with Colorado public institutions of higher education, shall determine each institution's average percentage of state and institutional financial aid allocated to the resident student population who have a family income of ninety thousand dollars or less in each year of the three years prior to 2025.
(b) Each Colorado public institution of higher education shall maintain a percentage of state and institutional financial aid to resident students who have an adjusted gross household income of ninety thousand dollars or less that is equal to or greater than the average percentage of state and institutional financial aid calculated by the department of higher education in each of the three academic years prior to the academic year 2024-25.
(c) If an institution does not maintain the percentage, the institution shall notify the department of higher education by a date determined by the department of higher education and must include in the notification a description of changes to institutional finances or the student population that prevented the institution from maintaining the state and institutional financial aid allocation percentage. The department of higher education shall include this information in its report described in subsection (6)(d) of this section.
(d) (I) On or before December 1, 2026, the department of higher education, in consultation with the department of revenue, shall submit a report to the joint budget committee and the house of representatives and senate education committees, or any successor committees, that describes the implementation of the tax incentive and includes an estimate of the total amount of tax incentives claimed pursuant to this section for income tax years that commence in 2025.
(II) On or before December 1, 2027, and each year thereafter until 2037, the department of higher education shall submit a report to the joint budget committee and the house of representatives and senate education committees, or any successor committees, including, for each institution, the average percentage of state and institutional financial aid allocated to the resident student population who have a family income of ninety thousand dollars or less in the three academic years prior to the academic year 2024-25, and in each academic year thereafter until 2034. The department of higher education shall include in the report available data on student enrollment information for incentive recipients, eligible nonrecipients, and noneligible students, disaggregated by income unless prohibited by federal law, and shall include, once the data are available, disaggregated outcome measures by income, unless prohibited by federal law, for incentive recipients, eligible nonrecipients, and noneligible students, including but not limited to student retention rates, completion rates, and student loan debt. Each Colorado public institution of higher education shall annually report student level financial aid, tuition and fees, student eligibility, and incentive eligibility information to the department of higher education that the department of higher education deems necessary to calculate the costs of the incentive, to provide to the department of revenue for incentive administration or for inclusion in the report.
(III) To allow the department of higher education to complete the report that it annually submits as required by subsection (6)(d)(II) of this section, the department of revenue shall annually provide to the department of higher education data that indicates whether an eligible student has claimed the incentive.
(7) This section is repealed, effective December 31, 2037.
Source: L. 2024: Entire section added, (HB 24-1340), ch. 284, p. 1891, � 1, effective August 7. L. 2025: (2)(b.5), (2)(c.5), and (2)(d.5) added and (2)(c), (3), IP(4)(a), (4)(b), (4)(c), and (6)(d) amended, (SB 25-319), ch. 432, p. 2492, � 1, effective June 4.
39-22-571. Film festival incentive tax credit - tax preference performance statement - legislative declaration - definitions - repeal. (1) (a) The general assembly finds and declares that:
(I) Colorado's film festival industry has the ability to be a true economic driver in the state; and
(II) By providing a tax incentive to big film festivals to relocate to Colorado, a single big festival could bring over twenty thousand out of state visitors, leading to a boost in local economies, an increase in sales and use tax revenue, and job creation.
(b) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credits provided for in this section is to induce designated behavior by taxpayers and to provide a reduction in income tax liability for certain businesses or individuals by allowing film festival organizers to receive a credit against income tax or an income tax refund for qualified expenditures if certain criteria are met. Specifically, these tax expenditures are intended to incentivize film festival organizers to relocate to Colorado and, in particular, for big film festivals to boost local economies, increase sales and use tax revenue, and create new jobs.
(c) The general assembly and the state auditor shall measure the effectiveness of the tax credit in achieving the purposes specified in subsection (1)(b) of this section based on the amount of qualified expenditures made in Colorado, the number of visitors attending film festivals in the state, and the amount of state and local sales and use tax collected that can be attributed to such film festivals.
(2) As used in this section, unless the context otherwise requires:
(a) Existing or small Colorado film festival entity means a film festival entity that is not a global film festival entity. An existing or small Colorado film festival entity may be an entity that provides video, television, new media, or content creation exhibition.
(b) Global film festival entity means a film festival entity that:
(I) Is either a tax-exempt entity under section 501 (c)(3) of the internal revenue code or a for-profit entity; and
(II) Has a multi-decade operating history and a verifiable annual track record of attracting one hundred thousand or more in-person ticket sales and tens of thousands of out-of-state and international attendees for the film festival.
(c) Office means the Colorado office of economic development created in section 24-48.5-101 (1).
(d) Qualified expenditure means a payment made by a global film festival entity or an existing or small Colorado film festival entity operating in Colorado in connection with the film festival taking place in Colorado. Qualified expenditures for an existing or small Colorado film festival are limited to those incurred in Colorado in accordance with policies and procedures determined by the office. Qualified expenditure includes, but is not limited to:
(I) Salaries and benefits of employees of the entity that operates the festival;
(II) Costs associated with contractors that facilitate the operation of the festival;
(III) Costs associated with the rental of films, equipment, storage, venues, and office or other space to operate the festival;
(IV) Costs associated with rental expenses or building operation expenses of the entity that operates the festival;
(V) Travel expenses for individuals associated with the entity that operates the festival, including travel expenses for contractors and talent;
(VI) Any other costs incurred by the entity associated with insurance, tickets, marketing, and other related film programming events;
(VII) Capital costs to operate the film festival in Colorado; and
(VIII) Depreciable investments in real or business personal property in Colorado that are needed to operate the film festival.
(3) (a) Subject to subsection (3)(e) of this section, for tax years commencing on or after January 1, 2027, but before January 1, 2037, there is allowed a credit with respect to income taxes imposed pursuant to this article 22 to any global film festival entity or existing or small Colorado film festival entity that receives a tax credit certificate pursuant to this section in the amount of the tax credit certificate.
(b) The office may reserve a tax credit for the benefit of any global film festival entity pursuant to subsection (6) of this section subject to the following limits:
(I) For calendar years commencing on or after January 1, 2027, but before January 1, 2029, the aggregate amount of tax credit that may be reserved is four million dollars per year;
(II) For the calendar year commencing on January 1, 2029, the aggregate amount of tax credit that may be reserved is five million dollars; and
(III) For calendar years commencing on or after January 1, 2030, but before January 1, 2037, the aggregate amount of tax credit that may be reserved is three million dollars per year.
(c) Subject to subsection (3)(e) of this section, the office may reserve a tax credit for the benefit of any existing or small Colorado film festival entity pursuant to subsection (7) of this section. For calendar years commencing on or after January 1, 2027, but before January 1, 2037, the aggregate amount of tax credit that may be reserved pursuant to this subsection (3)(c) is five hundred thousand dollars per year.
(d) The tax credit allowed pursuant to this section shall be administered by the office jointly with the Colorado office of film, television, and media and the division of business funding and incentives, or their successor divisions or offices.
(e) The tax credit created in this section is not allowed to any qualified applicant unless at least one qualified global film festival entity commences the relocation of the festival to Colorado by January 1, 2026. The office shall determine if the relocation requirement of this subsection (3)(e) is satisfied and notify the department.
(4) (a) Subject to the program policies and procedures established by the office, a global film festival entity or an existing or small Colorado film festival entity may be allowed a tax credit for each tax year in which the global film festival entity or existing or small Colorado film festival entity hosts a film festival in Colorado. A global film festival entity or an existing or small Colorado film festival entity may be allowed an additional tax credit in the subsequent tax year with respect to any qualified expenditures incurred in that year.
(b) For purposes of this section, when determining the amount of tax credit for which a global film festival entity or existing or small Colorado film festival entity is eligible, any qualified expenditure that occurred in the eleven months prior to the commencement of a tax year in which the film festival entity hosted a film festival in Colorado may be added to the qualified expenditures that occurred during the tax year in which the film festival entity hosted a film festival in Colorado.
(c) Only one credit is allowed in accordance with this section with respect to a qualified expenditure.
(5) (a) The office shall develop and publish program policies and procedures for the administration of this section, including application guidelines for a global film festival entity and for an existing or small Colorado film festival entity applying to receive a tax credit reservation or issuance under this section. The office may include guardrails or requirements that the applicant must satisfy before a tax credit reservation or issuance occurs.
(b) When determining the priority and amount of a reservation of a tax credit for an existing or small Colorado film festival entity, if there are more requests for tax credit reservations than there are reservations available, the office must provide priority to existing or small Colorado film festival entities according to a competitive evaluation. The office shall evaluate applications based on the following criteria and shall prioritize applications from an entity that:
(I) Faces a substantial market or environmental change that demonstratively impacts the ongoing viability of the entity and is outside of the entity's control;
(II) Demonstrates historic community and economic impact, with special consideration being given to an entity that has run a festival for more than ten years;
(III) Demonstrates innovation and uniqueness;
(IV) Increases geographic equity; or
(V) Demonstrates community support through letters of recommendation including, but not limited to, letters that include demonstrations of historic and economic impact from:
(A) A local elected official, such as a mayor; or
(B) A local governing body, such as a city council or board of county commissioners.
(6) (a) For a global film festival entity to claim a tax credit pursuant to subsection (3) of this section, the global film festival entity must apply to the office for the reservation of a tax credit at a time and in a manner determined in the program policies and procedures. A global film festival entity may request reservations of tax credits in an amount up to thirty-four million dollars in accordance with subsection (3) of this section. The application must include a statement of intent by the global film festival entity to organize a festival in Colorado. The global film festival entity must submit, in conjunction with the application, any documentation necessary to demonstrate that it meets the definition of a global film festival entity, as defined in subsection (2)(a) of this section, and any other information required by the office. If the office is making a multi-year tax credit reservation, it shall document the multi-year tax credit reservation in a written tax credit agreement.
(b) The office shall review each tax credit reservation application submitted by a global film festival entity and, based on the information provided in the application, the office shall make a determination of whether the global film festival entity will receive a tax credit reservation and the amount of that reservation. The office must establish and provide written notice to the global film festival entity of the minimum festival operating requirements as part of the reservation process for the global film festival entity to receive a tax credit, which may include, but are not limited to, the number of films required to be screened, the marketing budget, the length of the festival in days, the location of the festival, the time during the year when the festival is required to take place, and other guardrails as determined by the office.
(c) Upon completion of the qualified expenditures, a global film festival entity that received a tax credit reservation from the office must retain a certified public accountant licenced to practice in the state or a certified public accounting firm that is registered in the state to review and report in writing, and in accordance with professional standards, regarding the accuracy of the financial documents that detail the expenses incurred in the course of the organization of the film festival in Colorado. The certified public accountant's written report must include documentation of the global film festival entity's qualified expenditures. This report must also show which qualified expenditures occurred within Colorado and which occurred outside Colorado according to standards developed by the office.
(d) A global film festival entity shall apply to the office for tax credit issuance in accordance with the program policies and procedures.
(e) When the office is satisfied that the global film festival entity is eligible for a refundable tax credit, the office shall issue to the global film festival entity a tax credit certificate that evidences the global film festival entity's right to claim the tax credit allowed under subsection (3) of this section. The amount of the tax credit is the lesser of the qualified expenditures calculated pursuant to subsection (4) of this section or the amount of the tax credit reserved pursuant to subsection (6)(b) of this section. The tax credit certificate must include the taxpayer's name, the taxpayer's social security number or federal employer identification number, the approved tax credit amount, and the income tax year for which the tax credit is being allowed.
(7) (a) An existing or small Colorado film festival entity may apply to the office for the reservation of a tax credit at a time and in a manner determined by the office and published in the program policies and procedures. An existing or small Colorado film festival entity may request a reservation of a tax credit for up to five hundred thousand dollars or another maximum amount as determined by the office. The application must include a statement of intent by the existing or small Colorado film festival entity to organize a festival in Colorado.
(b) The office shall review each application for a tax credit reservation submitted by an existing or small Colorado film festival entity and, based on the information provided in the application, the office shall make a determination of whether the existing or small Colorado film festival entity will be eligible to receive a tax credit and the amount of the tax credit reservation that will be granted to the existing or small Colorado film festival entity. The office shall inform the existing or small Colorado film festival entity in writing as to whether it has approved or denied the application for a tax credit reservation, the amount of the reservation if approved, and the years of the reservation. If the office is making a multi-year tax credit reservation, it shall document the multi-year tax credit reservation in a written conditional agreement. The office may establish and provide written notice to the existing or small Colorado film festival entity of the minimum festival operating requirements as part of the reservation process for the existing or small Colorado film festival entity to receive a tax credit which may include, but are not limited to, the number of films required to be screened, the marketing budget, the length of the festival in days, the location of the festival, the time during the year when the festival is required to take place, and any other guardrails as determined by the office.
(c) Upon completion of the qualified expenditures, an existing or small Colorado film festival entity that received approval for a tax credit reservation from the office must retain a certified public accountant licenced to practice in the state or a certified public accounting firm that is registered in the state to review and report in writing, and in accordance with professional standards, regarding the accuracy of the financial documents that detail the expenses incurred in the course of the organization of the film festival in Colorado. The certified public accountant's written report must include documentation of the existing or small Colorado film festival entity's qualified expenditures. This report must also show which qualified expenditures occurred within Colorado according to standards developed by the office.
(d) The existing or small Colorado film festival entity shall apply to the office for tax credit issuance in accordance with the program policies and procedures.
(e) When the office is satisfied that an existing or small Colorado film festival entity is eligible for a tax credit, the office shall issue to the existing or small Colorado film festival entity a refundable tax credit certificate that evidences the existing or small Colorado film festival entity's right to claim the tax credit allowed under subsection (3) of this section. The amount of the tax credit is the lesser of the qualified expenditures calculated pursuant to subsection (4) of this section or the amount of the tax credit reserved pursuant to subsection (7)(b) of this section. The tax credit certificate must include the taxpayer's name, the taxpayer's social security number or federal employer identification number, the approved tax credit amount, and the calendar year for which the tax credit is being allowed.
(8) If a credit authorized by this section exceeds the income tax due on the income of the qualified global film festival entity or existing or small Colorado film festival entity, or the entity is a tax-exempt entity under section 501 (c)(3) of the internal revenue code that does not pay Colorado state income taxes, the excess tax credit may not be carried forward and one hundred percent of the unclaimed value of the tax credit shall be refunded by the department to the film festival entity. A tax-exempt entity shall file a return pursuant to section 39-22-601 (7)(b).
(9) This section is repealed, effective December 31, 2041.
Source: L. 2025: Entire section added, (HB 25-1005), ch. 62, p. 255, � 2, effective August 6.