| Summary |
Section 2 of the bill extends the innovative motor vehicles income
tax credit for the purchase or lease of electric motor vehicles and plug-in
hybrid electric motor vehicles that weigh 8,500 pounds or less through tax
year 2028 and adjusts the amount of the credit that may be claimed,
including with certain allowances for additional credit amounts for
vehicles purchased or leased at a location that allows the credit to be
assigned and is assigned to a motor vehicle dealer or financing entity and
for vehicles that have a manufacturer's suggested retail price below
$30,000.
However, the credit cannot be claimed for vans, sport utility
vehicles, and pickup trucks that have a manufacturer's suggested retail
price of $80,000 or more or for any other vehicle that has a
manufacturer's suggested retail price of $55,000 or more. Additionally,
if for any one of the state fiscal years 2025-26, 2026-27, or 2027-28, the
state is not projected to exceed the state fiscal year spending limit
imposed by section 20 of article X of the state constitution by 5% then for
any income tax year commencing in the calendar year that begins in that
fiscal year, the amount of the credit is reduced by 50%, and if the amount
of the reduced credit is at or below $500, then no credit is allowed for
such a tax year.
Section 3 extends the income tax credit for the purchase or lease
of an innovative truck through tax year 2028 and adjusts the amount of
the credit that may be claimed. However, for light-duty trucks, if for any
one of the state fiscal years 2025-26, 2026-27, or 2027-28, the state is not
projected to exceed the state fiscal year spending limit imposed by section
20 of article X of the state constitution by 5% then for any income tax
year commencing in the calendar year that begins in that fiscal year, the
amount of the credit is reduced by 50%, and if the amount of the reduced
credit is at or below $500, then no credit is allowed for such a tax year.
Additionally, under current law, the innovative motor vehicles tax
credit and the innovative trucks tax credit may be assigned by a purchaser
to the entity that finances the purchase or lease of the vehicle. Sections 1
and 2 expand the purchaser's ability to assign the credits to a motor
vehicle dealer in addition to a financing entity. For income tax years
commencing on or after January 1, 2024, sections 1 and 2 also allow a tax
exempt person or political subdivision of the state to claim or assign the
tax credit.
Section 4 terminates an existing heat pump tax credit so that it is
allowed only for income tax years beginning on and after January 1, 2023,
but before January 1, 2024.
Section 5 creates a refundable income tax credit allowable in tax
years commencing on or after January 1, 2024, but before January 1,
2033, for the owner of an industrial facility that undertakes a industrial
study (study) or puts greenhouse gas emissions reduction improvements
(improvements) into service. The credit is administered by the Colorado
energy office (office). The amount of credit that can be claimed for an
industrial study is 30% of the costs paid for completing the study up to $1
million.
The amount of credit that can be claimed for improvements is 30%
of the capital costs paid by the owner, not including the cost for design;
except that for certain improvements that have the potential to
significantly reduce greenhouse gas emissions but are not yet
commercially available, the office may approve a higher percentage to be
claimed of up to 50%. Owners must apply semi-annually for the credit to
the office and the office reviews applications and awards a reservation of
credits based on a merit-based review. Upon completion of a study or
upon putting the improvements into service, the office issues the owner
a tax credit certificate to claim the credit in the amount reserved to the
owner. The availability of the credit is subject to an aggregate cap each
application period. If the aggregate maximum amount is not claimed in
a tax year, the aggregate maximum amount in the next income tax year is
increased by an amount equal to the excess amount.
Section 6 creates a refundable tax credit for an expenditure an
eligible taxpayer makes in connection with a geothermal energy project,
which is a project in the state that is intended to evaluate and develop a
geothermal resource for the purpose of electricity production. The office
is required to approve geothermal energy projects that can receive a
qualified expenditure made by an eligible taxpayer. The office sets the
amount of credit an eligible taxpayer may receive and reserves the
amount of credit for the income tax year in which the eligible taxpayer
anticipates making the expenditure. Subject to specified limits on the
maximum amount of credits that the office may approve and that an
eligible taxpayer may receive, the office issues a tax credit certificate in
the reserved amount of tax credit after an eligible taxpayer submits a cost
certification of the qualified expenditure.
Section 7 creates a refundable tax credit for income tax years
beginning on or after January 1, 2024, but before January 1, 2033, that is
administered by the office and is available to a person subject to income
tax or a person or political subdivision of the state exempt from income
tax that produces geothermal electricity for sale or for the person or
political subdivision's own use. The credit amount is equal to $0.003 per
kilowatt hour of geothermal electricity that is produced in the state in the
tax year, up to a maximum amount of $1 million.
Section 8 creates a new refundable income tax credit for heat
pump technology for income tax years commencing on or after January
1, 2024, but before January 1, 2033. The office is responsible for
maintaining a list of eligible taxpayers who meet certain industry criteria
and who are allowed the credit for the installation of heat pump
technology or a thermal energy network if the eligible taxpayer provides
a discount from the amount charged for installation, unless the eligible
taxpayer installs their own heat pump technology or thermal energy
network. The amount of the tax credit is calculated based on the
applicable percentage, set annually by the office, of a flat dollar amount
which depends on the type of heat pump technology installed and the year
the credit is claimed. The calculation of the amount of allowable credit
may be modified depending on whether the heat pump technology is
installed at a multifamily property, at a nonresidential building, or for a
thermal energy network. However, for heat pump technology that is
installed in an existing residential building or nonresidential building, if
for any one of the state fiscal years 2025-26 through 2032-33, the state is
not projected to exceed the state fiscal year spending limit imposed by
section 20 of article X of the state constitution by 5% then for any income
tax year commencing in the calendar year that begins in that fiscal year,
the amount of the credit is reduced by 50%, and if the amount of the
reduced credit is at or below $250, then no credit is allowed for such a tax
year.
Section 9 creates a refundable income tax credit for income tax
years commencing on or after January 1, 2024, but before January 1,
2033, for the sale of new qualifying electric bicycles in the state. The
credit is allowed in the amount of $800 to a qualified retailer who sells a
qualifying electric bicycle to a resident of the state and offers a discount
equal to the lesser of $700 or the purchase price. However, if for any one
of the state fiscal years 2025-26 through 2032-33, the state is not
projected to exceed the state fiscal year spending limit imposed by section
20 of article X of the state constitution by 5% then for any income tax
year commencing in the calendar year that begins in that fiscal year, the
amount of the credit is reduced by 50%.
Section 10 creates a refundable income tax credit for income tax
years commencing on or after January 1, 2024, but before January 1,
2033, for a percentage of the actual costs incurred to construct,
reconstruct, or erect a sustainable aviation fuel production facility in the
state. The credit can be claimed by an aviation business, a sustainable
aviation fuel producer, or an airport for the income tax year in which the
production facility is put in service and is subject to aggregate caps for
each income tax year for which the credit can be claimed. Additionally,
the credit is subject to recapture if the sustainable aviation fuel production
of a facility comprises less than 60% of the total fuel production of the
facility in any of the 5 taxable years immediately following the taxable
year in which the facility was placed in service.
Section 11 creates a mechanism to allow for advance payment of
income tax credits to a motor vehicle dealer or financing entity that has
been assigned the innovative motor vehicle tax credit or innovative truck
tax credit, or to a qualified retailer for the electric bicycle tax credit.
Section 12 creates a sales and use tax exemption for a fleet vehicle
that is a heavy-duty truck or a medium-duty truck. For tax years
commencing on or after January 1, 2024, but before January 1, 2028, the
exemption amount is equal to 50% of the purchase price of the vehicle,
and for tax years commencing on or after January 1, 2028, but before
January 1, 2033, the exemption amount is equal to 60% of the purchase
price of the vehicle.
Section 13 terminates an existing sales and use tax exemption for
heat pump systems and heat pump water heaters used in commercial or
residential buildings so that it is allowed only for income tax years
beginning on or after January 1, 2023, but before January 1, 2024.
Section 14 creates a sales and use tax exemption for all sales to an
eligible taxpayer of heat pump technology and equipment necessary for
the proper functioning of a thermal energy network and for the storage
and use of the same for income tax years commencing on or after January
1, 2024, but before January 1, 2033.
Section 15 reduces the severance tax credit allowed for oil and gas
production. Under current law, the amount of credit allowed is calculated
by applying rate of 87.5% of all ad valorem taxes assessed during the
taxable year for accrual basis taxpayers or paid during the taxable year by
cash basis taxpayers upon oil and gas, oil and gas leaseholds and
leasehold interests, and oil and gas royalties and royalty interests. The bill
reduces the rate to 75% for 2024 and 2025. For tax years beginning on
and after January 1, 2026, the bill modifies the calculation for the oil and
gas tax that otherwise would have been implemented in tax year 2025 by
making a parallel downward adjustment so that the amount of credit is
derived by multiplying 65.625% of the gross income of the well by the
mill levy fixed in the prior calendar year.
Section 16 requires that for state fiscal years 2024-25 through
2032-33, the revenue collected that is equal to the amount attributable to
the decreased amount of severance tax credit allowed for oil and gas
production is credited to the general fund; except that on July 1, 2025, the
revenue must first be credited to the cash funds used for state fiscal years
2023-24 and 2024-25 by the office for the administration of the tax
credits created by the bill and the remaining money is credited to the state
general fund. Additionally, the stakeholder group that was required to
convene pursuant to HB22-1391 is required to additionally consider
long-term changes for the severance tax credit for oil and gas production.
Section 17 creates a partial, temporary, and specific ownership tax
exemption for new class A or class B personal property that is a fleet
vehicle and meets the definition of a category 7 truck for purposes of the
innovative truck tax credit.
Section 18 and section 19 allow for cities and counties to opt out
of the sales and use tax exemption created for sales of category 7 fleet
vehicles that are heavy-duty trucks or medium-duty electric trucks, sales
to an eligible taxpayer of heat pump technology and equipment necessary
for a proper functioning of a thermal energy network, and for the storage
and use of the same for income tax years commencing on or after January
1, 2024, but before January 1, 2033.
Section 20 gives the office the authority to expend money from the
industrial and manufacturing operations clean air grant program cash fund
for state fiscal years 2023-24 and 2024-25 to administer and implement
the industrial clean energy tax credit that is created in section 5.
Section 21 gives the office the authority to expend money from the
geothermal energy grant fund for state fiscal years 2023-24 and 2024-25
to administer and implement the tax credit for expenditure made in
connection with a geothermal energy project that is created in section 6
and the geothermal electricity generation production tax credit that is
created in section 7.
Section 22 gives the office the authority to expend money from the
community access to electric bicycles cash fund for state fiscal years
2023-24 and 2024-25 to administer and implement the electric bicycle tax
credit created in section 9 for state fiscal years 2023-24 and 2024-25.
Section 23 gives the office the authority to expend money from the
electrifying school buses grant program cash fund for state fiscal years
2023-24 and 2024-25 to administer and implement the changes made to
the innovative motor vehicles and innovative trucks tax credits set forth
in sections 2 and 3.
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