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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