| AI Summary |
AI Bill Version
HB25-1296: Taxation and Economic Development Reforms
Definition and Taxation of Computer Software
- Clarifies that internalized instruction code is part of computer hardware and is taxable.
- Establishes that computer software licenses purchased in bulk are taxed based on licenses used in Colorado.
Taxation of Telephone and Telegraph Services (Effective July 1, 2025)
- Imposes sales tax on interstate telephone and telegraph services that originate in Colorado and are billed to a Colorado address.
Gasoline and Special Fuel Tax Deductions
- Repeals the 0.5% distributor tax deduction for payment processing and bad debt losses, effective July 1, 2029.
Enterprise Zone Investment Tax Credit
- Caps the maximum credit at $2 million per taxpayer per year beginning January 1, 2026.
- Excludes certain industries, including oil and gas extraction, hard rock mining, aviation, fuel retail, and wireless telecommunications facility construction.
- Allows businesses to apply for a waiver to exceed the cap if they can demonstrate significant economic benefits to the Colorado Economic Development Commission.
- Requires annual reporting on waiver approvals, including taxpayer names and justification.
Modification of Property Tax and Rent Assistance Grants
- Freezes adjustments for inflation on grants for low-income seniors and disabled individuals until January 1, 2026.
- Limits the maximum eligible income amount and grant amounts to 2023 levels.
Repeal of Certain Tax Credits and Exemptions
- Repeals the senior property tax and rent assistance program effective December 31, 2026.
Effective Dates
- Upon passage, except for specific provisions taking effect on July 1, 2025, and December 31, 2026.
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| Summary |
The bill adjusts several state tax expenditures as follows:
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Section 2 of the bill increases the amount of a company's
total domestic workforce that must be in Colorado for a
company to qualify for the insurance premium tax rate tax
expenditure for a home office or regional home office;
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Section 3 requires insurance companies, when submitting
certain filings with the division of insurance, to submit the
total annual dollar amount of premiums collected or
contracted for on policies or contracts of insurance
covering property or risks in Colorado during the previous
calendar year from entities that are exempt from taxation;
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Section 6 limits the existing tax deduction related to
expenses, the deduction of which is disallowed by section
280C of the internal revenue code, so that a taxpayer may
only claim the tax deduction for income tax years
commencing before January 1, 2026;
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Section 10, for income tax years commencing on and after
January 1, 2026, creates a new tax deduction related to
expenses, the deduction of which is disallowed by section
280C of the internal revenue code, so that a taxpayer may
claim the deduction for any expenses that cannot be
deducted under section 280C of the internal revenue code;
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Section 7 limits the alternative minimum tax credit to
income tax years commencing prior to January 1, 2025;
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Section 8 extends the tax credit for monetary contributions
to promote child care, so that the tax credit is available
through income tax years commencing before January 1,
2030, rather than January 1, 2028;
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Section 9, for income tax years commencing on and after
January 1, 2026, creates an income tax credit for certain
individuals who are 65 years of age or older in the income
tax year, or who are a surviving spouse of that individual,
and who were previously eligible to receive a grant for real
property tax assistance and heat or fuel expenses
assistance;
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Section 20, beginning January 1, 2026, ends the
availability of grants for real property tax assistance and
heat or fuel expenses assistance;
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Sections 4, 5, 14, 15, 21, 22, and 23 make conforming
amendments for the changes made in sections 9 and 20;
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Section 11 expands the definition of local government to
include counties for purposes of the alternative
transportation options tax credit;
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Section 12 limits the existing business personal property
tax credit so that a taxpayer may only claim the tax
deduction for income tax years commencing before January
1, 2026;
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Section 13 modifies the tax credit for qualified costs
incurred in preservation of historic structures by removing
the 5% increase in the percentage of rehabilitation expenses
incurred in a rehabilitation in a disaster area for the
rehabilitation of a commercial structure that are applicable
for the tax credit;
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Section 16 modifies the downloaded software sales tax
exemption so that all software that is available for repeated
sale and license and governed by a nonnegotiable license
agreement qualifies as tangible property and thus is subject
to sales tax;
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Section 17 ensures that, beginning July 1, 2025, interstate
telephone and telegraph services are subject to state sales
tax;
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Section 18 repeals, effective July 1, 2025, the special fuel
excise tax reduction associated with bad debt and the
payment of the special fuel excise tax; and
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Section 19 modifies the enterprise zone tax credit for
income tax years beginning January 1, 2026, by limiting the
total amount of the credit that may be claimed to $2
million, providing an exemption process for that limit, and
prohibiting certain taxpayers from claiming that credit.
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