HB 25-1021 CO

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Became Law

The act creates 2 income tax subtractions for income tax years commencing on or after January 1, 2027, but before January 1, 2038. The first subtraction is for an amount equal to state capital gains that are realized by a taxpayer, who is the owner of a qualified business, during the taxable year for the conversion by an increment of at least 20% ownership to a qualified employee-owned business. The taxpayers that are eligible for this subtraction are the same taxpayers that would be eligible for the tax credit for conversion costs for employee business ownership. The total amount of capital gains that a taxpayer may subtract is set by and may be annually adjusted by the Colorado office of economic development (office), and is required to be posted on the office's website. The second subtraction is allowed to worker-owned cooperatives in an amount equal to the worker-owned cooperative's federal taxable income for the tax year not to exceed $1 million. The act also makes changes to the tax credit for conversion or expansion costs for employee business ownership (credit), which has been available through income tax year 2026. The act extends the credit through income tax years commencing in 2031. The act also specifies that the aggregate amount of credits that can be claimed for each income tax year commencing on or after January 1, 2026, but before January 1, 2032, is $3 million. The act also increases the percentage of conversion or expansion costs that are eligible to be claimed for the credit from 50% to 75% beginning in tax year 2026 while maintaining the existing dollar caps for the different methods of conversion. Additionally, the act revises several definitions to expand eligibility for the credit and allows for qualified support entities, which are businesses or nonprofit organizations that provide services to businesses that qualify under the credit so that those businesses can convert or expand to employee ownership, to be eligible to receive the credit for up to 75% of the costs incurred for providing such support, not to exceed $167,000, including for staff salaries and benefits, marketing and outreach, and consulting and technical assistance. Support costs exclude any costs that are considered conversion or expansion costs that can be claimed in the credit for employee business ownership. (Note: This summary applies to this bill as enacted.)

• William Lindstedt Democratic · primary
• Rick Taggart Republican · primary
• Jeff Bridges Democratic · primary
• Mark Baisley Republican · primary

1. May 30, 2025 Governor Signed · executive
2. May 19, 2025 Sent to the Governor · executive
3. May 19, 2025 Signed by the President of the Senate · upper
4. May 19, 2025 Signed by the Speaker of the House · lower
5. May 5, 2025 House Considered Senate Amendments - Result was to Concur - Repass · lower
6. May 5, 2025 Senate Third Reading Passed - No Amendments · upper
7. May 2, 2025 Senate Second Reading Special Order - Passed with Amendments - Committee · upper
8. May 2, 2025 Senate Committee on Appropriations Refer Unamended - Consent Calendar to Senate Committee of the Whole · upper
9. May 1, 2025 Senate Committee on Finance Refer Amended to Appropriations · upper
10. Apr 29, 2025 Introduced In Senate - Assigned to Finance · upper
11. Apr 28, 2025 House Third Reading Passed - No Amendments · lower
12. Apr 25, 2025 House Second Reading Special Order - Passed with Amendments - Committee, Floor · lower
13. Apr 25, 2025 House Committee on Appropriations Refer Unamended to House Committee of the Whole · lower
14. Mar 3, 2025 House Committee on Finance Refer Amended to Appropriations · lower
15. Feb 19, 2025 House Committee on Business Affairs & Labor Refer Amended to Finance · lower
16. Jan 8, 2025 Introduced In House - Assigned to Business Affairs & Labor · lower