Signed by Governor Jared Polis

Vote Smart's Synopsis:

Vote to amend and pass a bill that amends previous state tax breaks, including those passed that pertain to the COVID-19 pandemic.

Highlights:

• Specifies that for income tax years ending on or after the enactment of the March 2020 “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) but before January 1, 2021, the taxpayer’s net operating income loss or excess business loss will be determined under section 172(a) of the Internal Revenue Code after amendments made by the CARES Act (Sec. 2).

• Requires a net operating loss deduction to be allowed in the same manner that is allowed under the Internal Revenue Code and can be carried forward and carried back for state income tax purposes (Sec. 4).

• Authorizes a resident individual who claims an earned income tax credit equal to 15 percent of the federal credit that they have claimed on their tax return for the same tax year for an income tax year beginning prior to January 1, 2022 (Sec. 5).

• Authorizes a resident individual an earned income tax credit against the taxes due that is equal to 10 percent of the federal credit that they would have been allowed, except if the resident individual, the resident individual’s spouse, or one or more of the resident individual’s dependents do not have a valid social security number, for income tax years beginning on or after January 1, 2021, but before January 1, 2022 (Sec. 5).

• Authorizes a resident individual who claims an earned income tax credit equal to 15 percent of the federal credit that they have claimed on their tax return for the same tax year for an income tax year beginning on or after January 1, 2022 (Sec. 5).

• Defines “resident individual” as a taxpayer filing with an individual taxpayer identification number (Sec. 5).

• Requires the state treasurer to transfer $113 million from the general fund to the state education fund on March 1, 2021 (Sec. 6).

• Requires the state treasurer to transfer $23 million from the general fund to the state education fund on March 1, 2022 (Sec. 6).

• Appropriates $49,000 to the department of revenue to implement this bill (Sec. 7).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that amends previous state tax breaks, including those passed that pertain to the COVID-19 pandemic.

Highlights:

• Establishes that for income tax years coming on or after the enactment of the March 2020 “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) but before January 1, 2021, the taxpayer’s net operating income loss or excess business loss shall be determined under federal law (Sec. 2).

• Amends previous tax code to specify that for any income tax year coming on or after January 1, 2021, equal to the deductions for qualified business income for an individual taxpayer who files a single return greater than $75,000 or whose adjusted gross income is greater than $150,000 this federal deduction may be claimed (Sec. 3).

• Reduces the amount of net operating loss that a corporation can carry forward to the following tax year to $400,000 (Sec. 4).

• Repeals the state income tax modification for qualifying net capital gains for income tax years commencing on or after January 2021 (Sec. 5).

• Repeals the exemption from state sales and use taxes for the sales, purchase, storage, use, or consumption of electricity, coal, gas, fuel oil, steam, coke, or nuclear fuel, for use in processing, manufacturing, mining, refining, irrigation, and construction services for filing periods on or after August 2020 (Sec. 6).

• Establishes a sales and use tax refund, not to exceed $1,000 but specifies that the refund shall not apply to the following, including (Sec. 8):

• Diesel fuel purchased for off-road use; or

• Electricity, coal, gas, fuel, oil, steam, coke, or nuclear fuel purchased for agricultural purposes, generating electricity or railroad transportation services.

• Prohibits the elimination of the sales tax exemption and specifies that the creation of a sales tax refund shall not affect the county and municipal sales tax (Sec. 9).

• Repeals the statutes that provide an insurance rate tax reduction for insurance companies maintaining a home office or regional home office (Sec. 11).

• Specifies that the earned income tax credit shall be equal to a percentage of the federal earned income tax credit and increases the percentage from 10 percent to 20 percent beginning in 2023 (Sec. 12).

• Authorizes the state treasurer to transfer the following amounts from the general fund to the state education fund for the following fiscal years (Sec. 13):

• $150 million for the fiscal year 2021-22;

• $200 million for the fiscal year 2022-23;

• $200 million for the fiscal year 2023-24; and

• $200 million for the fiscal year 2024-25.

Full Bill Text