Bill > HB1021

This bill provides tax incentives for businesses transitioning to employee-owned structures in Colorado. Specifically, for income tax years from 2027 to 2037, the bill allows business owners to subtract a certain amount of capital gains from their federal taxable income when converting at least 20% of their business to an employee-owned structure, such as an employee stock ownership plan (ESOP), employee ownership trust, or worker-owned cooperative. The Colorado Office of Economic Development will establish and periodically adjust the total amount of capital gains that can be subtracted. Additionally, the bill provides tax credits for qualified businesses undergoing conversion or expansion, with credits covering up to 75% of conversion and expansion costs, and introduces a new tax credit for qualified support entities that help businesses transition to employee ownership. The bill aims to encourage business owners to sell their businesses to employees and provide tax relief to businesses establishing employee ownership structures. The tax incentives are set to expire on July 1, 2042, and the effectiveness of these incentives will be measured by the number and aggregate amount of subtractions and credits claimed each tax year.

Budget and Finance, Business and Industry

https://leg.colorado.gov/bills/hb25-1021