summary
Introduced
02/05/2025
02/05/2025
In Committee
02/05/2025
02/05/2025
Crossed Over
Passed
Dead
02/27/2025
02/27/2025
Introduced Session
2025 Regular Session
Bill Summary
Under current law, the state income tax rate imposed on the taxable income of individuals, estates, trusts, and corporations is 4.4%; except that, for the income tax year commencing on January 1, 2024, the income tax rate is 4.25% and for any income tax year commencing on or after January 1, 2025, but before January 1, 2035, the income tax rate is temporarily reduced if state revenue exceeded the limitation on state fiscal year spending imposed by section 20 (7)(a) of article X of the state constitution for the state fiscal year that ended during the income tax year. The extent to which the rate is temporarily reduced depends on the total amount of excess state revenues remaining after homestead exemption reimbursements and qualified-senior primary residence reimbursements are paid. The bill makes the 4.25% tax rate permanent beginning with the income tax year commencing on January 1, 2025, makes any additional temporarily reduced income tax rate permanent for subsequent income tax years, and eliminates the state income tax on individuals, estates, and trusts for income tax years commencing on or after January 1, 2035.
AI Summary
This bill permanently reduces and eventually eliminates state income taxes in Colorado. Specifically, it establishes a permanent state income tax rate of 4.25% for individuals, estates, trusts, and corporations for tax years between 2025 and 2035, replacing the current temporary tax rate structure. The bill further eliminates state income taxes entirely for individuals, estates, and trusts starting in 2035, meaning that after December 31, 2034, no income tax will be collected from these entities. As part of this transition, the bill also eliminates all income tax credits for individuals, estates, and trusts after January 1, 2035, and any existing tax credits with carry-forward periods will expire on December 31, 2034. The legislation modifies various sections of Colorado's tax code to implement these changes, including provisions for tax returns and reporting requirements. The bill is subject to potential referendum and would take effect either immediately after the 90-day legislative period or, if challenged, would require voter approval in the November 2026 general election.
Committee Categories
Military Affairs and Security
Sponsors (1)
Last Action
Senate Committee on State, Veterans, & Military Affairs Postpone Indefinitely (on 02/27/2025)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://leg.colorado.gov/bills/sb25-138 |
| Fiscal Note FN2 | https://leg.colorado.gov/sites/default/files/documents/2025A/bills/fn/2025a_sb138_f1.pdf |
| Fiscal Note FN1 | https://leg.colorado.gov/sites/default/files/documents/2025A/bills/fn/2025a_sb138_00.pdf |
| BillText | https://leg.colorado.gov/sites/default/files/documents/2025A/bills/2025a_138_01.pdf |
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