HB 1289

NOTE: This bill has been prepared for the signatures of the appropriate legislative
officers and the Governor. To determine whether the Governor has signed the bill
or taken other action on it, please consult the legislative status sheet, the legislative
history, or the Session Laws.
     HOUSE BILL 26-1289
     BY REPRESENTATIVE(S) Garcia and Brown, Bacon, Boesenecker,
     Lindsay, Mabrey, McCormick, Nguyen, Rutinel, Sirota, Smith, Story,
     Willford, Woodrow, Zokaie, McCluskie, Espenoza, Ricks, Titone;
     also SENATOR(S) Weissman, Benavidez, Cutter, Gonzales J., Jodeh, Kipp,
     Snyder, Coleman.
     CONCERNING MODIFICATION OF CERTAIN TAX EXPENDITURES, AND, IN
          CONNECTION THEREWITH , MAKING AND REDUCING AN
          APPROPRIATION.
     Be it enacted by the General Assembly of the State of Colorado:
           SECTION 1. Legislative declaration. The general assembly finds
     and declares that:
             (1) (a) Regular evaluation and maintenance of the tax code is critical
     to a high-quality tax system;
           (b) The office of the state auditor and the general assembly regularly
     review tax credits, deductions, and exemptions, along with other tax
     expenditures, and recommend streamlining implementation, assessing
     ongoing fit with the original purpose, and eliminating outdated or
     ________
     Capital letters or bold & italic numbers indicate new material added to existing law; dashes
     through words or numbers indicate deletions from existing law and such material is not part of
     the act.
ineffective tax expenditures;
        (c) This act is a single tax policy change that makes changes to
existing tax expenditures and eliminates others to improve the
administrative efficiency of the tax code, reduce administrative burden,
better align certain tax expenditures with the general assembly's intent in
enacting the tax expenditures, and conform Colorado's tax code with
provisions commonly used in other states so that Colorado is less of an
outlier compared to the rest of the country in how taxpayers compute their
taxes owed;
      (d) Any net district revenue gain resulting from the tax policy
change in this act is incidental and de minimis; and
        (e) Therefore, consistent with the Colorado Supreme Court's holding
in TABOR Found. v. Reg'l Transp. Dist., 2018 CO 29, that a tax policy
change that causes either no net district tax revenue gain or a net district tax
revenue gain that is only incidental and de minimis does not require voter
approval under section 20 (4)(a) of article X of the state constitution, this
act is not a tax policy change that requires voter approval.
       (2) (a) Eliminating the administrative and bad debt allowance for
fuel tax distributors serves the purposes of:
       (I) Reducing a duplicative benefit; and
       (II) Better aligning Colorado's tax code with those of other states.
       (b) According to the office of the state auditor's 2019 evaluation of
the tax expenditure, the internal revenue service already provides a tax
offset for bad debt, and most surrounding states don't have a similar tax
expenditure.
       (c) Any revenue gain realized as a result of eliminating the
administrative and bad debt allowance for fuel tax distributors is incidental
and de minimis.
       (3) (a) Eliminating the vendor allowances for the cigarette tax,
cigarette inventory tax, tobacco products tax, and nicotine products tax
serves the purpose of:
PAGE 2-HOUSE BILL 26-1289
      (I) Better aligning Colorado's tax code with most other tax codes,
which don't have similar allowances to reimburse the cost of tax collection;
and
        (II) Removes a redundancy in Colorado's tax code, since businesses
are already able to deduct these costs from their taxable income.
       (b) Any revenue gain realized as a result of eliminating the vendor
allowances for the cigarette tax, cigarette inventory tax, tobacco products
tax, and nicotine products tax is incidental and de minimis.
       (4) (a) Eliminating the sales tax exemption for property used in
space flight better serves the purposes of:
        (I) Aligning the Colorado tax code with those of the vast majority
of states that don't have a similar tax expenditure; and
       (II) Modernizes Colorado's tax code, since the department of
revenue's biannual Tax Profile and Expenditure Report shows that virtually
no taxpayers claim the tax expenditure.
     (b) Any revenue gain realized as a result of eliminating the sales tax
exemption for property used in space flight is incidental and de minimis.
       (5) (a) Eliminating the income tax deduction for wages and salaries
because of section 280C of the internal revenue code serves the purpose of
making Colorado's tax code more neutral between taxpayers. According to
the office of the state auditor's 2019 and 2024 evaluations of the tax
expenditure, only certain types of expenses and businesses qualify for the
tax expenditure, which results in Colorado's tax code favoring certain types
of business activity over others.
       (b) Any revenue gain realized as a result of eliminating the income
tax deduction for wages and salaries because of section 280C of the internal
revenue code is incidental and de minimis.
      (6) (a) Reducing the fuel loss deduction tax expenditure from 2% to
1% serves the purposes of:
       (I)   Better aligning the tax expenditure with how much fuel
PAGE 3-HOUSE BILL 26-1289
distributors lose in transit; and
        (II) Removes a redundancy in Colorado's tax code, since distributors
are already able to deduct these losses from their taxable income.
      (b) Any revenue gain realized as a result of reducing the fuel loss
deduction tax expenditure is incidental and de minimis.
        (7) Restricting the enterprise zone new employee health insurance
tax expenditure so that it is only available to those businesses with fewer
than fifty employees serves the purposes of eliminating redundancy and
better aligning the tax expenditure with the 56th general assembly's intent
in creating the tax expenditure. The 56th general assembly created the tax
expenditure to incentivize businesses in enterprise zones to offer health
insurance to their employees, but, as a result of the 2010 passage of the
federal "Affordable Care Act", these businesses are already required to offer
their employees insurance. Any revenue gain realized as a result of
restricting this tax expenditure is incidental and de minimis.
       (8) Restricting the enterprise zone research and experimental income
tax credit serves the purpose of better aligning the tax expenditure with the
56th general assembly's intent in creating the tax expenditure by limiting the
tax expenditure to businesses that make the largest and most impactful
increases in their research and developing spending. Any revenue gain
realized as a result of restricting this tax expenditure is incidental and de
minimis.
       (9) (a) The purpose of updating the method for water's-edge
combined reporting for future tax years is to better reflect the original intent
for water's-edge combined reporting, close loopholes, and better align
Colorado's system of unitary apportionment with federal reporting
requirements, while fairly apportioning to Colorado its share of
corporations' income attributable to operations in the state.
       (b) The updates to the method for water's-edge combined reporting
reflect and strengthen the state's tax policy of water's-edge combined
reporting. The updates do not change the state's tax policy, is not a new tax,
and any revenue gain realized as a result of the updates is incidental and de
minimis.
PAGE 4-HOUSE BILL 26-1289
       (10) The purpose of eliminating the enterprise zone commercial
vehicle investment tax expenditure is to promote efficiency by removing a
tax credit that the office of the state auditor's 2020 evaluation of the tax
expenditure and the department of revenue's biannual review show very few
taxpayers claim. Any revenue gain realized as a result of eliminating this tax
expenditure is incidental and de minimis.
       SECTION 2. In Colorado Revised Statutes, 24-75-219, amend
(7)(d)(II) and (7)(d)(III) as follows:
       24-75-219. Transfers - transportation - capital construction -
definitions.
       (7) In addition to any other transfers required by this section:
       (d) (II) On July 1, 2026, the state treasurer shall transfer fifty million
five hundred thousand FORTY-FIVE MILLION SIX HUNDRED THOUSAND dollars
from the general fund to the state highway fund;
        (III) On each July 1 from July 1, 2027, through July 1, 2031, the
state treasurer shall transfer one hundred million NINETY-SIX MILLION FOUR
HUNDRED THOUSAND dollars from the general fund to the state highway
fund; and
        SECTION 3. In Colorado Revised Statutes, 29-2-109, amend
(1)(j); and add (1)(k) as follows:
       29-2-109. Contents of use tax ordinances and proposals - repeal.
        (1) The use tax ordinance, resolution, or proposal of any town, city,
or county adopted pursuant to this article 2 shall be imposed only for the
privilege of using or consuming in the town, city, or county any
construction and building materials purchased at retail or for the privilege
of storing, using, or consuming in the town, city, or county any motor and
other vehicles, purchased at retail on which registration is required, or both.
For the purposes of this subsection (1), the term "construction and building
materials" shall not include parts or materials utilized in the fabrication,
construction, assembly, or installation of passenger tramways, as defined in
section 12-150-103 (5), by any ski area operator, as defined in section
33-44-103 (7), or any person fabricating, constructing, assembling, or
PAGE 5-HOUSE BILL 26-1289
installing a passenger tramway for a ski area operator. The ordinance,
resolution, or proposal may recite that the use tax shall not apply to the
storage and use of wood from salvaged trees killed or infested in Colorado
by mountain pine beetles or spruce beetles as exempted from the state use
tax pursuant to section 39-26-723. The ordinance, resolution, or proposal
may recite that the use tax shall not apply to the storage and use of
components used in the production of energy, including but not limited to
alternating current electricity, from a renewable energy source, as exempted
from the state use tax pursuant to section 39-26-724. The ordinance,
resolution, or proposal may recite that the use tax shall not apply to the
storage and use of eligible decarbonizing building materials, as exempted
from the state use tax pursuant to section 39-26-731. The ordinance,
resolution, or proposal shall recite that the use tax shall not apply:
       (j) To the storage, use, or consumption of any construction and
building materials required or made necessary in the performance of any
construction contract bid, let, or entered into at any time prior to the
effective date of such use tax ordinance, resolution, or proposal; AND
       (k) TO THE STORAGE, USE, OR CONSUMPTION OF CONSTRUCTION AND
BUILDING MATERIALS BY OR ON BEHALF OF A COMMON CARRIER BY RAIL
OPERATING IN INTERSTATE OR FOREIGN COMMERCE WHEN THE STORAGE,
USE, OR CONSUMPTION OF THE CONSTRUCTION AND BUILDING MATERIALS IS
PURSUANT TO A CONTRACT WITH THE STATE, A DEPARTMENT OR INSTITUTION
OF THE STATE, A POLITICAL SUBDIVISION OF THE STATE, OR A SPECIAL
DISTRICT THAT ALLOWS THE STATE, A DEPARTMENT OR INSTITUTION OF THE
STATE, A POLITICAL SUBDIVISION OF THE STATE, OR A SPECIAL DISTRICT TO
USE THE RAILROAD'S PROPERTY OR TRACKS FOR THE PROVISION OF PUBLIC
PASSENGER RAIL SERVICE.
        SECTION 4. In Colorado Revised Statutes, 39-22-104, amend
(3)(t) and (3)(u); and add (3)(v) and (4)(ff) as follows:
       39-22-104. Income tax imposed on individuals, estates, and
trusts - single rate - report - tax preference performance statement -
legislative declaration - definitions - repeal.
       (3) There shall be added to the federal taxable income:
       (t) For income tax years commencing on or after January 1, 2025,
PAGE 6-HOUSE BILL 26-1289
an amount equal to the amount of employer contribution that an employee
forfeits pursuant to section 39-22-558 (3)(c) and that the taxpayer had
previously subtracted from the taxpayer's federal taxable income pursuant
to subsection (4)(bb) of this section; and
       (u) FOR INCOME TAX YEARS BEGINNING ON OR AFTER JANUARY 1,
2026, the amount of any overtime compensation excluded or deducted from
federal gross income INCOME; AND
      (v) (I) (A) FOR INCOME TAX YEARS BEGINNING ON AND AFTER
JANUARY 1, 2027, THE EXCESS OF ANY GAIN EXCLUDED FROM FEDERAL
GROSS INCOME PURSUANT TO SECTION 1400Z-2 (a)(1)(A) OF THE INTERNAL
REVENUE CODE OVER THE AMOUNT OF THAT GAIN INVESTED BY THE
TAXPAYER IN A COLORADO QUALIFIED OPPORTUNITY FUND IN A MANNER
THAT QUALIFIES FOR EXCLUSION FROM FEDERAL GROSS INCOME PURSUANT
TO SECTION 1400Z-2 (a)(I)(A) OF THE INTERNAL REVENUE CODE.
      (B) FOR AMOUNTS INVESTED IN A QUALIFIED OPPORTUNITY FUND
AFTER DECEMBER 31, 2026, OTHER THAN A COLORADO QUALIFIED
OPPORTUNITY FUND, THE AMOUNT OF GAIN EXCLUDED FROM FEDERAL GROSS
INCOME AS A RESULT OF AN ELECTION MADE BY THE TAXPAYER PURSUANT
TO SECTION 1400Z-2(c) OF THE INTERNAL REVENUE CODE.
      (II)  FOR PURPOSES OF THIS SUBSECTION (3)(v), "COLORADO
QUALIFIED OPPORTUNITY FUND" MEANS A QUALIFIED OPPORTUNITY FUND
THAT HOLDS AT LEAST NINETY PERCENT OF ITS ASSETS IN COLORADO
QUALIFIED OPPORTUNITY ZONE PROPERTY. COLORADO QUALIFIED
OPPORTUNITY ZONE PROPERTY IS:
      (A)     QUALIFIED  OPPORTUNITY ZONE BUSINESS PROPERTY
SUBSTANTIALLY ALL OF THE USE OF WHICH, DURING SUBSTANTIALLY ALL OF
THE FUND'S HOLDING PERIOD FOR THE PROPERTY, WAS IN A QUALIFIED
OPPORTUNITY ZONE WITHIN COLORADO; OR
      (B)  QUALIFIED OPPORTUNITY ZONE STOCK, OR A QUALIFIED
OPPORTUNITY ZONE PARTNERSHIP INTEREST, IN A QUALIFIED OPPORTUNITY
ZONE BUSINESS IN WHICH SUBSTANTIALLY ALL OF THE TANGIBLE PROPERTY
OWNED OR LEASED IS QUALIFIED OPPORTUNITY ZONE BUSINESS PROPERTY AS
DESCRIBED IN SECTION 1400Z-2 (d)(3)(A)(i) OF THE INTERNAL REVENUE
CODE AND SUBSTANTIALLY ALL THE USE OF WHICH IS IN A QUALIFIED
PAGE 7-HOUSE BILL 26-1289
OPPORTUNITY ZONE WITHIN COLORADO.
       (III) FOR PURPOSES OF SUBSECTION (3)(v)(II) OF THIS SECTION:
      (A) PROPERTY HELD IN THE FUND SHALL BE MEASURED UNDER RULES
SIMILAR TO THE RULES OF SECTION 1400Z-2 (d)(1) OF THE INTERNAL
REVENUE CODE; AND
      (B) THE TERMS USED HAVE THE SAME MEANING AS SET FORTH IN
SECTION 1400Z-2 OF THE INTERNAL REVENUE CODE.
       (4) There shall be subtracted from federal taxable income:
       (ff) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY
1, 2027, THE AMOUNT OF ANY GAIN INCLUDED IN FEDERAL GROSS INCOME
PURSUANT TO SECTION 1400Z-2 (b) OF THE INTERNAL REVENUE CODE TO
THE EXTENT THAT SUCH GAIN WAS ADDED TO FEDERAL TAXABLE INCOME
PURSUANT TO SECTION 39-22-104 (3)(v) FOR A PRIOR TAX YEAR.
       SECTION 5. In Colorado Revised Statutes, 39-22-303, amend
(8)(a), (8)(b)(I), (11.5)(b)(I), and (11.5)(b)(II); and add (8)(c), (8.5),
(12)(c.3), and (12)(c.5) as follows:
     39-22-303. Dividends in a combined report - foreign source
income - affiliated groups - definitions - rules - repeal.
        (8) (a) Except as provided in subsection (8)(b) of this section, FOR
TAX YEARS BEGINNING BEFORE JANUARY 1, 2027, neither the taxpayer nor
the executive director shall include in a combined report any C corporation
that conducts business outside the United States if eighty percent or more
of the C corporation's property and payroll, as determined by factoring
pursuant to section 24-60-1301, is assigned to locations outside the United
States. For the purpose of this subsection (8), "United States" is restricted
to the fifty states and the District of Columbia.
       (b) (I) For tax years beginning on or after January 1, 2022, BUT
BEFORE JANUARY 1, 2027, a taxpayer shall include in the combined group
any member of an affiliated group of C corporations that is incorporated in
a foreign jurisdiction for the purpose of tax avoidance.
PAGE 8-HOUSE BILL 26-1289
        (c) THIS SUBSECTION (8) IS REPEALED, EFFECTIVE DECEMBER 31,
2031.
      (8.5) (a) FOR INCOME TAX YEARS BEGINNING ON OR AFTER JANUARY
1, 2027, THE MEMBERS OF AN AFFILIATED GROUP OF C CORPORATIONS
REQUIRED TO FILE A COMBINED REPORT PURSUANT TO SUBSECTION
(11.5)(b)(I) OF THIS SECTION MAY MAKE A WATER'S-EDGE ELECTION AS SET
FORTH IN SUBSECTION (8.5)(c) OF THIS SECTION. PURSUANT TO A
WATER'S-EDGE ELECTION, THE COMBINED GROUP SHALL TAKE INTO ACCOUNT
THE NET INCOME AND APPORTIONMENT FACTORS OF THE MEMBERS OF THE
AFFILIATED GROUP PURSUANT TO SUBSECTION (11.5) OF THIS SECTION TO
THE EXTENT SET FORTH IN SUBSECTION (8.5)(b) OF THIS SECTION.
      (b) (I) THE COMBINED GROUP SHALL TAKE INTO ACCOUNT THE
ENTIRE NET INCOME AND APPORTIONMENT FACTORS OF:
        (A)  EVERY MEMBER OF THE AFFILIATED GROUP THAT IS
INCORPORATED IN THE UNITED STATES OR FORMED UNDER THE LAWS OF ANY
STATE, THE DISTRICT OF COLUMBIA, OR ANY TERRITORY OR POSSESSION OF
THE UNITED STATES;
       (B) EVERY MEMBER OF THE AFFILIATED GROUP, REGARDLESS OF THE
PLACE WHERE THE MEMBER WAS INCORPORATED OR FORMED, IF TWENTY
PERCENT OR MORE OF THE MEMBER'S PROPERTY AND PAYROLL, AS
DETERMINED BY FACTORING PURSUANT TO SECTION 24-60-1301, IS
ASSIGNED TO LOCATIONS WITHIN THE UNITED STATES. FOR THE PURPOSE OF
THIS SUBSECTION (8.5)(b)(I)(B), "UNITED STATES" IS RESTRICTED TO THE
FIFTY STATES AND THE DISTRICT OF COLUMBIA.
      (C) EVERY MEMBER OF THE AFFILIATED GROUP THAT IS A DOMESTIC
INTERNATIONAL SALES CORPORATION AS DESCRIBED IN SECTIONS 991 TO 994
OF THE INTERNAL REVENUE CODE OR AN EXPORT TRADE CORPORATION AS
DESCRIBED IN SECTIONS 970 AND 971 OF THE INTERNAL REVENUE CODE; AND
        (D)   EVERY MEMBER OF THE AFFILIATED GROUP    THAT IS
INCORPORATED IN A FOREIGN JURISDICTION FOR THE PURPOSE OF TAX
AVOIDANCE.
     (II) TO THE EXTENT SUCH AMOUNTS ARE NOT ALREADY TAKEN INTO
ACCOUNT PURSUANT TO SUBSECTION (8.5)(b)(I) OF THIS SECTION, THE
PAGE 9-HOUSE BILL 26-1289
COMBINED GROUP SHALL ALSO TAKE INTO ACCOUNT:
      (A) THE APPORTIONABLE INCOME OF A MEMBER OF THE AFFILIATED
GROUP THAT IS EFFECTIVELY CONNECTED OR TREATED AS EFFECTIVELY
CONNECTED PURSUANT TO THE INTERNAL REVENUE CODE WITH THE
CONDUCT OF A TRADE OR BUSINESS WITHIN THE UNITED STATES AND, FOR
THAT REASON, SUBJECT TO FEDERAL INCOME TAX AND THE RELATED
APPORTIONMENT FACTORS; AND
      (B) IN THE CASE OF A MEMBER OF THE AFFILIATED GROUP THAT IS A
RESIDENT OF A COUNTRY THAT DOES NOT HAVE A COMPREHENSIVE INCOME
TAX TREATY WITH THE UNITED STATES AND EARNS MORE THAN TWENTY
PERCENT OF ITS NET INCOME, DIRECTLY OR INDIRECTLY, FROM INTANGIBLE
PROPERTY OR SERVICE-RELATED ACTIVITIES THAT ARE DEDUCTIBLE FROM
THE APPORTIONABLE INCOME OF ONE OR MORE MEMBERS OF THE COMBINED
GROUP, THE RELATED NET INCOME AND THE APPORTIONMENT FACTORS.
      (III) FOR PURPOSES OF THIS SUBSECTION (8.5)(b), A MEMBER OF THE
AFFILIATED GROUP IS PRESUMPTIVELY INCORPORATED IN A FOREIGN
JURISDICTION FOR THE PURPOSE OF TAX AVOIDANCE IF THE MEMBER IS
INCORPORATED IN A LISTED JURISDICTION. A MEMBER IS NOT INCORPORATED
IN A FOREIGN JURISDICTION FOR THE PURPOSE OF TAX AVOIDANCE IF THE
COMBINED GROUP PROVES TO THE SATISFACTION OF THE EXECUTIVE
DIRECTOR, OR IF THE EXECUTIVE DIRECTOR DETERMINES, THAT THE MEMBER
IS INCORPORATED IN A LISTED JURISDICTION FOR REASONS THAT MEET THE
ECONOMIC SUBSTANCE DOCTRINE DESCRIBED IN SECTION 7701 (o) OF THE
INTERNAL REVENUE CODE.
       (c) (I) THE COMBINED GROUP MUST MAKE A WATER'S-EDGE ELECTION
ON A TIMELY FILED, ORIGINAL RETURN FOR AN INCOME TAX YEAR.
      (II) (A) EXCEPT AS PROVIDED IN SUBSECTION (8.5)(c)(II)(C) OF THIS
SECTION, A COMBINED GROUP'S WATER'S-EDGE ELECTION IS BINDING FOR
AND APPLICABLE TO THE INCOME TAX YEAR WHEN THE COMBINED GROUP
MAKES THE ELECTION AND EACH OF THE NINE INCOME TAX YEARS
THEREAFTER.
       (B) UPON THE EXPIRATION OF THE PERIOD DESCRIBED IN SUBSECTION
(8.5)(c)(II)(A) OF THIS SECTION, A COMBINED GROUP MAY WITHDRAW THE
WATER'S-EDGE ELECTION. THE COMBINED GROUP MUST WITHDRAW THE
PAGE 10-HOUSE BILL 26-1289
ELECTION ON A TIMELY FILED, ORIGINAL TAX RETURN FOR THE FIRST INCOME
TAX YEAR AFTER THE PERIOD DESCRIBED IN SUBSECTION (8.5)(c)(II)(A) OF
THIS SECTION, OR BY OTHER WRITTEN WITHDRAWAL MADE IN THE TIME AND
MANNER PRESCRIBED BY RULES PROMULGATED BY THE EXECUTIVE
DIRECTOR. EXCEPT AS PROVIDED IN SUBSECTION (8.5)(c)(II)(C) OF THIS
SECTION, A COMBINED GROUP'S WITHDRAWAL OF AN ELECTION IS BINDING
FOR AND APPLICABLE TO THE INCOME TAX YEAR WHEN THE COMBINED
GROUP WITHDRAWS THE ELECTION AND EACH OF THE NINE INCOME TAX
YEARS THEREAFTER. IF THE COMBINED GROUP DOES NOT WITHDRAW THE
ELECTION AS DESCRIBED IN THIS SUBSECTION (8.5)(c)(II)(B), THE ELECTION
IS DEEMED RENEWED FOR AN ADDITIONAL TEN-YEAR PERIOD, SUBJECT TO
THE SAME CONDITIONS AS APPLIED TO THE ORIGINAL ELECTION.
      (C) A COMBINED GROUP MAY PETITION THE EXECUTIVE DIRECTOR TO
WITHDRAW A WATER'S-EDGE ELECTION PRIOR TO THE EXPIRATION OF THE
PERIOD SET FORTH IN SUBSECTION (8.5)(c)(II)(A) OF THIS SECTION, OR TO
REINSTATE A WITHDRAWN ELECTION, UPON A SHOWING OF REASONABLE
CAUSE BASED UPON EXTRAORDINARY HARDSHIP DUE TO UNFORESEEN
CHANGES IN STATE TAX STATUTES, LAW, OR POLICY. IF THE EXECUTIVE
DIRECTOR GRANTS A WITHDRAWAL OF AN ELECTION, THE EXECUTIVE
DIRECTOR MAY IMPOSE REASONABLE CONDITIONS AS NECESSARY TO
PREVENT THE EVASION OF TAX OR TO CLEARLY REFLECT NET INCOME FOR
THE ELECTION PERIOD PRIOR TO OR AFTER THE WITHDRAWAL.
      (III)   THE EXECUTIVE DIRECTOR MAY PROMULGATE RULES
GOVERNING THE EFFECT, IF ANY, ON THE SCOPE OR APPLICATION OF A
WATER'S-EDGE ELECTION, INCLUDING THE PROCEDURES FOR ELECTION AND
TERMINATION OR DEEMED ELECTION, RESULTING FROM A CHANGE IN THE
COMPOSITION OF THE UNITARY GROUP, THE COMBINED GROUP, THE
MEMBERS, AND ANY OTHER SIMILAR CHANGE.
       (d) THE EXECUTIVE DIRECTOR MAY DISREGARD A WATER'S-EDGE
ELECTION IN PART OR IN WHOLE, AND THE NET INCOME AND APPORTIONMENT
FACTORS OF ANY MEMBER OF THE UNITARY GROUP MAY BE INCLUDED IN THE
COMBINED REPORT, WITHOUT REGARD TO SUBSECTIONS (8.5)(a) TO (8.5)(c)
OF THIS SECTION, IF:
      (I) ANY MEMBER OF THE UNITARY GROUP KNOWINGLY FAILS TO
COMPLY WITH OR RECKLESSLY DISREGARDS ANY PROVISION OF THIS ARTICLE
22 OR ANY PROVISION OF ARTICLE 21 OF THIS TITLE 39; OR
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     (II) A PERSON OTHERWISE NOT INCLUDED IN THE WATER'S-EDGE
COMBINED GROUP IS USED FOR A SUBSTANTIAL STATE INCOME TAX
AVOIDANCE PURPOSE.
      (e) A COMBINED GROUP'S WATER'S-EDGE ELECTION PURSUANT TO
THIS SUBSECTION (8.5) HAS NO EFFECT ON WHETHER A PERSON EXCLUDED
FROM THE WATER'S-EDGE COMBINED GROUP MAY BE SEPARATELY LIABLE
FOR THE TAX IMPOSED BY THIS ARTICLE 22. A PERSON EXCLUDED FROM A
WATER'S-EDGE COMBINED GROUP AND SUBJECT TO THE TAX IMPOSED BY THIS
ARTICLE 22 SHALL SEPARATELY FILE AND PAY SUCH TAX AS PROVIDED IN
THIS ARTICLE 22.
       (11.5) (b) For tax years beginning on and after January 1, 2026:
        (I) Except as provided in subsection SUBSECTION (8) OR (8.5) of this
section, all of the members of an affiliated group of C corporations,
wherever incorporated or domiciled, that are members of a unitary business
shall file a combined report as a combined group.
       (II) (A) The net income of each member of the combined group, as
determined under section 39-22-304, is combined, eliminating items of
income, expense, gain, and loss from transactions between members of the
combined group, applying the consolidated filing rules under the internal
revenue code, and the regulations thereunder, as if the combined group was
a consolidated filing group. Dividends are eliminated to the extent permitted
under subsection (9) of this section.
       (B) A COMBINED GROUP SHALL ELIMINATE DIVIDENDS FROM A
COMBINED REPORT TO THE EXTENT PERMITTED UNDER SUBSECTION (9) OF
THIS SECTION.
       (C) FOR INCOME TAX YEARS BEGINNING ON OR AFTER JANUARY 1,
2027, TO THE EXTENT THE NET INCOME OF A MEMBER OF A COMBINED GROUP
INCLUDES SUBPART F INCOME OR NET CFC TESTED INCOME WITH RESPECT
TO ANOTHER MEMBER OF THE COMBINED GROUP OF WHICH THE MEMBER IS
A UNITED STATES SHAREHOLDER, THE COMBINED GROUP SHALL ELIMINATE
SUCH SUBPART F OR NET CFC TESTED INCOME FROM A COMBINED REPORT.
       (12) As used in this section, unless the context otherwise requires:
PAGE 12-HOUSE BILL 26-1289
     (c.3) "NET CFC TESTED INCOME" MEANS INCOME INCLUDED AS
FEDERAL GROSS INCOME PURSUANT TO SECTION 951A (a) OF THE INTERNAL
REVENUE CODE.
      (c.5) "SUBPART F INCOME" MEANS INCOME INCLUDED AS FEDERAL
GROSS INCOME PURSUANT TO SECTION 951 (a) OF THE INTERNAL REVENUE
CODE.
       SECTION 6. In Colorado Revised Statutes, 39-22-304, amend
(1)(b)(I), (3)(i), and (3)(q); and add (2)(l) and (3)(u) as follows:
       39-22-304. Net income of corporation - legislative declaration -
definitions - repeal.
        (1) (b) (I) (A) For income tax years commencing on or after January
1, 2022, BUT BEFORE JANUARY 1, 2027, in the case of a C corporation that
is not incorporated in the United States, or included in a consolidated
federal corporate income tax return, "federal taxable income" means the C
corporation's income or loss as determined from a profit and loss statement
prepared for that C corporation on a separate entity basis in the currency in
which its books of account are regularly maintained, provided this profit
and loss statement is subject to an independent audit, adjusted to conform
to the accounting principles generally accepted in the United States for the
preparation of such statements and further modified to take into account any
book-tax adjustments necessary to reflect federal and state tax law. Income
or loss so computed includes all income wherever derived and is not limited
to items of income from sources within the United States or effectively
connected income within the meaning of the internal revenue code. Items
of income, expense, gain or loss, and related apportionment factors that are
denominated in a foreign currency must also be translated into United States
dollars on a reasonable basis consistently applied year-to-year and
entity-by-entity. Unrealized foreign currency gains and losses are not
recognized. Income apportioned to this state is to be expressed in United
States dollars.
      (B) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY
1, 2027, IN THE CASE OF A C CORPORATION THAT IS INCLUDED IN A
COMBINED GROUP PURSUANT TO SECTION 39-22-303, AND THAT IS NOT
INCORPORATED IN THE UNITED STATES, OR INCLUDED IN A CONSOLIDATED
FEDERAL CORPORATE INCOME TAX RETURN, "FEDERAL TAXABLE INCOME"
PAGE 13-HOUSE BILL 26-1289
MEANS THE C CORPORATION'S INCOME OR LOSS AS DETERMINED FROM A
PROFIT AND LOSS STATEMENT PREPARED FOR THAT C CORPORATION ON A
SEPARATE ENTITY BASIS IN THE CURRENCY IN WHICH ITS BOOKS OF ACCOUNT
ARE REGULARLY MAINTAINED, PROVIDED THIS PROFIT AND LOSS STATEMENT
IS SUBJECT TO AN INDEPENDENT AUDIT, ADJUSTED TO CONFORM TO THE
ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES FOR
THE PREPARATION OF SUCH STATEMENTS, AND FURTHER MODIFIED TO TAKE
INTO ACCOUNT ANY BOOK-TAX ADJUSTMENTS NECESSARY TO REFLECT
FEDERAL AND STATE TAX LAW. INCOME OR LOSS SO COMPUTED INCLUDES
ALL INCOME WHEREVER DERIVED AND IS NOT LIMITED TO ITEMS OF INCOME
FROM SOURCES WITHIN THE UNITED STATES OR EFFECTIVELY CONNECTED
INCOME WITHIN THE MEANING OF THE INTERNAL REVENUE CODE. ITEMS OF
INCOME, EXPENSE, GAIN OR LOSS, AND RELATED APPORTIONMENT FACTORS
THAT ARE DENOMINATED IN A FOREIGN CURRENCY MUST ALSO BE
TRANSLATED INTO UNITED STATES DOLLARS ON A REASONABLE BASIS
CONSISTENTLY APPLIED YEAR - TO - YEAR AND ENTITY - BY - ENTITY .
UNREALIZED FOREIGN CURRENCY GAINS AND LOSSES ARE NOT RECOGNIZED.
INCOME APPORTIONED TO THE STATE IS TO BE EXPRESSED IN UNITED STATES
DOLLARS.
       (C) SUBSECTION (1)(b)(I)(A) OF THIS SECTION AND THIS SUBSECTION
(1)(b)(I)(C) ARE REPEALED, EFFECTIVE DECEMBER 31, 2031.
      (2) There shall be added to federal taxable income:
      (l) (I) (A) FOR INCOME TAX YEARS BEGINNING ON AND AFTER
JANUARY 1, 2027, THE EXCESS OF ANY GAIN EXCLUDED FROM FEDERAL
GROSS INCOME PURSUANT TO SECTION 1400Z-2 (a)(I)(A) OF THE INTERNAL
REVENUE CODE OVER THE AMOUNT OF THAT GAIN INVESTED BY THE
TAXPAYER IN A COLORADO QUALIFIED OPPORTUNITY FUND IN A MANNER
THAT QUALIFIES FOR EXCLUSION FROM FEDERAL GROSS INCOME PURSUANT
TO SECTION 1400Z-2 (a)(I)(A) OF THE INTERNAL REVENUE CODE.
      (B) FOR AMOUNTS INVESTED IN A QUALIFIED OPPORTUNITY FUND
AFTER DECEMBER 31, 2026, OTHER THAN A COLORADO QUALIFIED
OPPORTUNITY FUND, THE AMOUNT OF GAIN EXCLUDED FROM FEDERAL GROSS
INCOME AS A RESULT OF AN ELECTION MADE BY THE TAXPAYER PURSUANT
TO SECTION 1400Z-2(c) OF THE INTERNAL REVENUE CODE.
      (II)   FOR PURPOSES OF THIS SUBSECTION (2)(l), "COLORADO
PAGE 14-HOUSE BILL 26-1289
QUALIFIED OPPORTUNITY FUND" MEANS A QUALIFIED OPPORTUNITY FUND
THAT HOLDS AT LEAST NINETY PERCENT OF ITS ASSETS IN COLORADO
QUALIFIED OPPORTUNITY ZONE PROPERTY. COLORADO QUALIFIED
OPPORTUNITY ZONE PROPERTY IS:
        (A)    QUALIFIED OPPORTUNITY ZONE BUSINESS PROPERTY,
SUBSTANTIALLY ALL OF THE USE OF WHICH, DURING SUBSTANTIALLY ALL OF
THE FUND'S HOLDING PERIOD FOR THE PROPERTY, WAS IN A QUALIFIED
OPPORTUNITY ZONE WITHIN COLORADO; OR
        (B)   QUALIFIED OPPORTUNITY ZONE STOCK OR A QUALIFIED
OPPORTUNITY ZONE PARTNERSHIP INTEREST IN A QUALIFIED OPPORTUNITY
ZONE BUSINESS, IN WHICH SUBSTANTIALLY ALL OF THE TANGIBLE PROPERTY
OWNED OR LEASED IS QUALIFIED OPPORTUNITY ZONE BUSINESS PROPERTY AS
DESCRIBED IN SECTION 1400Z-2 (d)(3)(A)(i) OF THE INTERNAL REVENUE
CODE AND SUBSTANTIALLY ALL OF THE USE OF WHICH IS IN A QUALIFIED
OPPORTUNITY ZONE WITHIN COLORADO.
        (III) FOR PURPOSES OF SUBSECTION (2)(l)(II) OF THIS SECTION:
      (A) PROPERTY HELD IN THE FUND SHALL BE MEASURED UNDER RULES
SIMILAR TO THE RULES OF SECTION 1400Z-2 (d)(I) OF THE INTERNAL
REVENUE CODE; AND
      (B) THE TERMS USED HAVE THE SAME MEANING AS SET FORTH IN
SECTION 1400Z-2 OF THE INTERNAL REVENUE CODE.
        (3) There shall be subtracted from federal taxable income:
       (i) (I) FOR INCOME TAX YEARS BEGINNING BEFORE JANUARY 1, 2027,
that portion of wages or salaries paid or incurred for the taxable year, the
deduction for which is disallowed by section 280C of the internal revenue
code.
        (II) THIS SUBSECTION (3)(i) IS REPEALED, EFFECTIVE DECEMBER 31,
2031.
       (q) (I) FOR INCOME TAX YEARS BEGINNING ON OR AFTER JANUARY
1, 2022, BUT BEFORE JANUARY 1, 2027:
PAGE 15-HOUSE BILL 26-1289
       (I) (A) Any amount included in federal taxable income pursuant to
section 951 (a) of the internal revenue code with respect to a controlled
foreign corporation that is a C corporation incorporated in a foreign
jurisdiction for the purpose of tax avoidance pursuant to section 39-22-303
(8)(b)(II); and
       (II) (B) The amount of any income included in federal taxable
income pursuant to section 951A (a) of the internal revenue code with
respect to a controlled foreign corporation that is a C corporation
incorporated in a foreign jurisdiction for the purpose of tax avoidance
pursuant to section 39-22-303 (8)(b)(II), less any amount deducted under
section 250 (a)(1)(B) of the internal revenue code with respect to such
income.
        (II) THIS SUBSECTION (3)(q) IS REPEALED, EFFECTIVE DECEMBER 31,
2031.
        (u) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY 1,
2027, THE AMOUNT OF GAIN INCLUDED IN FEDERAL GROSS INCOME
PURSUANT TO SECTION 1400Z-2 (b) OF THE INTERNAL REVENUE CODE TO
THE EXTENT THAT SUCH GAIN WAS ADDED TO FEDERAL TAXABLE INCOME
PURSUANT TO SECTION 39-22-304 (2)(l) FOR A PRIOR TAX YEAR.
        SECTION 7. In Colorado Revised Statutes, 39-22-516.7, amend
(4)(a)(IX), (4)(a)(X), (4)(a.3), (4)(a.5), and (4)(a.7) as follows:
       39-22-516.7. Tax credit for innovative motor vehicles - tax
preference performance statement - legislative declaration - definitions
- repeal.
       (4) The amount of the credit allowed pursuant to this section is
calculated as follows:
        (a) Category 1.
       (IX) Except as otherwise provided in subsection (4)(a.7) of this
section, with respect to the purchase or lease of a category 1 vehicle sold or
leased in tax years commencing on or after January 1, 2027, but before
January 1, 2028, one TWO thousand dollars;
PAGE 16-HOUSE BILL 26-1289
       (X) Except as otherwise provided in subsection (4)(a.7) of this
section, with respect to the purchase or lease of a category 1 vehicle sold or
leased in tax years commencing on or after January 1, 2028, but before
January 1, 2029, five hundred ONE THOUSAND dollars; and
       (a.3) Limitation on credit.
       (I) No credit is allowed for a purchase or lease made on or after July
1, 2023, but before January 1, 2029 JANUARY 1, 2027, of a Category 1
vehicle that exceeds a manufacturer's suggested retail price of
eighty-thousand dollars.
       (II) NO CREDIT IS ALLOWED FOR A PURCHASE OR LEASE MADE ON OR
AFTER JANUARY 1, 2027, BUT BEFORE JANUARY 1, 2029, OF A CATEGORY 1
VEHICLE THAT EXCEEDS A MANUFACTURER'S SUGGESTED RETAIL PRICE OF
FIFTY THOUSAND DOLLARS.
        (a.5) (I) Category 1 for vehicles under $35,000 threshold. With
respect to the purchase or lease of a category 1 vehicle sold or leased in tax
years commencing on or after January 1, 2024, but prior to January 1, 2029
JANUARY 1, 2027, with a manufacturer's suggested retail price below
thirty-five thousand dollars there is allowed an additional two thousand five
hundred dollars of credit in addition to the amount of credit allowed
pursuant to subsection (4)(a) of this section.
      (II) CATEGORY 1 FOR VEHICLES UNDER $40,000 THRESHOLD.
WITH RESPECT TO THE PURCHASE OR LEASE OF A CATEGORY 1 VEHICLE SOLD
OR LEASED IN TAX YEARS COMMENCING ON OR AFTER JANUARY 1, 2027, BUT
PRIOR TO JANUARY 1, 2029, WITH A MANUFACTURER'S SUGGESTED RETAIL
PRICE BELOW FORTY THOUSAND DOLLARS THERE IS ALLOWED AN
ADDITIONAL TWO THOUSAND FIVE HUNDRED DOLLARS OF CREDIT IN
ADDITION TO THE AMOUNT OF CREDIT ALLOWED PURSUANT TO SUBSECTION
(4)(a) OF THIS SECTION.
        (a.7) (I) If the June 2025 revenue forecast, and each June revenue
forecast through the June 2027 revenue forecast as prepared by either
legislative council staff or the office of state planning and budgeting,
projects that state revenues, as defined in section 24-77-103.6 (6)(c), will
not increase by at least four percent for the next fiscal year, the amount of
the credit allowed pursuant to subsection (4)(a)(VIII), (4)(a)(IX), or
PAGE 17-HOUSE BILL 26-1289
(4)(a)(X) of this section for any THE INCOME tax year commencing in the
calendar year that begins during said next fiscal year is reduced by fifty
percent; except that if the amount of reduced credit is equal to or less than
five hundred dollars, then no credit is available for such a THAT INCOME tax
year.
       (II) THIS SUBSECTION (4)(a.7) IS REPEALED, EFFECTIVE DECEMBER
31, 2031.
       SECTION 8. In Colorado Revised Statutes, 39-22-516.8, amend
(8.7)(d) as follows:
      39-22-516.8. Tax credit for innovative trucks - tax preference
performance statement - legislative declaration - definitions - repeal.
        (8.7) (d) If the June 2025 revenue forecast, and each June revenue
forecast through the June 2027 revenue forecast as prepared by either
legislative council staff or the office of state planning and budgeting,
projects that state revenues, as defined in section 24-77-103.6 (6)(c), will
not increase by at least four percent for the next fiscal year, the amount of
the credit allowed pursuant to subsection (8.7)(a)(III), (8.7)(a)(IV), or
(8.7)(a)(V) of this section for any THE INCOME tax year commencing in the
calendar year that begins during said next fiscal year is reduced by fifty
percent; except that if the amount of reduced credit is equal to or less than
five hundred dollars, then no credit is available for such a THE INCOME tax
year.
        SECTION 9. In Colorado Revised Statutes, 39-22-543, amend
(2)(c), (2)(d), (3)(a), (4)(b), (5), and (6); and add (2)(a.5) and (4)(c) as
follows:
       39-22-543. Credit for wildfire hazard mitigation expenses -
legislative declaration - definitions - repeal.
       (2) As used in this section, unless the context otherwise requires:
       (a.5) "INFESTATION MITIGATION MEASURES" MEANS THE THINNING
OF WOODY VEGETATION THAT IS AT RISK OF MOUNTAIN PINE BEETLE OR
SPRUCE BEETLE INFESTATION OR THAT HAS BEEN KILLED BY MOUNTAIN PINE
BEETLES OR SPRUCE BEETLES, IF SUCH ACTIVITIES MEET OR EXCEED ANY
PAGE 18-HOUSE BILL 26-1289
COLORADO STATE FOREST SERVICE STANDARDS OR ANY OTHER APPLICABLE
STATE RULES.
        (c) "Landowner" means any INDIVIDUAL owner of record of private
land located within the state, including any easement, right-of-way, or estate
in the land, and includes the heirs, successors, and assigns of such land.
"Landowner" shall not include any partnership, S corporation, or other
similar entity that owns private land as an entity. unless there is a dwelling
on that land that is designed for residential occupancy
        (d) "Wildfire mitigation measures" means the creation of a
defensible space around structures; the establishment of fuel breaks; the
thinning of woody vegetation for the primary purpose of reducing risk to
structures from wildland fire; or the secondary treatment of woody fuels by
lopping and scattering, piling, chipping, removing from the site, or
prescribed burning; so long as such activities meet or exceed any Colorado
state forest service standards or any other applicable state rules.
        (3) (a) In the case of two taxpayers filing a joint return, the amount
of the credit shall not exceed six hundred twenty-five dollars in any taxable
year. THE AMOUNT OF THE CREDIT ALLOWED BY THIS SECTION IS THE SAME
WHETHER IT IS CLAIMED BY A SINGLE TAXPAYER OR TWO TAXPAYERS WHO
FILE A JOINT RETURN. In the case of two taxpayers who may legally file a
joint return but actually file separate returns, only one of the taxpayers may
claim the credit specified in this section.
        (4) (b) For income tax years commencing on or after January 1,
2025, but prior to January 1, 2028 JANUARY 1, 2027, a landowner with a
federal taxable income at or below one hundred twenty thousand dollars for
the income tax year commencing on or after January 1, 2023, as adjusted for
inflation and rounded to the nearest hundred dollars for each income tax
year thereafter, is allowed a credit against the income taxes imposed by this
article 22 in an amount equal to the landowner's costs incurred for wildfire
mitigation measures in an amount up to one thousand dollars. The
maximum total credit in a taxable year FOR A LANDOWNER is one thousand
dollars.
      (c) FOR INCOME TAX YEARS BEGINNING ON OR AFTER JANUARY 1,
2027, BUT BEFORE JANUARY 1, 2031, A LANDOWNER WITH AN ADJUSTED
GROSS INCOME AT OR BELOW THREE HUNDRED THOUSAND DOLLARS FOR THE
PAGE 19-HOUSE BILL 26-1289
INCOME TAX YEAR BEGINNING ON OR AFTER JANUARY 1, 2027, AS ADJUSTED
FOR INFLATION AND ROUNDED TO THE NEAREST HUNDRED DOLLARS FOR
EACH INCOME TAX YEAR THEREAFTER, IS ALLOWED A CREDIT AGAINST THE
INCOME TAXES IMPOSED BY THIS ARTICLE 22 IN AN AMOUNT EQUAL TO THE
LANDOWNER'S COSTS INCURRED FOR WILDFIRE MITIGATION MEASURES,
INFESTATION MITIGATION MEASURES, OR BOTH IN AN AMOUNT UP TO TWO
THOUSAND DOLLARS. THE MAXIMUM TOTAL CREDIT IN A TAXABLE YEAR FOR
A LANDOWNER IS TWO THOUSAND DOLLARS.
      (5) (a) If the amount of a credit under this section exceeds a
taxpayer's actual tax liability for an income tax year BEGINNING BEFORE
JANUARY 1, 2027, the amount of the credit not used to offset the taxpayer's
income tax liability is not refunded to the taxpayer and shall not be carried
forward as a tax credit against the taxpayer's income tax liability in any
subsequent tax year.
        (b) FOR INCOME TAX YEARS BEGINNING ON OR AFTER JANUARY 1,
2027, IF THE AMOUNT OF A CREDIT ALLOWED BY THIS SECTION EXCEEDS THE
TAXPAYER'S INCOME TAXES DUE, THE EXCESS MAY NOT BE CARRIED
FORWARD AND IS REFUNDED TO THE TAXPAYER.
        (6) This section is repealed, effective January 1, 2030 JANUARY 1,
2040.
        SECTION 10. In Colorado Revised Statutes, 39-22-549, amend
(2)(e), (2)(f), (2)(h), (3)(a)(I)(B), (3)(a)(II)(B), (4)(a) introductory portion,
(5)(a)(I)(A), (5)(b), (5)(c), and (6); and add (2)(e.5) and (3)(a)(III) as
follows:
       39-22-549. Credit against tax - small food business recovery and
resilience grant program equipment - community food consortium
duties and responsibilities - tax preference performance statement -
legislative declaration - definitions - repeal.
        (2) As used in this section, unless the context otherwise requires:
        (e) "Purchaser" means:
       (I) FOR INCOME TAX YEARS COMMENCING BEFORE JANUARY 1, 2027,
a small food retailer or small family farm that purchases small food business
PAGE 20-HOUSE BILL 26-1289
recovery and resilience grant program equipment.
      (II) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY
1, 2027, A QUALIFIED DISTRIBUTOR, SMALL FOOD RETAILER, OR SMALL
FAMILY FARM THAT PURCHASES SMALL FOOD BUSINESS RECOVERY AND
RESILIENCE GRANT PROGRAM EQUIPMENT.
     (e.5) "QUALIFIED DISTRIBUTOR" MEANS A COLORADO-OWNED AND
OPERATED BUSINESS OR NONPROFIT ORGANIZATION THAT:
     (I) IS SUBJECT TO TAX PURSUANT TO THIS ARTICLE 22 OR THAT IS
EXEMPT FROM TAX PURSUANT TO SECTION 39-22-112 (1);
     (II) ACTIVELY MANAGES THE AGGREGATION, DISTRIBUTION, AND
MARKETING OF SOURCE-IDENTIFIED RAW COLORADO AGRICULTURAL
PRODUCTS;
       (III)  PRIORITIZES THE AGGREGATION, DISTRIBUTION, AND
MARKETING OF SOURCE-IDENTIFIED RAW COLORADO AGRICULTURAL
PRODUCTS FROM COLORADO PRODUCERS TO SATISFY WHOLESALE, RETAIL,
AND INSTITUTIONAL DEMAND; AND
       (IV)
          HAS MANAGED THE AGGREGATION, DISTRIBUTION, AND
MARKETING OF SOURCE-IDENTIFIED RAW COLORADO AGRICULTURAL
PRODUCTS TO A MEMBER OF THE CONSORTIUM IN THE INCOME TAX YEAR FOR
WHICH THE BUSINESS OR ORGANIZATION IS CLAIMING A TAX CREDIT
PURSUANT TO THIS SECTION.
       (f) "Small family farm" has the same meaning as set forth in section
35-1-117 (8)(d) FOR INCOME TAX YEARS COMMENCING BEFORE JANUARY 1,
2027. FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY 1, 2027,
"SMALL FAMILY FARM" MEANS A FARM THAT IS COLORADO-OWNED AND
COLORADO-OPERATED, FILES A SCHEDULE F WITH THE INTERNAL REVENUE
SERVICE, AND ACTS AS A WHOLESALER OR VENDOR TO A CHARITABLE FOOD
PROGRAM, SMALL FOOD RETAILER, SCHOOL, CHILD CARE CENTER, OR OLDER
ADULT FACILITY THAT IS LOCATED IN OR PROVIDES FOOD TO A LOCAL, STATE,
OR FEDERALLY DEFINED "LOW INCOME, LOW ACCESS NEIGHBORHOOD".
       (h) "Small food retailers" has the same meaning as set forth in
section 35-1-117 (8)(e) FOR INCOME TAX YEARS COMMENCING BEFORE
PAGE 21-HOUSE BILL 26-1289
JANUARY 1, 2027. FOR INCOME TAX YEARS COMMENCING ON OR AFTER
JANUARY 1, 2027, "SMALL FOOD RETAILERS" MEANS:
      (I)        IN D E P E N D E N T ,
                AN  C O LO R A D O - O WN E D , A N D
COLORADO-OPERATED SMALL FOOD RETAIL BUSINESS, DEFINED AS A FOOD
RETAILER THAT:
      (A) IS SUBJECT TO TAX PURSUANT TO THIS ARTICLE 22 OR IS EXEMPT
FROM TAX PURSUANT TO SECTION 39-22-112 (1);
      (B) HAS FIVE OR FEWER SEPARATE COLORADO RETAIL LOCATIONS
WITH LESS THAN TWENTY-TWO THOUSAND SQUARE FEET OF RETAIL SPACE
PER LOCATION;
      (C) CARRIES AT LEAST THREE CATEGORIES OF FEDERALLY DEFINED
STAPLE FOODS, AS DESCRIBED IN THE FEDERAL "FOOD AND NUTRITION ACT
OF 2008", SECS. 3 AND 9; THE FEDERAL "CONSOLIDATED APPROPRIATIONS
ACT OF 2017", SEC. 76; AND THE FEDERAL "ENHANCING RETAILER
STANDARDS IN THE SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM", 81
FED. REG. 90675; AND
     (D) IS LOCATED IN OR PROVIDES FOOD TO LOCAL, STATE, OR
FEDERALLY DEFINED LOW-INCOME, LOW-ACCESS NEIGHBORHOODS; OR
     (II) IS A FARMER'S MARKET OR FARM-DIRECT OPERATION THAT IS
ALREADY OR DEMONSTRATES AN INTENT TO BECOME SNAP AND WIC
AUTHORIZED WHERE ALLOWED.
      (3) (a) Subject to the provisions of subsection (4) of this section:
       (I) (B) For income tax years commencing on or after January 1,
2025, but before January 1, 2031, any member of the food consortium is
allowed a credit against the tax imposed by this article 22 in an amount
equal to seventy-five percent of the amount certain spent by the member of
the consortium on completing its duties and responsibilities minus any
amount awarded to the member of the consortium pursuant to section
35-1-117 (2) for the completion of its duties and responsibilities; and
      (II) (B) For income tax years commencing on or after January 1,
2025, but before January 1, 2031, any purchaser of small food business
PAGE 22-HOUSE BILL 26-1289
recovery and resilience grant program equipment is allowed a credit against
the tax imposed by this article 22 in an amount equal to seventy-five percent
of the purchase price of the relevant small food business recovery and
resilience grant program equipment minus the amount of any grant awarded
under the small food business recovery and resilience grant program for the
purchase of the same small food business recovery and resilience grant
program equipment; AND
       (III) NOTWITHSTANDING SUBSECTION (3)(a)(I) AND (3)(a)(II) OF THIS
SECTION, FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY 1,
2027, A TAXPAYER IS ONLY ALLOWED A CREDIT AGAINST THE TAX IMPOSED
BY THIS ARTICLE 22 PURSUANT TO THIS SECTION IF THE CREDIT WOULD BE IN
AN AMOUNT EQUAL TO OR GREATER THAN THREE HUNDRED SEVENTY-FIVE
DOLLARS.
        (4) (a) FOR INCOME TAX YEARS COMMENCING PRIOR TO JANUARY 1,
2027, a member of the consortium or a purchaser of small food business
recovery grant program equipment may submit an application to the
department of agriculture for the issuance of a letter of eligibility for a tax
credit certificate allowed in this section by the deadlines established in the
rules promulgated by the department of agriculture. The application must
include:
       (5) (a) A member of the consortium or a purchaser of small food
business recovery grant program equipment shall submit an application to
the department of agriculture for the issuance of a tax credit certificate
allowed in this section by the deadlines established in the rules promulgated
by the department of agriculture. The application must include:
       (I) A certification that the applicant is either:
        (A) A purchaser who is a QUALIFIED DISTRIBUTOR, small food
retailer, or small family farm that purchased small food business recovery
and resilience grant program equipment; or
       (b) If the department of agriculture determines that the application
filed pursuant to subsection (5)(a) of this section is complete, the
department of agriculture shall determine whether the applicant qualifies for
the credit allowed pursuant to this section. If the department of agriculture
approves the application, the department of agriculture shall issue a tax
PAGE 23-HOUSE BILL 26-1289
credit certificate to the applicant that indicates the amount of the tax credit
that the purchaser or member of the consortium may claim for the specified
income tax year; except that:
      (I) The total amount of tax credit certificates issued by the
department of agriculture in a given income tax CALENDAR year must not
exceed a total of ten million dollars FOR CALENDAR YEARS COMMENCING
BEFORE JANUARY 1, 2027, A TOTAL OF FIVE MILLION DOLLARS FOR THE
CALENDAR YEAR COMMENCING ON JANUARY 1, 2027, AND, FOR CALENDAR
YEARS COMMENCING ON OR AFTER JANUARY 1, 2028, A TOTAL OF FIVE
MILLION DOLLARS.
       (II) FOR AN INCOME TAX YEAR COMMENCING ON OR AFTER JANUARY
1, 2027, THE MAXIMUM ALLOWABLE CREDIT AMOUNT FOR A SMALL FAMILY
FARM THAT CLAIMS A CREDIT PURSUANT TO THIS SECTION IS THREE
HUNDRED THOUSAND DOLLARS AND IS ONE MILLION DOLLARS FOR ANY
OTHER TAXPAYER THAT CLAIMS A CREDIT PURSUANT TO THIS SECTION.
        (c) (I) FOR INCOME TAX YEARS COMMENCING BEFORE JANUARY 1,
2027, the department of agriculture shall issue tax credit certificates allowed
in this section in an order that accords with the rules promulgated by the
department of agriculture. The department of agriculture shall review and
approve or disapprove an application filed pursuant to subsection (5)(a) of
this section within a reasonable time, not to exceed ninety days after the
filing of a completed application.
       (II) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY
1, 2027, THE DEPARTMENT OF AGRICULTURE SHALL REVIEW AND APPROVE
OR DISAPPROVE AN APPLICATION FILED PURSUANT TO SUBSECTION (5)(a) OF
THIS SECTION WITHIN A REASONABLE TIME, NOT TO EXCEED ONE HUNDRED
FIFTY DAYS AFTER THE FILING OF A COMPLETED APPLICATION.
       (6) To claim the income tax credit allowed pursuant to this section,
the purchaser or member of the consortium shall attach a copy of the tax
credit certificate to its state income tax return. No tax credit is allowed
pursuant to this section unless the purchaser or member of the consortium
provides a copy of the tax credit certificate with its filed state income tax
return. The amount of the credit that the purchaser or member of the
consortium may claim pursuant to this section is the amount stated on the
tax credit certificate. IF THE PURCHASER IS EXEMPT FROM TAX PURSUANT TO
PAGE 24-HOUSE BILL 26-1289
SECTION 39-22-112 (1), THE PURCHASER SHALL FILE A RETURN PURSUANT TO
SECTION 39-22-601 (7)(b).
        SECTION 11. In Colorado Revised Statutes, 39-22-550, amend
(1)(b) introductory portion, (1)(b)(I), (2)(c)(III), (2)(c)(IV), (3)(a), (3)(e)(II),
(5), and (6); and add (2)(c)(V), (3)(e)(III), and (3)(f) as follows:
      39-22-550. Tax credit for reducing emissions from certain lawn
equipment - tax preference performance statement - legislative
declaration - definitions - report - repeal.
       (1) (b) In accordance with section 39-21-304 (1), which requires
each bill that creates a new tax expenditure, OR EXTENDS AN EXPIRING TAX
EXPENDITURE, to include a tax preference performance statement as part of
a statutory legislative declaration, the general assembly further finds and
declares that:
       (I) The general legislative purpose of the tax credit allowed by
subsection (3) of this section, AND THE GENERAL LEGISLATIVE PURPOSE OF
ITS EXTENSION, is to induce certain designated behaviors by taxpayers,
specifically the purchase of electric-powered lawn equipment; and
       (2) As used in this section, unless the context otherwise requires:
       (c) "Qualified retailer" means a retailer that sells lawn equipment
and:
       (III) Has paid the taxes due on the monthly sales tax return; and
      (IV) Has registered with the department of revenue pursuant to
subsection (3)(e)(II) of this section; AND
      (V) HAS NOT BEEN DISQUALIFIED BY THE DEPARTMENT PURSUANT TO
SUBSECTION (3)(f) OF THIS SECTION.
      (3) (a) For income tax years commencing on or after January 1,
2024, but before January 1, 2027 JANUARY 1, 2030, a retailer qualified
QUALIFIED RETAILER pursuant to subsection (3)(e)(II) of this section is
allowed a tax credit against the tax imposed pursuant to this article 22 in an
amount equal to thirty-three percent of the aggregate purchase price for all
PAGE 25-HOUSE BILL 26-1289
retail sales of new, electric-powered lawn equipment that the qualified
retailer sold in the state during the tax year.
       (e) (II) Before selling a piece of new, electric-powered lawn
equipment for which a retailer intends to claim a credit pursuant to this
section, the retailer shall register as a qualified retailer by filing with the
department of revenue a registration statement in the form and manner that
the department prescribes AND RECEIVE APPROVAL OF THEIR REGISTRATION
FROM THE DEPARTMENT.
       (III) FOR INCOME TAX YEARS BEGINNING ON OR AFTER JANUARY 1,
2027, THE QUALIFIED RETAILER MAY ELECT ADVANCE PAYMENTS OF THE
CREDIT ALLOWED PURSUANT TO THIS SECTION AS SPECIFIED IN SECTION
39-22-629.
      (f) (I) AFTER THE NOTICE AND HEARING HELD IN ACCORDANCE WITH
SECTIONS 24-4-104 AND 24-4-105, THE DEPARTMENT MAY DISQUALIFY A
QUALIFIED RETAILER IF THE DEPARTMENT DETERMINES:
      (A) THE QUALIFIED RETAILER REQUESTED ADVANCE PAYMENT OR
CLAIMED A CREDIT WITH RESPECT TO A TRANSACTION THAT DOES NOT
QUALIFY FOR THE CREDIT ALLOWED BY THIS SECTION;
      (B) THE QUALIFIED RETAILER PROVIDED FALSE OR MISLEADING
INFORMATION TO THE DEPARTMENT; OR
      (C) THE QUALIFIED RETAILER NO LONGER HOLDS A SALES TAX
LICENSE.
      (II) A RETAILER THAT HAS BEEN DISQUALIFIED PURSUANT TO THIS
SUBSECTION (3)(f) MAY NOT REAPPLY TO BE A QUALIFIED RETAILER. THE
DEPARTMENT SHALL NOT APPROVE A REGISTRATION SUBMITTED BY A
DISQUALIFIED RETAILER.
       (5) Pursuant to section 39-21-304 (3), notwithstanding section
24-1-136 (11)(a)(I), and for the purpose of providing data that allows the
general assembly and the state auditor to measure the effectiveness of the
tax credit created in subsection (3) of this section, the department of
revenue, on or before January 1, 2025, and on or before January 1 of each
year thereafter through January 1, 2028 JANUARY 1, 2031, shall submit to
PAGE 26-HOUSE BILL 26-1289
the general assembly and the state auditor a report detailing the sales of
new, electric-powered lawn equipment, as reported by a qualified retailer
claiming the tax credit authorized under subsection (3) of this section. The
tax credit established in this section meets its purpose if sales of new,
gasoline-powered lawn equipment are significantly reduced within five
years after the tax credit becomes effective, as determined by the general
assembly and the state auditor pursuant to section 39-21-304 (3).
       (6)This section is repealed, effective December 31, 2033
DECEMBER 31, 2036.
       SECTION 12. In Colorado Revised Statutes, 39-22-551, amend
(2)(e)(XI), (2)(j), and (6)(a)(I); and add (8)(d) as follows:
      39-22-551. Industrial clean energy tax credit - tax preference
performance statement - definitions - report - repeal.
       (2) Definitions. As used in this section, unless the context otherwise
requires:
       (e) "Greenhouse gas emissions reduction improvements" means
improvements that help to measurably reduce greenhouse gas emissions.
"Greenhouse gas emissions reduction improvements" may include one or
more of the following equipment purchases, improvements, retrofits, or
investments:
      (XI) Installing equipment used for collection of biomethane, AND,
FOR INCOME TAX YEARS COMMENCING ON AND AFTER JANUARY 1, 2027,
INSTALLING EQUIPMENT USED FOR UTILIZATION OF BIOMETHANE;
      (j) "Owner" means a person or developer of a project to be
implemented at a qualified industrial facility subject to tax under this article
22 who applies for and claims the credit allowed by this section. FOR
INCOME TAX YEARS COMMENCING ON AND AFTER JANUARY 1, 2027,
"OWNER" ALSO INCLUDES A PERSON OR POLITICAL SUBDIVISION OF THE
STATE THAT IS A DEVELOPER OF A PROJECT TO BE IMPLEMENTED AT A
QUALIFIED INDUSTRIAL FACILITY AND THAT IS EXEMPT FROM TAXATION
UNDER SECTION 39-22-112 (1).
       (6) Merit-based review and reservation of credits.
PAGE 27-HOUSE BILL 26-1289
       (a) (I) For each application period, the office shall conduct a
merit-based evaluation of the applications that have been placed in the
evaluation pool pursuant to subsection (5)(c)(II)(B) of this section. BEFORE
TAX YEARS BEGINNING JANUARY 1, 2027, the office shall complete its
review, and award reservations, within ninety days after the end of the
application period. FOR INCOME TAX YEARS COMMENCING ON OR AFTER
JANUARY 1, 2027, THE OFFICE SHALL COMPLETE ITS REVIEW, AND AWARD
RESERVATIONS, WITHIN ONE HUNDRED TWENTY DAYS AFTER THE END OF THE
APPLICATION PERIOD.
      (8) Limit on aggregate amount of tax credits available to be
reserved.
       (d) NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (8)(a) OF
THIS SECTION, FOR ANY SEMI-ANNUAL APPLICATION PERIOD COMMENCING ON
OR AFTER JULY 1, 2026, THE OFFICE MAY ADJUST THE LIMITS IN SUBSECTION
(8)(a) OF THIS SECTION AS SET FORTH IN SECTION 39-22-522 (4)(f).
        SECTION 13. In Colorado Revised Statutes, 39-22-552, amend
(4)(c)(I)(B) and (4)(e); and add (4)(f) as follows:
       39-22-552. Tax credit for expenditures made in connection with
a geothermal energy project - tax preference performance statement -
legislative declaration - definitions - repeal.
       (4) (c) (I) (B) Based upon the totality of the factors set forth in
subsection (4)(d) of this section and based on considerations required for
geothermal energy projects as set forth in subsection (5) of this section,
which the office may weigh equally or differently, the office shall determine
an applicable amount of credit that may be reserved for the benefit of the
eligible taxpayer which may be all, part, or none of the credit amount
requested in the eligible taxpayer's application; except that the office shall
not reserve an amount in excess of the limitations set forth in subsection
(3)(b) of this section, and, EXCEPT AS PROVIDED IN SUBSECTION (4)(f) OF
THIS SECTION, the aggregate amount of credits reserved for all owners must
not exceed thirty-five million dollars for all taxpayers in all years the credit
is allowed.
      (e) (I) The reservation of tax credits does not entitle an eligible
taxpayer to an issuance of any credits until the eligible taxpayer provides the
PAGE 28-HOUSE BILL 26-1289
office with any documentation required by the office and a cost certification
of the expenditure made in connection with an approved geothermal energy
project during the tax year in which the reservation is approved. The cost
certification must be audited by a licensed public accountant that is not
affiliated with the eligible taxpayer. The office shall review the cost
certification to verify that it satisfies the information provided in the eligible
taxpayer's application. If the office determines that the eligible taxpayer
made a qualified expenditure, the office shall issue a tax credit certificate
in the applicable amount.
       (II) IF THE APPLICABLE AMOUNT OF QUALIFIED EXPENDITURES MADE
BY THE ELIGIBLE TAXPAYER IS LESS THAN THE AMOUNT RESERVED
PURSUANT TO SUBSECTION (4)(c) OF THIS SECTION, THE OFFICE MAY
RESERVE THE EXCESS CREDIT FOR THE BENEFIT OF THE ELIGIBLE TAXPAYER
FOR A FUTURE TAX YEAR OR RESERVE THE EXCESS FOR THE BENEFIT OF
ANOTHER APPLICANT AS SET FORTH IN SUBSECTION (4)(c) OF THIS SECTION;
EXCEPT THAT THE OFFICE SHALL NOT RESERVE CREDITS FOR ANY TAX YEAR
BEGINNING ON OR AFTER JANUARY 1, 2033.
       (f) (I) BEGINNING JULY 1, 2026, THE OFFICE MAY INCREASE THE
LIMIT ON THE AGGREGATE AMOUNT OF CREDITS RESERVED FOR ALL OWNERS
SET FORTH IN SUBSECTION (4)(c)(I)(B) OF THIS SECTION TO THE EXTENT OF
THE EXCESS OF THE AGGREGATE AMOUNT OF CREDIT AVAILABLE PURSUANT
TO SECTION 39-22-551 (8)(b) OVER THE AMOUNT OF CREDITS RESERVED OR
AWARDED BY THE OFFICE PURSUANT TO SECTION 39-22-551 (6)(a) OR (7)(c),
RESPECTIVELY. THE OFFICE SHALL DECREASE ACCORDINGLY THE
AGGREGATE AMOUNT OF CREDIT AVAILABLE PURSUANT TO SECTION
39-22-551 (8)(b).
       (II) BEGINNING JULY 1, 2026, THE OFFICE MAY INCREASE THE
AGGREGATE AMOUNT OF CREDIT AVAILABLE PURSUANT TO SECTION
39-22-551 (8)(b) BY ANY AMOUNT NOT RESERVED OR ALLOWED PURSUANT
TO THIS SUBSECTION (4). THE OFFICE SHALL DECREASE ACCORDINGLY THE
LIMIT ON THE AGGREGATE AMOUNT OF CREDITS RESERVED FOR ALL OWNERS
SET FORTH IN SUBSECTION (4)(c)(I)(B) OF THIS SECTION.
        SECTION 14. In Colorado Revised Statutes, 39-22-554, amend
(3)(f) as follows:
       39-22-554. Heat pump technology and thermal energy network
PAGE 29-HOUSE BILL 26-1289
tax credit - tax preference performance statement - legislative
declaration - definitions - repeal.
        (3) (f) (I) If the June 2025 revenue forecast, and each June revenue
forecast through the June 2031 revenue forecast as prepared by either
legislative council staff or the office of state planning and budgeting,
projects that state revenues, as defined in section 24-77-103.6 (6)(c), will
not increase by at least four percent for the next fiscal year, the amount of
the credit allowed pursuant to subsection (3)(c)(I)(B), (3)(c)(I)(C),
(3)(c)(II)(B), (3)(c)(II)(C), or (3)(c)(III)(B) of this section, as may be
modified by subsections (3)(d) and (3)(e) of this section, for any tax year
commencing in the calendar year that begins during said next fiscal year is
reduced by fifty percent if the heat pump technology is installed at an
existing residential or nonresidential building; except that if the amount of
the reduced credit is equal to or less than two hundred fifty dollars, then no
credit is available for such a THAT INCOME tax year.
        (II) THIS SUBSECTION (3)(f) IS REPEALED, EFFECTIVE DECEMBER 31,
2031.
       SECTION 15. In Colorado Revised Statutes, 39-22-555, amend
(2)(g)(III), (2)(g)(IV), (3)(e)(III), and (6); and add (2)(g)(V), (3)(e)(IV),
and (4)(c) as follows:
      39-22-555. Electric bicycle tax credit - tax preference
performance statement - legislative declaration - definitions - repeal.
       (2) Definitions. As used in this section, unless the context otherwise
requires:
       (g) "Qualified retailer" means a retailer that sells qualified electric
bicycles and:
        (III) Has paid the taxes due on the monthly sales tax return; and
        (IV) Has registered with the department pursuant to subsection
(3)(e)(III) of this section; AND
      (V) HAS NOT BEEN DISQUALIFIED BY THE DEPARTMENT PURSUANT
TO SUBSECTION (4)(c) OF THIS SECTION.
PAGE 30-HOUSE BILL 26-1289
        (3) (e) (III) Prior to selling a qualified electric bicycle for which a
retailer intends to claim a credit pursuant to this section, the retailer shall:
       (A) Register as a qualified retailer by filing with the department a
registration statement in the form and manner prescribed by the department
AND RECEIVE APPROVAL OF THEIR REGISTRATION FROM THE DEPARTMENT;
AND
          (B) PROVIDE THE OFFICE DETAILED INFORMATION AS THE OFFICE
MAY REQUIRE REGARDING EACH MODEL OF QUALIFIED ELECTRIC BICYCLE
THE RETAILER INTENDS TO SELL FOR THE CREDIT ALLOWED BY THIS SECTION.
THE OFFICE MAY REQUIRE A QUALIFIED RETAILER TO PERIODICALLY UPDATE
THE INFORMATION REQUIRED BY THIS SUBSECTION (3)(e)(III)(B).
          (IV)
            A QUALIFIED RETAILER MAY AUTHORIZE THE OFFICE TO
PUBLICIZE THE QUALIFIED RETAILER'S INTENTION TO SELL QUALIFIED
ELECTRIC BICYCLES PURSUANT TO THIS SECTION ON THE OFFICE'S WEBSITE.
      (4) (c) (I) AFTER THE NOTICE AND HEARING HELD IN ACCORDANCE
WITH SECTIONS 24-4-104 AND 24-4-105, THE DEPARTMENT MAY DISQUALIFY
A QUALIFIED RETAILER IF THE DEPARTMENT DETERMINES:
          (A) THE QUALIFIED RETAILER REQUESTED ADVANCE PAYMENT OR
CLAIMED A CREDIT WITH RESPECT TO A TRANSACTION THAT DOES NOT
QUALIFY FOR THE CREDIT ALLOWED BY THIS SECTION;
      (B) THE QUALIFIED RETAILER PROVIDED FALSE OR MISLEADING
INFORMATION TO THE DEPARTMENT OR THE OFFICE;
          THE QUALIFIED RETAILER FAILED TO COMPLY WITH THE
          (C)
REQUIREMENTS SET FORTH IN SUBSECTION (3)(e)(III)(B) OF THIS SECTION;
OR
      (D) THE QUALIFIED RETAILER NO LONGER HOLDS A SALES TAX
LICENSE.
          (II) THE DEPARTMENT MAY CONSULT WITH THE OFFICE FOR THE
PURPOSE OF MAKING A DETERMINATION PURSUANT TO THIS SUBSECTION
(4)(c).
PAGE 31-HOUSE BILL 26-1289
      (III) A RETAILER THAT HAS BEEN DISQUALIFIED PURSUANT TO THIS
SUBSECTION (4)(c) MAY NOT REAPPLY TO BE A QUALIFIED RETAILER. THE
DEPARTMENT SHALL NOT APPROVE A REGISTRATION SUBMITTED BY A
DISQUALIFIED RETAILER.
      (IV) UPON NOTIFICATION BY THE DEPARTMENT OF A RETAILER'S
DISQUALIFICATION, THE OFFICE SHALL REMOVE THE DISQUALIFIED RETAILER
FROM THE LIST PUBLISHED PURSUANT TO SUBSECTION (3)(e)(IV) OF THIS
SECTION.
        (6) (a) If the June 2025 revenue forecast, and each June revenue
forecast through the June 2031 revenue forecast as prepared by either
legislative council staff or the office of state planning and budgeting,
projects that state revenues, as defined in section 24-77-103.6 (6)(c), will
not increase by at least four percent for the next fiscal year, the amount of
the credit allowed pursuant to this section, the discount required pursuant
to subsection (3)(b) of this section, and the administrative fee allowed
pursuant to subsection (3)(d) of this section for any tax year commencing
in the calendar year that begins during said next fiscal year, is reduced by
fifty percent.
        (b) THIS SUBSECTION (6) IS REPEALED, EFFECTIVE DECEMBER 31,
2031.
       SECTION 16. In Colorado Revised Statutes, 39-21-113, add (41)
and (42) as follows:
        39-21-113. Reports and returns - rule - repeal.
     (41) NOTWITHSTANDING THE PROVISIONS OF THIS SECTION, THE
EXECUTIVE DIRECTOR MAY PROVIDE TO THE COLORADO ENERGY OFFICE
DETAILED TAXPAYER INFORMATION PERTINENT TO A CLAIM FOR AN INCOME
TAX CREDIT FOR THE RETAIL SALE OF A QUALIFIED ELECTRIC BICYCLE
PURSUANT TO SECTION 39-22-555. ANY INFORMATION PROVIDED PURSUANT
TO THIS SUBSECTION (41) MUST REMAIN CONFIDENTIAL, AND ALL PERSONS
WHO RECEIVE THIS INFORMATION ARE SUBJECT TO THE LIMITATIONS
SPECIFIED IN SUBSECTION (4) OF THIS SECTION AND THE PENALTIES SPECIFIED
IN SUBSECTION (6) OF THIS SECTION.
        (42) NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION,
PAGE 32-HOUSE BILL 26-1289
THE EXECUTIVE DIRECTOR MAY PROVIDE TO THE COLORADO ENERGY OFFICE
SUCH DETAILED TAXPAYER INFORMATION PERTINENT TO A CLAIM FOR AN
INCOME TAX CREDIT FOR THE INSTALLATION OF A HEAT PUMP PURSUANT TO
SECTION 39-22-554. ANY INFORMATION PROVIDED PURSUANT TO THIS
SUBSECTION (42) MUST REMAIN CONFIDENTIAL, AND ALL PERSONS WHO
RECEIVE THIS INFORMATION ARE SUBJECT TO THE LIMITATIONS SPECIFIED IN
SUBSECTION (4) OF THIS SECTION AND THE PENALTIES SPECIFIED IN
SUBSECTION (6) OF THIS SECTION.
        SECTION 17. In Colorado Revised Statutes, 39-22-556, amend
(3)(a), (4)(b), (7), and (9) as follows:
        39-22-556. Tax credit for sustainable aviation fuel production
facility - tax preference performance statement - legislative declaration
- definitions - repeal.
        (3) (a) For tax years commencing on or after January 1, 2024, but
before January 1, 2033 JANUARY 1, 2027, a qualified taxpayer is allowed a
credit against the income tax imposed under this article 22 for an amount
of the actual cost paid to construct, reconstruct, or erect a sustainable
aviation fuel production facility in the state equal to:
        (I) Thirty percent for a facility for which construction begins on or
after January 1, 2024, but before January 1, 2027;
       (II) Twenty-four percent for a facility for which construction begins
on or after January 1, 2027, but before January 1, 2028;
        (III) Eighteen percent for a facility for which construction begins on
or after January 1, 2028, but before January 1, 2029; and
        (IV) Twelve percent for a facility for which construction begins on
or after January 1, 2029, but before January 1, 2033.
       (4) (b) The aggregate amount of all tax credit certificates issued by
the office pursuant to this subsection (4) must not exceed one million
dollars for the 2024 income tax year, two million dollars per year for the
2025 and 2026 income tax years, and three million dollars per year for
income tax years 2027 through 2032 YEAR.
PAGE 33-HOUSE BILL 26-1289
        (7) Notwithstanding the requirement in section 24-1-136 (11)(a)(I),
for the purpose of providing data that allows the general assembly and the
state auditor to measure the effectiveness of the credit created in subsection
(3) of this section pursuant to section 39-21-304 (3), the office on or before
January 1, 2026, and on or before January 1 of each year thereafter until
January 1, 2034 JANUARY 1, 2027, shall submit to the general assembly and
the state auditor a report detailing the construction, reconstruction, and
erection of sustainable aviation fuel production facilities as reported by
qualified taxpayers claiming the credit in this section. The tax credit meets
its purpose if the construction, reconstruction, and erection of sustainable
aviation fuel production facilities in the state increase significantly in tax
years for which the credit is allowed.
       (9)This section is repealed, effective December 31, 2038
DECEMBER 31, 2033.
      SECTION 18. In Colorado Revised Statutes, add 39-22-556.5 as
follows:
        39-22-556.5. Tax credit for the purchase of sustainable aviation
fuel - tax preference performance statement - legislative declaration -
definitions - repeal.
       (1) (a)   IN ACCORDANCE WITH SECTION 39-21-304 (1), WHICH
REQUIRES EACH BILL THAT CREATES A NEW TAX EXPENDITURE TO INCLUDE
A TAX PREFERENCE PERFORMANCE STATEMENT AS PART OF A STATUTORY
LEGISLATIVE DECLARATION, THE GENERAL ASSEMBLY FINDS AND DECLARES
THAT THE PURPOSE OF THIS TAX EXPENDITURE IS TO INDUCE CERTAIN
DESIGNATED BEHAVIOR BY TAXPAYERS, SPECIFICALLY THE PURCHASE OF
SUSTAINABLE AVIATION FUEL FOR USE IN THE STATE, BY PROVIDING TAX
RELIEF FOR CERTAIN BUSINESSES AND INDIVIDUALS THAT PURCHASE
SUSTAINABLE AVIATION FUEL FOR USE IN THE STATE.
       (b) THE GENERAL ASSEMBLY AND THE STATE AUDITOR SHALL
MEASURE THE EFFECTIVENESS OF THE CREDIT IN ACHIEVING THE PURPOSES
SPECIFIED IN SUBSECTION (1)(a) OF THIS SECTION BASED ON THE
INFORMATION REQUIRED BY AND REPORTED TO THE OFFICE PURSUANT TO
SUBSECTION (5) OF THIS SECTION.
       (2) AS USED IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE
PAGE 34-HOUSE BILL 26-1289
REQUIRES:
      (a) "CARBON INTENSITY" MEANS THE AMOUNT OF GREENHOUSE
GASES GENERATED PER GALLON OF SUSTAINABLE AVIATION FUEL PRODUCED.
      (b) "COLORADO ENERGY OFFICE" OR "OFFICE" MEANS THE
COLORADO ENERGY OFFICE CREATED IN SECTION 24-38.5-101.
      (c) "DEPARTMENT" MEANS THE DEPARTMENT OF REVENUE.
      (d) "QUALIFIED TAXPAYER" MEANS A PERSON WHO PURCHASES
SUSTAINABLE AVIATION FUEL FOR UPLIFT AND USE IN THE STATE IF THAT
PERSON IS SUBJECT TO TAX PURSUANT TO THIS ARTICLE 22 OR IS A PERSON
OR POLITICAL SUBDIVISION OF THE STATE THAT IS EXEMPT FROM TAXATION
PURSUANT TO SECTION 39-22-112 (1); EXCEPT THAT "QUALIFIED
PURCHASER" DOES NOT INCLUDE A SUSTAINABLE AVIATION FUEL PRODUCER
OR BLENDER.
      (e) "SUSTAINABLE AVIATION FUEL" HAS THE SAME MEANING AS SET
FORTH IN SECTION 40B (d) OF THE INTERNAL REVENUE CODE.
       (3) (a) (I) FOR TAX YEARS COMMENCING ON OR AFTER JANUARY 1,
2027, BUT BEFORE JANUARY 1, 2033, A QUALIFIED TAXPAYER IS ALLOWED
A CREDIT AGAINST THE INCOME TAX IMPOSED UNDER THIS ARTICLE 22 IN AN
AMOUNT NOT LESS THAN ONE DOLLAR AND FIFTY CENTS, INCREASED BY ONE
CENT FOR EACH WHOLE PERCENTAGE OF CARBON INTENSITY REDUCTION IN
EXCESS OF FIFTY PERCENT, BUT NO GREATER THAN ONE HUNDRED PERCENT,
FOR EACH GALLON OF SUSTAINABLE AVIATION FUEL THAT THE QUALIFIED
TAXPAYER PURCHASED FOR USE IN THE STATE DURING THE INCOME TAX
YEAR, EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3)(b) OF THIS
SECTION.
      (II) FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2028, THE
OFFICE MAY ALLOW AN ADDITIONAL CREDIT OF FIFTY CENTS FOR EACH
GALLON OF SUSTAINABLE AVIATION FUEL PRODUCED IN THE STATE THAT THE
QUALIFIED TAXPAYER PURCHASED FOR USE IN THE STATE DURING THE
INCOME TAX YEAR, EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3)(b)
OF THIS SECTION.
      (b) THE OFFICE SHALL ANNUALLY REVIEW AND EVALUATE THE
PAGE 35-HOUSE BILL 26-1289
EFFECTIVENESS OF THE TAX CREDIT ALLOWED PURSUANT TO THIS SECTION
AND MAY, NOTWITHSTANDING SUBSECTION (3)(a) OF THIS SECTION, FOR THE
SUBSEQUENT TAX YEAR, MODIFY THE AMOUNT PER GALLON, INCLUDING THE
INCREASE AS A RESULT OF CARBON INTENSITY REDUCTION, THAT A
QUALIFIED TAXPAYER IS ALLOWED AS A CREDIT AGAINST THE INCOME TAX
IMPOSED UNDER THIS ARTICLE 22 PURSUANT TO THIS SECTION. THE OFFICE
SHALL POST THE MODIFIED AMOUNT ON ITS WEBSITE.
      (c) FOR PURPOSES OF THIS SECTION, SUSTAINABLE AVIATION FUEL IS
DEEMED TO BE PURCHASED FOR USE IN THE STATE IF IT IS DELIVERED TO AND
USED FOR FUELING AIRCRAFT AT A COLORADO AIRPORT, AIRFIELD, OR
AIRPARK NOTWITHSTANDING THE SUBSEQUENT OPERATION OF SUCH
AIRCRAFT OUTSIDE THE STATE. EXCEPT AS PROVIDED IN THIS SUBSECTION
(3)(c), FUEL LOADED INTO A CARGO TANK OR OTHERWISE EXPORTED FROM
THE STATE IS NOT DEEMED TO BE PURCHASED FOR USE IN THE STATE.
      (d) IF A CREDIT IS ALLOWED PURSUANT TO THIS SECTION TO A
QUALIFIED PURCHASER THAT IS AN AIRPORT, AIRFIELD, OR AIRPARK, NO
ADDITIONAL CREDIT IS ALLOWED TO A QUALIFIED PURCHASER THAT
PURCHASES THE SUSTAINABLE AVIATION FUEL, DIRECTLY OR INDIRECTLY,
FROM THE QUALIFIED PURCHASER TO WHICH THE CREDIT WAS ALLOWED. THE
QUALIFIED PURCHASER FOR WHICH A CREDIT WAS RESERVED SHALL DISCLOSE
TO ANY PURCHASER THAT IT HAS RESERVED A CREDIT WITH RESPECT TO THE
SUSTAINABLE AVIATION FUEL SOLD.
       (4) (a) PRIOR TO PURCHASING SUSTAINABLE AVIATION FUEL FOR USE
IN THE STATE, A QUALIFIED TAXPAYER SHALL SUBMIT AN APPLICATION TO
THE OFFICE FOR A TAX CREDIT CERTIFICATE TO RESERVE THE CREDIT
ALLOWED BY THIS SECTION ON A FORM AND IN A MANNER PRESCRIBED BY
THE OFFICE. THE APPLICATION MUST INCLUDE INFORMATION TO ALLOW THE
OFFICE TO MAKE A DETERMINATION THAT THE APPLICANT IS A QUALIFIED
TAXPAYER, DOCUMENTATION REGARDING THE CARBON INTENSITY OF THE
SUSTAINABLE AVIATION FUEL THAT WILL BE PURCHASED, AND AN ESTIMATE
OF THE AMOUNT OF SUSTAINABLE AVIATION FUEL THE QUALIFIED TAXPAYER
PLANS TO PURCHASE FOR USE IN THE STATE DURING THE INCOME TAX YEAR.
      (b)   AFTER REVIEWING THE APPLICATION, THE OFFICE SHALL
DETERMINE WHETHER THE APPLICANT QUALIFIES FOR THE CREDIT AND THE
AMOUNT OF CREDIT TO BE RESERVED FOR THE BENEFIT OF THE QUALIFIED
TAXPAYER, WHICH MAY BE ALL, PART, OR NONE OF THE AMOUNT REQUESTED
PAGE 36-HOUSE BILL 26-1289
IN THE APPLICATION. THE OFFICE SHALL NOTIFY THE APPLICANT IN WRITING
OF ITS DECISION AND THE AMOUNT RESERVED, IF ANY. THE AGGREGATE
AMOUNT OF CREDIT THE OFFICE MAY RESERVE PURSUANT TO THIS
SUBSECTION (4) MUST NOT EXCEED THREE MILLION DOLLARS PER CALENDAR
YEAR. IN THE CASE OF A QUALIFIED TAXPAYER WITH AN INCOME TAX YEAR
OTHER THAN A CALENDAR YEAR, CREDIT RESERVED PURSUANT TO THIS
SUBSECTION (4) MAY BE CLAIMED FOR THE TAX YEAR THAT BEGINS DURING
THE CALENDAR YEAR.
      (c) FOLLOWING THE CLOSE OF THE TAX YEAR, IN ACCORDANCE WITH
THE STANDARDS DEVELOPED BY THE OFFICE PURSUANT TO SUBSECTION
(4)(e) OF THIS SECTION, THE QUALIFIED TAXPAYER SHALL SUBMIT
DOCUMENTATION SUBSTANTIATING THE QUALIFIED TAXPAYER'S PURCHASES
OF SUSTAINABLE AVIATION FUEL FOR USE IN THE STATE DURING THE TAX
YEAR. UPON A DETERMINATION BY THE OFFICE THAT THE PURCHASES
QUALIFY FOR THE CREDIT ALLOWED BY THIS SECTION, THE OFFICE SHALL
ISSUE THE TAXPAYER A TAX CREDIT CERTIFICATE FOR THE LESSER OF THE
CREDIT ALLOWED PURSUANT TO SUBSECTION (3)(a) OF THIS SECTION WITH
RESPECT TO THE AMOUNT OF SUSTAINABLE AVIATION FUEL ACTUALLY
PURCHASED FOR USE IN THE STATE OR THE AMOUNT OF CREDIT RESERVED
FOR THE BENEFIT OF THE QUALIFIED TAXPAYER PURSUANT TO THIS
SUBSECTION (4).
      (d) THE OFFICE SHALL, IN A SUFFICIENTLY TIMELY MANNER TO
ALLOW THE DEPARTMENT TO PROCESS RETURNS CLAIMING THE INCOME TAX
CREDIT ALLOWED IN THIS SECTION, PROVIDE THE DEPARTMENT WITH AN
ELECTRONIC REPORT OF EACH QUALIFIED TAXPAYER THAT THE OFFICE
APPROVED FOR THE INCOME TAX CREDIT ALLOWED IN THIS SECTION FOR THE
PRECEDING CALENDAR YEAR THAT INCLUDES THE FOLLOWING INFORMATION:
      (I) THE TAXPAYER'S NAME;
      (II) THE TAXPAYER'S SOCIAL SECURITY NUMBER OR THE TAXPAYER'S
COLORADO ACCOUNT NUMBER AND FEDERAL EMPLOYER IDENTIFICATION
NUMBER; AND
      (III) THE AMOUNT OF THE TAX CREDIT CERTIFICATE.
      (e) THE OFFICE SHALL DEVELOP STANDARDS FOR THE APPROVAL OF
QUALIFIED TAXPAYERS FOR WHOM A TAX CREDIT UNDER THIS SECTION IS
PAGE 37-HOUSE BILL 26-1289
ALLOWED AND THE AWARDING OF TAX CREDIT CERTIFICATES PURSUANT TO
THIS SUBSECTION (4) AND SHALL POST THOSE STANDARDS ON ITS WEBSITE.
       (5) NOTWITHSTANDING THE REQUIREMENT IN SECTION 24-1-136
(11)(a)(I), FOR THE PURPOSE OF PROVIDING DATA THAT ALLOWS THE
GENERAL ASSEMBLY AND THE STATE AUDITOR TO MEASURE THE
EFFECTIVENESS OF THE CREDIT CREATED IN SUBSECTION (3) OF THIS SECTION
PURSUANT TO SECTION 39-21-304 (3), THE OFFICE, ON OR BEFORE JANUARY
1, 2028, AND ON OR BEFORE JANUARY 1 OF EACH YEAR THEREAFTER UNTIL
JANUARY 1, 2034, SHALL SUBMIT TO THE GENERAL ASSEMBLY AND THE
STATE AUDITOR A REPORT DETAILING THE PURCHASE OF SUSTAINABLE
AVIATION FUEL BY TAXPAYERS CLAIMING THE CREDIT IN THIS SECTION. THE
TAX CREDIT MEETS ITS PURPOSE IF THE PURCHASE OF SUSTAINABLE AVIATION
FUEL IN THE STATE INCREASES SIGNIFICANTLY IN TAX YEARS FOR WHICH THE
CREDIT IS ALLOWED.
      (6) IF THE CREDIT AUTHORIZED BY THIS SECTION EXCEEDS THE
INCOME TAX DUE ON THE INCOME OF THE QUALIFIED TAXPAYER FOR THE
TAXABLE YEAR, THE EXCESS CREDIT MAY NOT BE CARRIED FORWARD AND
MUST BE REFUNDED TO THE QUALIFIED TAXPAYER.
      (7) THIS SECTION IS REPEALED, EFFECTIVE DECEMBER 31, 2038.
        SECTION 19. In Colorado Revised Statutes, 39-22-629, amend
(1)(a) as follows:
      39-22-629. Advance payments of income tax credits - definitions.
      (1) As used in this section, unless the context otherwise requires:
      (a) "Applicable credit" means:
       (I) FOR INCOME TAX YEARS COMMENCING BEFORE JANUARY 1, 2027,
the credits allowed in sections 39-22-516.7, 39-22-516.8, and 39-22-555;
AND
      (II) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY
1, 2027, THE CREDITS ALLOWED IN SECTIONS 39-22-516.7, 39-22-516.8,
39-22-550, AND 39-22-555.
PAGE 38-HOUSE BILL 26-1289
        SECTION 20. In Colorado Revised Statutes, 39-26-710, amend
(1)(a) and (2) as follows:
      39-26-710. Railroads - construction and building materials -
tangible personal property - work equipment - rolling stock - tax
preference performance statement - legislative declaration.
       (1) The following shall be exempt from taxation under the
provisions of part 1 of this article:
        (a) The sale of construction and building materials to a common
carrier by rail operating in interstate or foreign commerce for use by the
common carrier in construction and maintenance of its railroad tracks;
however, any actual use of such construction and building materials shall,
at the time of the actual use, be subject to the tax imposed by part 2 of this
article ARTICLE 26 and any use tax imposed pursuant to article 2 of title 29,
C.R.S. EXCEPT AS PROVIDED IN SUBSECTION (2)(c) OF THIS SECTION;
       (2) The following shall be exempt from taxation under the
provisions of part 2 of this article ARTICLE 26:
       (a) The storage, use, or consumption of any tangible personal
property that is to be affixed or attached as a component part of a
locomotive, a freight car, railroad work equipment, or other railroad rolling
stock; and
       (b) The storage, use, or consumption of locomotives, freight cars,
railroad work equipment, and other railroad rolling stock used or purchased
for use in interstate commerce by a railroad company; AND
     (c) FOR TAX PERIODS BEGINNING ON OR AFTER JULY 1, 2027, THE
STORAGE, USE, OR CONSUMPTION OF CONSTRUCTION AND BUILDING
MATERIALS BY OR ON BEHALF OF A COMMON CARRIER BY RAIL OPERATING
IN INTERSTATE OR FOREIGN COMMERCE WHEN THE STORAGE, USE, OR
CONSUMPTION OF THE CONSTRUCTION AND BUILDING MATERIALS IS
PURSUANT TO A CONTRACT WITH THE STATE, A DEPARTMENT OR INSTITUTION
OF THE STATE, A POLITICAL SUBDIVISION OF THE STATE, OR A SPECIAL
DISTRICT THAT ALLOWS THE STATE, A DEPARTMENT OR INSTITUTION OF THE
STATE, A POLITICAL SUBDIVISION OF THE STATE, OR A SPECIAL DISTRICT TO
USE THE RAILROAD'S PROPERTY OR TRACKS FOR THE PROVISION OF PUBLIC
PAGE 39-HOUSE BILL 26-1289
PASSENGER RAIL SERVICE. THE DEPARTMENT OF TRANSPORTATION SHALL
NOTIFY THE DEPARTMENT OF REVENUE OF THE IDENTITY OF ANY COMMON
CARRIER ELIGIBLE FOR THE EXEMPTION ALLOWED BY THIS SUBSECTION
(2)(c).
       SECTION 21. In Colorado Revised Statutes, 39-26-723, amend (1)
and (3); and add (2.5) as follows:
      39-26-723. Colorado wood products - repeal - tax preference
performance statement - legislative declaration.
        (1) For STATE fiscal years commencing on or after July 1, 2008, but
prior to the STATE fiscal year commencing on July 1, 2020, and for STATE
fiscal years commencing on or after July 1, 2021, but prior to the fiscal year
commencing on July 1, 2026, CALENDAR YEAR COMMENCING ON JANUARY
1, 2031, all sales, storage, and use of wood from salvaged trees killed or
infested in Colorado by mountain pine beetles or spruce beetles, including
but not limited to products such as lumber, furniture built from the salvaged
trees, and wood chips or wood pellets generated from the salvaged trees, are
exempt from taxation under the provisions of parts 1 and 2 of this article 26.
          (2.5) IN ACCORDANCE WITH SECTION 39-21-304 (1), WHICH REQUIRES
ANY BILL THAT EXTENDS AN EXPIRING TAX EXPENDITURE TO INCLUDE A TAX
PREFERENCE PERFORMANCE STATEMENT AS PART OF A STATUTORY
LEGISLATIVE DECLARATION, THE GENERAL ASSEMBLY FINDS AND DECLARES
THAT THE PURPOSE OF THE TAX CREDIT PROVIDED IN SUBSECTION (1)(a) OF
THIS SECTION IS TO INDUCE CERTAIN DESIGNATED BEHAVIOR BY TAXPAYERS
BY CONTINUING TO ENCOURAGE THE SALE, STORAGE, AND USE OF WOOD
FROM SALVAGED TREES KILLED OR INFESTED IN COLORADO BY MOUNTAIN
PINE BEETLES OR SPRUCE BEETLES. THE GENERAL ASSEMBLY AND THE STATE
AUDITOR SHALL MEASURE THE EFFECTIVENESS OF THE CREDIT IN ACHIEVING
THIS PURPOSE BASED ON THE VALUE OF EXEMPT SALES.
          (3) This section is repealed, effective July 1, 2027 JULY 1, 2034.
        SECTION 22. In Colorado Revised Statutes, 39-26-728, amend (1)
as follows:
          39-26-728. Property for use in space flight - definitions - repeal.
PAGE 40-HOUSE BILL 26-1289
       (1) (a) For the state fiscal years commencing on or after July 1,
2014, EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (1)(b) OF THIS
SECTION, all sales, storage, and use of qualified property, ON OR AFTER JULY
1, 2024, BUT BEFORE JANUARY 1, 2027, for use in space flight is exempt
from taxation under parts 1 and 2 of this article ARTICLE 26.
     (b) ON OR AFTER JANUARY 1, 2030, ALL SALES, STORAGE, AND USE
OF QUALIFIED PROPERTY FOR USE IN SPACE FLIGHT IS EXEMPT FROM
TAXATION UNDER PARTS 1 AND 2 OF THIS ARTICLE 26.
      (c) SUBSECTION (1)(a) OF THIS SECTION AND THIS SUBSECTION (1)(c)
ARE REPEALED, EFFECTIVE DECEMBER 31, 2029.
       SECTION 23. In Colorado Revised Statutes, 39-27-102, amend
(1)(b)(I) as follows:
      39-27-102. Tax imposed on gasoline and special fuel - deposits
- penalties.
        (1) (b) (I) In the case of gasoline or special fuel removed from a
terminal, the tax is imposed upon the person first receiving the gasoline or
special fuel at the terminal even if such person is also the supplier. In the
case of gasoline or special fuel removed from a terminal by a common
carrier, the consignor who owns the gasoline or special fuel removed by the
common carrier is deemed to be the remover and first recipient thereof. The
amount of gasoline or special fuel removed is deemed to be the amount
shipped from the terminal, measured in gallons, as shown by the terminal
manifest; except that, FOR TAX PERIODS BEGINNING BEFORE JANUARY 1,
2027, THE LICENSED DISTRIBUTOR SHALL DEDUCT an allowance of two
percent of the total amount of gasoline or special fuel acquired during any
calendar month, as shown by terminal manifests, is deducted by the licensed
distributor to cover losses in transit and in unloading the gasoline or special
fuel but there is no allowance for liquefied petroleum gas or removal by
bulk transfer, AND, FOR TAX PERIODS BEGINNING ON OR AFTER JANUARY 1,
2027, THE LICENSED DISTRIBUTOR SHALL DEDUCT AN ALLOWANCE OF ONE
AND ONE-HALF PERCENT OF THE TOTAL AMOUNT OF GASOLINE OR SPECIAL
FUEL ACQUIRED DURING ANY CALENDAR MONTH, AS SHOWN BY TERMINAL
MANIFESTS, TO COVER LOSSES IN TRANSIT AND IN UNLOADING THE GASOLINE
OR SPECIAL FUEL, BUT THERE IS NO ALLOWANCE FOR LIQUEFIED PETROLEUM
GAS OR REMOVAL BY BULK TRANSFER. The two percent allowance provided
PAGE 41-HOUSE BILL 26-1289
under this subsection (1)(b)(I) is allowed whether the terminal is within or
without this OUTSIDE OF THE state.
        SECTION 24. In Colorado Revised Statutes, 39-27-105, amend
(2)(a)(I) and (2)(b) as follows:
       39-27-105. Collection of tax on gasoline and special fuel - rules
- repeal.
       (2) (a) (I) It is the duty of every distributor of gasoline or special
fuel other than liquefied petroleum gas to compute the amount of tax
payable on all gasoline or special fuel imported, removed from a terminal,
or otherwise acquired during the preceding calendar month at the rate of tax
per gallon imposed thereon in section 39-27-102 (1). and In computing the
amount of tax FOR TAX PERIODS BEGINNING BEFORE JANUARY 1, 2027, the
allowance of two percent provided for in section 39-27-102 (1)(b)(I)(A)
shall SECTION 39-27-102 (1)(b)(I) MUST be taken into account. IN
COMPUTING THE AMOUNT OF TAX FOR TAX PERIODS BEGINNING ON OR AFTER
JANUARY 1, 2027, THE DISTRIBUTOR SHALL TAKE INTO ACCOUNT THE
ALLOWANCE OF ONE PERCENT PROVIDED FOR IN SECTION 39-27-102
(1)(b)(I).
       (b) (I) From the amount of tax computed under subsection (2)(a) of
this section, the distributor shall deduct one-half of one percent to cover
expenses of payment of the tax and bad debt losses and shall pay the
remaining balance to the department of revenue and file the statement
required by subsection (1) of this section on or before the twenty-sixth day
of each calendar month. If any distributor is delinquent in remitting the tax,
except in unusual circumstances shown to the satisfaction of the executive
director of the department of revenue, the retailer shall not be allowed to
deduct any amount under this subsection (2)(b).
       (II) FOR TAX PERIODS BEGINNING ON OR AFTER JANUARY 1, 2027,
THE DISTRIBUTOR SHALL FILE THE STATEMENT REQUIRED BY SUBSECTION (1)
OF THIS SECTION AND SHALL PAY THE AMOUNT OF TAX COMPUTED UNDER
SUBSECTION (2)(a) OF THIS SECTION ON OR BEFORE THE TWENTY-SIXTH DAY
OF EACH CALENDAR MONTH.
        SECTION 25. In Colorado Revised Statutes, 39-28-103.3, amend
(4) as follows:
PAGE 42-HOUSE BILL 26-1289
       39-28-103.3. Inventory tax - definition.
       (4) Every wholesaler and wholesale subcontractor shall file a report,
on a form created by the department, of the inventory identified in
accordance with subsection (3) of this section and pay the tax imposed
under this section for the inventory. A wholesaler shall separately identify
the number of packages with a Colorado tax stamp and the unaffixed
Colorado tax stamps. The wholesaler or wholesale subcontractor shall remit
the tax payment on or before the tenth day of the month following the
required inventory. FOR TAX PERIODS BEGINNING BEFORE JANUARY 1, 2027,
if payment is made on or before the due date, the wholesaler or wholesale
subcontractor may deduct three percent of the tax imposed under this
section, but, if any wholesaler or wholesale subcontractor is delinquent in
remitting such payment, other than in unusual circumstances shown to the
satisfaction of the executive director of the department, the wholesaler or
wholesale subcontractor shall not be allowed to retain any amounts to cover
the expense in collecting and remitting the tax and the TAX, AND, IN
ADDITION, FOR ANY TAX PERIOD, THE penalty imposed under section
39-28-108 (2) applies.
        SECTION 26. In Colorado Revised Statutes, 39-28-104, amend
(1)(a)(I) as follows:
      39-28-104. Evidence of payment of tax - credits - redemptions -
repeal.
        (1) (a) (I) Payment of the taxes imposed by sections 39-28-103 and
39-28-103.5 and section 21 of article X of the state constitution shall be
evidenced by the affixing of stamps to, or by an imprint or impression by
suitable metering machines approved by the department on, packages
containing cigarettes. The department shall procure stamps of such design
and legend as it deems necessary and suitable for the purpose. Except as
provided in THIS subsection (1), (b) of this section the department shall sell
such stamps for cash to licensed wholesalers at a discount of four percent
of their face value for sales occurring after July 1, 2005, but before January
1, 2021, and four-tenths percent of their face value for sales occurring on
and after January 1, 2021, BUT BEFORE JANUARY 1, 2027, if payment is
made on or before the tenth day of the month following the month in which
the purchase is made to cover the licensed wholesaler's expense in the
collection and remittance of such tax; but, if any licensed wholesaler is
PAGE 43-HOUSE BILL 26-1289
delinquent in remitting such payment, other than in unusual circumstances
shown to the satisfaction of the executive director of the department, the
licensed wholesaler shall not be allowed to retain any amounts THAT MAY
BE AVAILABLE FOR TAX PERIODS BEFORE JANUARY 1, 2027, to cover his or
her THE WHOLESALER'S expense in collecting and remitting said tax, and, in
addition, FOR ANY TAX PERIOD, the penalty imposed under section
39-28-108 (2) shall apply. The department shall keep accurate records of all
stamps sold to each wholesaler. No wholesaler shall sell or transfer any
stamps purchased pursuant to this article 28.
       SECTION 27. In Colorado Revised Statutes, 39-28-108, amend
(2)(b) as follows:
       39-28-108. Penalty.
      (2) (b) If a person fails to pay the tax in the time allowed for the
discount in REQUIRED PURSUANT TO section 39-28-104 (1) or 39-28-103.3,
a penalty equal to ten percent thereof plus one-half of one percent per
month from the date when due, not to exceed eighteen percent in the
aggregate, together with interest on such delinquent taxes at the rate
computed under section 39-21-110.5, shall apply.
        SECTION 28. In Colorado Revised Statutes, 39-28.5-106, amend
(2) as follows:
       39-28.5-106. Returns and remittance of tax - civil penalty.
        (2) Every distributor and remote retail seller shall file a return with
the department by the twentieth day of the month following the month
reported and shall therewith remit the amount of tax due, less three and
one-third percent of any sum so remitted that consists of tax collected after
July 1, 2005, but before January 1, 2021, and less one and six-tenths percent
of any sum so remitted that consists of tax collected on or after January 1,
2021, BUT BEFORE JANUARY 1, 2027, to cover the distributor's or remote
retail seller's expense in the collection and remittance of said tax; except
that no part of the tax imposed pursuant to section 39-28.5-102.5 and
section 21 of article X of the state constitution shall be subject to the
discount provided for in this subsection (2). If any distributor or remote
retail seller is delinquent in remitting said tax, other than in unusual
circumstances shown to the satisfaction of the executive director of the
PAGE 44-HOUSE BILL 26-1289
department, the distributor or remote retail seller shall not be allowed to
retain any amounts ALLOWED FOR TAX PERIODS BEFORE JANUARY 1, 2027,
to cover his or her THE DISTRIBUTOR'S expense in collecting and remitting
said tax, and in addition, FOR ANY TAX PERIOD, the penalty imposed under
section 39-28.5-110 (2)(b) shall apply.
        SECTION 29. In Colorado Revised Statutes, 39-28.6-107, amend
(2) as follows:
       39-28.6-107. Returns and remittance of tax - civil penalty - rules.
       (2) Every distributor shall file a return with the department by the
twentieth day of the month following the month reported and shall
therewith remit the amount of tax due. less FOR TAX PERIODS BEGINNING
BEFORE JANUARY 1, 2027, A DISTRIBUTOR IS ENTITLED TO CLAIM A
DISCOUNT OF one and one-tenth percent of any amount remitted to cover the
distributor's expense in the collection and remittance of the tax. For tax
periods beginning before January 1, 2027, If any distributor is delinquent
in remitting the tax, other than in unusual circumstances shown to the
satisfaction of the executive director of the department, the distributor is not
allowed to retain any amounts ALLOWED FOR TAX PERIODS BEFORE JANUARY
1, 2027, to cover his or her THE DISTRIBUTOR'S expense in collecting and
remitting the tax and, in addition, FOR ANY TAX PERIOD, the penalty imposed
under section 39-28.6-111 (2)(b) applies.
        SECTION 30. In Colorado Revised Statutes, 39-30-104, amend
(2)(c)(I) introductory portion and (2.6)(a) introductory portion; and add
(1)(a)(III), (1)(b)(VIII), (4)(c), and (8) as follows:
       39-30-104. Credit against tax - investment in certain property
- definitions - repeal - tax preference performance statement -
legislative declaration.
      (1) (a) (III) NOTWITHSTANDING SUBSECTION (1)(a)(I) OF THIS
SECTION, FOR CREDITS ALLOWED BEGINNING IN INCOME TAX YEARS
COMMENCING ON OR AFTER JANUARY 1, 2027, A TAXPAYER IS NOT ALLOWED
A CREDIT WITH RESPECT TO A QUALIFIED INVESTMENT IN A COMMERCIAL
TRUCK, TRUCK TRACTOR, TRACTOR, OR SEMITRAILER WITH A GROSS VEHICLE
WEIGHT RATING OF FIFTY-FOUR THOUSAND POUNDS OR GREATER THAT IS
DESIGNATED AS CLASS A PERSONAL PROPERTY AS SPECIFIED IN SECTION
PAGE 45-HOUSE BILL 26-1289
42-3-106 (2)(a).
     (b) (VIII) THIS SUBSECTION (1)(b) IS REPEALED, EFFECTIVE
DECEMBER 31, 2026.
      (2) (c) (I) For income tax years commencing on or after January 1,
2014, except as provided in sections 24-46-104.3 and 24-46-108 and
subsection (2)(c)(II) of this section, the amount OF THE CREDIT SET FORTH
IN SUBSECTION (1) OF THIS SECTION that may be claimed by a taxpayer for
an income tax year and that is not applied or refunded under section
24-46-108 is limited to the lesser of:
       (2.6) (a) Except as provided in section 24-46-104.3 and subsection
(2.6)(b) of this section and notwithstanding any other provision in this
section, in each income tax year commencing on or after January 1, 2015,
but before January 1, 2021, AND IN EACH INCOME TAX YEAR COMMENCING
ON OR AFTER JANUARY 1, 2027, a taxpayer who places a new renewable
energy investment in service on or after January 1, 2015, but before January
1, 2021, OR WHO PLACES A NEW RENEWABLE ENERGY INVESTMENT IN
SERVICE ON OR AFTER JANUARY 1, 2027, that results in a credit pursuant to
subsection (1) of this section may elect to receive a refund of eighty percent
of the amount of such credit as specified in this subsection (2.6)(a) and
forego the remaining twenty percent as a cost of such election. If eighty
percent of the amount of the credit in subsection (1) of this section is:
      (4) (c) IF THE AMOUNT OF THE CREDIT ALLOWED PURSUANT TO
SUBSECTION (1) OF THIS SECTION EXCEEDS THE AMOUNT OF INCOME TAXES
OTHERWISE DUE ON THE INCOME OF THE TAXPAYER IN THE INCOME TAX
YEAR FOR WHICH THE CREDIT IS CLAIMED, THE AMOUNT OF THE CREDIT NOT
USED AS AN OFFSET AGAINST INCOME TAXES IN THE CURRENT INCOME TAX
YEAR MAY BE CARRIED FORWARD AND USED AS A CREDIT AGAINST INCOME
TAX LIABILITY IN SUBSEQUENT YEARS FOR A PERIOD NOT TO EXCEED
FOURTEEN YEARS AND MUST BE APPLIED FIRST TO THE EARLIEST POSSIBLE
INCOME TAX YEAR. ANY CREDIT REMAINING AFTER THAT PERIOD IS NOT
REFUNDED OR CREDITED TO THE TAXPAYER.
       (8) IN ACCORDANCE WITH SECTION 39-21-304 (1), WHICH REQUIRES
ANY BILL THAT EXTENDS AN EXPIRING TAX EXPENDITURE TO INCLUDE A TAX
PREFERENCE PERFORMANCE STATEMENT AS PART OF A STATUTORY
LEGISLATIVE DECLARATION, THE GENERAL ASSEMBLY FINDS AND DECLARES
PAGE 46-HOUSE BILL 26-1289
THAT THE PURPOSE OF THE TAX CREDIT PROVIDED IN SUBSECTION (1) OF THIS
SECTION IS TO INDUCE CERTAIN DESIGNATED BEHAVIOR BY TAXPAYERS BY
CONTINUING TO SUPPORT THE DEVELOPMENT OF NEW RENEWABLE ENERGY
INVESTMENTS IN ENTERPRISE ZONES. THE GENERAL ASSEMBLY AND THE
STATE AUDITOR SHALL MEASURE THE EFFECTIVENESS OF THE CREDIT IN
ACHIEVING THIS PURPOSE BASED ON THE NUMBER AND VALUE OF CREDITS
ISSUED AND NEW RENEWABLE ENERGY INVESTMENTS IN ENTERPRISE ZONES.
       SECTION 31. In Colorado Revised Statutes, 39-30-105.1, amend
(1)(b) as follows:
       39-30-105.1. Credit for new enterprise zone business employees
- definitions.
       (1) (b) (I) EXCEPT AS PROVIDED IN SUBSECTION (1)(b)(II) OF THIS
SECTION, in addition to the credit available under paragraph (a) of this
subsection SUBSECTION (1)(a) OF THIS SECTION, for any income tax year
commencing on or after January 1, 2014, a taxpayer qualified under said
paragraph (a) SUBSECTION (1)(a) OF THIS SECTION is allowed for the first
two ANY TWO OF THE FIRST TEN full income tax years while located in an
enterprise zone a credit in an amount equal to one thousand dollars for each
business facility employee who is insured under a health insurance plan or
program provided through his or her THE EMPLOYEE'S employer. To be
eligible for the credit, the employer must contribute fifty percent or more of
the total cost of a health insurance plan or program, and such plan or
program must be in accordance with the provisions of article 8 of title 10 or
part 1, 2, 3, or 4 of article 16 of title 10, C.R.S., or be a self-insurance
program and include partial or complete coverage for hospital and physician
services.
       (II) FOR INCOME TAX YEARS BEGINNING ON OR AFTER JANUARY 1,
2027, A TAXPAYER THAT HAS FIFTY OR MORE BUSINESS FACILITY EMPLOYEES
AT ANY TIME DURING AN INCOME TAX YEAR SHALL NOT CLAIM THE CREDIT
PROVIDED FOR IN THIS SUBSECTION (1)(b) FOR THAT TAX YEAR.
        SECTION 32. In Colorado Revised Statutes, 39-30-105.5, amend
(1) introductory portion; and add (1)(c) and (1.5) as follows:
     39-30-105.5. Credit against Colorado income taxes based on
expenditures for research and experimental activities - repeal.
PAGE 47-HOUSE BILL 26-1289
        (1) FOR INCOME TAX YEARS BEGINNING BEFORE JANUARY 1, 2027,
any taxpayer who makes expenditures in research and experimental
activities, as defined in section 174 of the federal "Internal Revenue Code
of 1986", as amended, which activities are conducted in an enterprise zone
for the purpose of carrying out a trade or business, shall be allowed a credit
against the income tax imposed by article 22 of this title TITLE 39 as
follows:
        (c) THIS SUBSECTION (1) IS REPEALED, EFFECTIVE DECEMBER 31,
2033.
        (1.5) FOR INCOME TAX YEARS BEGINNING ON OR AFTER JANUARY 1,
2027, ANY TAXPAYER WHO MAKES AT LEAST ONE HUNDRED FIFTY THOUSAND
DOLLARS IN EXPENDITURES IN RESEARCH AND EXPERIMENTAL ACTIVITIES,
AS DEFINED IN SECTION 174A OF THE FEDERAL "INTERNAL REVENUE CODE
OF 1986", AS AMENDED, WHICH ACTIVITIES ARE CONDUCTED IN AN
ENTERPRISE ZONE FOR THE PURPOSE OF CARRYING OUT A TRADE OR
BUSINESS, SHALL BE ALLOWED A CREDIT AGAINST THE INCOME TAX IMPOSED
BY ARTICLE 22 OF THIS TITLE 39 IN AN AMOUNT EQUAL TO THREE PERCENT
OF THE AMOUNT BY WHICH THE AMOUNT THAT THE TAXPAYER EXPENDED
FOR RESEARCH AND EXPERIMENTAL ACTIVITIES IN THE ENTERPRISE ZONE IN
THE INCOME TAX YEAR EXCEEDS THE AVERAGE OF THE TAXPAYER'S TOTAL
EXPENDITURES FOR RESEARCH AND EXPERIMENTAL ACTIVITIES IN THE
IMMEDIATELY PRECEDING TWO INCOME TAX YEARS IN THE AREA THAT
COMPROMISED THE RELEVANT ENTERPRISE ZONE.
        SECTION 33. In Colorado Revised Statutes, 39-30-105.6, amend
(1) as follows:
      39-30-105.6.     Credit against tax - rehabilitation of vacant
buildings - repeal.
        (1) (a) (I) For income tax years commencing on or after January 1,
1989, BUT BEFORE JANUARY 1, 2027, any taxpayer who is the owner or
tenant of a building which THAT is located in an enterprise zone, which is
at least twenty years old, and which has been unoccupied for at least two
years and who makes qualified expenditures for the purpose of
rehabilitating said building shall be allowed a credit against the income tax
imposed by article 22 of this title TITLE 39 in an amount equal to
twenty-five percent of the aggregate qualified expenditures per building or
PAGE 48-HOUSE BILL 26-1289
fifty thousand dollars per building, whichever is less.
        (II) THIS SUBSECTION (1)(a) IS REPEALED, EFFECTIVE DECEMBER 31,
2033.
       (b) FOR INCOME TAX YEARS BEGINNING ON OR AFTER JANUARY
1,2027, ANY TAXPAYER WHO IS THE OWNER OR TENANT OF A BUILDING THAT
IS LOCATED IN AN ENTERPRISE ZONE, IS AT LEAST TWENTY YEARS OLD, AND
HAS BEEN UNOCCUPIED FOR ANY ONE HUNDRED THIRTY-FIVE CALENDAR
DAYS WITHIN THE ONE HUNDRED EIGHTY CALENDAR DAYS PRECEDING THE
DATE THAT THE TAXPAYER PLACES A REHABILITATION IN SERVICE AND WHO
MAKES QUALIFIED EXPENDITURES FOR THE PURPOSE OF REHABILITATING
SAID BUILDING SHALL BE ALLOWED A CREDIT AGAINST THE INCOME TAX
IMPOSED BY ARTICLE 22 OF THIS TITLE 39 IN AN AMOUNT EQUAL TO
TWENTY-FIVE PERCENT OF THE AGGREGATE QUALIFIED EXPENDITURES PER
BUILDING OR TWO HUNDRED THOUSAND DOLLARS PER BUILDING, WHICHEVER
IS LESS.
       SECTION 34. In Colorado Revised Statutes, 39-22-123.5, amend
(3.5)(b)(I) and (3.5)(c) introductory portion; and add (2.7)(d) as follows:
       39-22-123.5. Earned income tax credit - legislative declaration
- repeal.
       (2.7) (d) (I) FOR INCOME TAX YEARS COMMENCING ON OR AFTER
JANUARY 1, 2028, A RESIDENT INDIVIDUAL IS ALLOWED AN EARNED INCOME
TAX CREDIT AGAINST THE TAXES DUE UNDER THIS ARTICLE 22 THAT IS EQUAL
TO THE APPLICABLE PERCENTAGE, SET FORTH IN SUBSECTION (2.7)(d)(II) OF
THIS SECTION, OF THE FEDERAL CREDIT THAT THE RESIDENT INDIVIDUAL
WOULD HAVE BEEN ALLOWED UNDER SECTION 32 (n)(2) OF THE INTERNAL
REVENUE CODE, NOTWITHSTANDING THE DATE LIMITATION SET FORTH IN
SECTION 32(n) OF THE INTERNAL REVENUE CODE AS SPECIFIED IN SECTION
9621 (a) OF THE "AMERICAN RESCUE PLAN ACT OF 2021", PUB.L. 117-2.
      (II) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3.5) OF THIS
SECTION, THE PERCENTAGE USED TO CALCULATE THE AMOUNT OF CREDIT
THAT CAN BE CLAIMED PURSUANT TO SUBSECTION (2.7)(d)(I) OF THIS
SECTION IS TWENTY-FIVE PERCENT.
        (3.5) (b) (I) For the income tax year commencing on January 1,
PAGE 49-HOUSE BILL 26-1289
2025, the percentage of the federal earned income tax credit that the
resident individual claimed or could have claimed that is used to calculate
the amount of earned income tax credit allowed pursuant to subsections
(2)(d), (2.5)(e), and (2.7)(c), AND (2.7)(d) of this section is increased by
fifteen percentage points if the estimated adjustment factor is equal to or
greater than two percent.
        (c) For income tax years commencing on or after January 1, 2026,
the percentage of the federal earned income tax credit that the resident
individual claimed or could have claimed that is used to calculate the
amount of earned income tax credit allowed pursuant to subsections (2)(d),
(2.5)(e), and (2.7)(c), AND (2.7)(d) of this section is increased as follows if
the estimated adjustment factor is as follows:
       SECTION 35. In Colorado Revised Statutes, 39-22-303, amend
(12)(b)(I) and (12)(b)(II); and add (12)(b)(III) and (16) as follows:
     39-22-303. Dividends in a combined report - foreign source
income - affiliated groups - definitions - rules - repeal.
       (12) As used in this section, unless the context otherwise requires:
       (b) "Listed jurisdiction" means:
       (I) For income tax years commencing before January 1, 2026,
Andorra, Anguilla, Antigua and Barbuda, Aruba, the Bahamas, Bahrain,
Barbados, Belize, Bermuda, Bonaire, British Virgin Islands, Cayman
Islands, Cook Islands, Curaçao, Cyprus, Dominica, Gibraltar, Grenada,
Guernsey-Sark-Alderney, Isle of Man, Jersey, Liberia, Luxembourg, Malta,
Marshall Islands, Mauritius, Monaco, Montserrat, Nauru, Niue, Panama,
Saba, Samoa, San Marino, Seychelles, Sint Eustatius, Sint Maarten, St.
Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Turks and
Caicos Islands, U.S. Virgin Islands, and Vanuatu; and
       (II) For income tax years commencing on or after January 1, 2026,
BUT BEFORE JANUARY 1, 2027, the jurisdictions listed in subsection
(12)(b)(I) of this section and Hong Kong, Republic of Ireland,
Liechtenstein, Netherlands, and Singapore; AND
       (III) FOR INCOME TAX YEARS COMMENCING ON OR AFTER JANUARY
PAGE 50-HOUSE BILL 26-1289
1, 2027, THE JURISDICTIONS LISTED IN SUBSECTION (12)(b)(I) OF THIS
SECTION AND HONG KONG, REPUBLIC OF IRELAND, NETHERLANDS, AND
SINGAPORE.
      (16) (a) DURING THE STATE FISCAL YEAR BEGINNING JULY 1, 2027,
AND EVERY FOURTH STATE FISCAL YEAR THEREAFTER, THE DEPARTMENT
SHALL ENGAGE A CONTRACTOR TO EXAMINE WHETHER A COUNTRY THAT IS
IDENTIFIED AS A LISTED JURISDICTION SHOULD REMAIN A LISTED
JURISDICTION.
      (b) THE DEPARTMENT SHALL REQUIRE THE CONTRACTOR TO EXAMINE
EACH LISTED JURISDICTION AND TO MAKE RECOMMENDATIONS ABOUT THE
STATUS OF A LISTED JURISDICTION IN A WRITTEN REPORT SUBMITTED TO THE
EXECUTIVE COMMITTEE OF THE LEGISLATIVE COUNCIL AND THE GOVERNOR
NO LATER THAN ONE HUNDRED EIGHTY CALENDAR DAYS AFTER THE
EFFECTIVE DATE OF THE CONTRACT ENGAGING THE CONTRACTOR TO
CONDUCT THE STUDY.
      (c) WHEN EXAMINING A LISTED JURISDICTION, THE DEPARTMENT
SHALL REQUIRE THE CONTRACTOR TO RECOMMEND WHETHER A LISTED
JURISDICTION SHOULD CONTINUE TO BE A LISTED JURISDICTION BASED ON
WHETHER THE LISTED JURISDICTION:
      (I) ASSESSES A CORPORATE TAX RATE OF LESS THAN FIFTEEN
PERCENT;
      (II) ALLOWS TAX DEDUCTIONS, INCENTIVES, OR CREDITS THAT
LOWER EFFECTIVE TAX RATES ARTIFICIALLY, WITH SPECIAL CONSIDERATION
GIVEN TO INTELLECTUAL PROPERTY AND FOREIGN-SOURCE ROYALTIES;
      (III)  TARGETS     PROFIT-SHIFTING   OF   FOREIGN-CONTROLLED
CORPORATIONS;
      (IV) LACKS TRANSPARENCY AND DOES NOT ENGAGE IN DATA
SHARING OR COOPERATE WITH OTHER COUNTRIES' REVENUE AGENCIES
DURING AUDITS AND INVESTIGATIONS OR DOES NOT PARTICIPATE IN
COUNTRY-BY-COUNTRY REPORTING;
      (V) DOES NOT REQUIRE A CORPORATION TO ENGAGE IN SUBSTANTIAL
ACTIVITY OR DELIVER ECONOMIC SUBSTANCE IN THE LISTED JURISDICTION
PAGE 51-HOUSE BILL 26-1289
IN ORDER TO BE INCORPORATED IN THAT JURISDICTION;
      (VI) DOES NOT MAINTAIN A BENEFICIAL OWNERSHIP REGISTRY OR
DOES NOT PROVIDE THE PUBLIC WITH ACCESS TO COMPANY INFORMATION;
      (VII) ALLOWS HYBRID-MISMATCH RELATIONSHIPS;
      (VIII) ALLOWS OVERLY LENIENT TRANSFER PRICING;
      (IX) ALLOWS INCOME-SHIFTING BETWEEN CORPORATE AFFILIATES
OR OTHER INDICATORS OF PROFIT-SHIFTING;
      (X) HAS NOT UNDERTAKEN REFORMS TO ADDRESS ALLEGATIONS
THAT IT IS A TAX HAVEN AND THAT IT SHOULD NOT BE A LISTED
JURISDICTION;
      (XI) PROVIDES CERTAIN TAX OR OTHER BENEFITS EXCLUSIVELY FOR
FOREIGN FIRMS AND NOT TO DOMESTIC ENTITIES;
      (XII) ENGAGES IN OTHER TAX EVASION INDICATORS; OR
      (XIII) ISSUES CORPORATE PROFIT OR FOREIGN DIRECT INVESTMENT
STATISTICS THAT ARE SIGNIFICANTLY OUT OF PROPORTION TO LOCAL
ECONOMIC DEVELOPMENT OR THE LOCAL WORKFORCE.
     (d) A COUNTRY MAY SUBMIT TO THE CONTRACTOR OR THE
DEPARTMENT INFORMATION ABOUT INTERNATIONAL TAX REFORM AND
EVOLVING BEST PRACTICES.
      (e) THE CONTRACTOR MAY RECOMMEND THAT A COUNTRY BE
DEEMED A LISTED JURISDICTION OR RECOMMEND THAT A COUNTRY NO
LONGER BE A LISTED JURISDICTION.
        SECTION 36. In Colorado Revised Statutes, 42-1-225, amend
(1)(c) and (2)(c); and add (3) and (4) as follows:
      42-1-225. Commercial vehicle enterprise tax fund - creation -
repeal.
      (1) (c) On or after July 1, 2025, BUT BEFORE JULY 1, 2027, the fund
PAGE 52-HOUSE BILL 26-1289
consists of money collected and transmitted to the fund pursuant to section
42-4-1701 (4)(a)(II). The general assembly shall annually appropriate the
money in the fund to cover the actual cost of administering section
39-30-104 (1)(b). After receiving the statement pursuant to section
39-30-104 (1)(b)(VI), the state treasurer shall credit the total cost of the
amount of the tax credits stated therein to the general fund. Any money
remaining in the commercial vehicle enterprise tax fund at the end of the
STATE fiscal year shall not revert to the general fund, EXCEPT AS PROVIDED
IN SUBSECTION (3) OF THIS SECTION.
        (2) (c) On July 1, 2025, and each July 1 thereafter ON JULY 1, 2026,
the department shall allocate the fund balance, not including the amount
appropriated to cover the actual cost of administering section 39-30-104
(1)(b), to offset the income tax credit granted in section 39-30-104 (1)(b).
      (3) ON JULY 1, 2027, THE STATE TREASURER SHALL TRANSFER ALL
OF THE MONEY IN THE FUND TO THE COLORADO ECONOMIC DEVELOPMENT
FUND, CREATED IN SECTION 24-46-105 (1)(a).
       (4) THIS SECTION 42-1-225 IS REPEALED, EFFECTIVE JULY 1, 2031.
        SECTION 37. In Colorado Revised Statutes, 42-4-1701, amend
(4)(a)(II)(B) as follows:
      42-4-1701. Traffic offenses and infractions classified - penalties
- penalty and surcharge schedule - repeal.
        (4) (a) (II) (B) The state, county, city, or city and county issuing a
citation that results in the assessment of the penalties in sub-subparagraph
(A) of this subparagraph (II) SUBSECTION (4)(a)(II)(A) OF THIS SECTION may
retain and distribute the following amount of the penalty according to the
law of the jurisdiction that assesses the penalty, but BEFORE JULY 1, 2027,
the remainder of the penalty shall be transmitted to the state treasurer, who
shall credit the moneys MONEY to the commercial vehicle enterprise tax
fund created in section 42-1-225, AND ON OR AFTER JULY 1, 2027, TO THE
GENERAL FUND:
        SECTION 38. In Colorado Revised Statutes, 39-22-546, amend
(3)(a) and (7) as follows:
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       39-22-546. Credit against tax - residential energy storage
systems - tax preference performance statement - legislative declaration
- definition - repeal.
        (3) (a) For income tax years commencing on or after January 1,
2023, but before January 1, 2027 JANUARY 1, 2030, any purchaser that
installs an energy storage system in a residential dwelling in this state is
allowed a credit against the tax imposed by this article 22 in an amount
equal to ten percent of the purchase price paid by the purchaser for the
energy storage system.
        (7) This section is repealed, effective January 1, 2030 JANUARY 1,
2033.
        SECTION 39. In Colorado Revised Statutes, 39-22-571, amend
(3)(a) as follows:
      39-22-571. Film festival incentive tax credit - tax preference
performance statement - legislative declaration - definitions - repeal.
        (3) (a) Subject to subsection (3)(e) of this section, for tax years
commencing on or after January 1, 2027 JANUARY 1, 2026, but before
January 1, 2037 JANUARY 1, 2036, there is allowed a credit with respect to
income taxes imposed pursuant to this article 22 to any global film festival
entity or existing or small Colorado film festival entity that receives a tax
credit certificate pursuant to this section in the amount of the tax credit
certificate.
        SECTION 40. Appropriation - adjustments to 2026 long bill. (1)
Except as provided in subsection (3) of this section, to implement this act,
appropriations made in the annual general appropriation act for the 2026-27
state fiscal year to the department of health care policy and financing are
adjusted as follows:
       (a) The general fund appropriation for medical and long-term care
services for Medicaid eligible individuals is decreased by $52,560, which
is subject to the "(M)" notation as defined in the annual general
appropriation act for the same fiscal year;
        (b) The appropriation for medical and long-term care services for
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Medicaid eligible individuals is increased by $52,560 cash funds, which
consists of $50,900 from the health care expansion fund created in section
24-22-117 (2)(a)(I), C.R.S., and $1,660 from the tobacco tax cash fund
created in section 24-22-117 (1)(a), C.R.S.;
      (c) The appropriation for the primary care fund program is increased
by $21,024, which is from the primary care fund created in section
24-22-117 (2)(b)(I), C.R.S.;
      (d) The general fund appropriation for the children's basic health
plan medical and dental costs is decreased by $332.; and
       (e) The appropriation for the children's basic health medical and
dental costs is increased by $332, which is from the children's basic health
plan trust fund created in section 25.5-8-105 (1), C.R.S.
        (2) For the 2026-27 state fiscal year, the general assembly
anticipates that the department of health care policy and financing will
receive $20,710 in federal funds for the primary care fund program to
implement this act, which amount is subject to the "(I)" notation as defined
in the annual general appropriation act for the same fiscal year. The
appropriation in subsection (1)(c) of this section is based on the assumption
that the department will receive this amount of federal funds.
        (3) Subsection (1) of this section does not require a reduction of an
appropriation in the annual general appropriation act for the 2026-27 state
fiscal year for the department of health care policy and financing if:
       (a) The amount of the general fund appropriation for medical and
long-term care services for Medicaid eligible individuals is less than the
amount of the adjustment required in subsection (1)(a) of this section;
       (b) The amount of the general fund appropriation for the children's
basic health plan medical and dental costs is less than the amount of the
adjustment required in subsection (1)(c) of this section; or
       (c) The annual general appropriation act for the 2026-27 state fiscal
year does not include an appropriation to the department of health care
policy and financing.
PAGE 55-HOUSE BILL 26-1289
      SECTION 41. Appropriation. (1) For the 2026-27 state fiscal
year, $38,432 is appropriated to the department of revenue. This
appropriation is from the general fund. To implement this act, the
department may use this appropriation as follows:
       (a) $15,140 for tax administration IT system (GenTax) support;
       (b) $13,616 to the taxation business group for personal services
related to taxation services; and
       (c) $9,676 to the executive director's office for personal services
related to administration and support.
       (2) For the 2026-27 state fiscal year, $25,000 is appropriated to the
office of the governor for use by economic development programs. This
appropriation is from the general fund. To implement this act, the office
may use this appropriation for administration.
      (3) For the 2026-27 state fiscal year, $996,276 is appropriated to the
department of early childhood. This appropriation is from the preschool
programs cash fund created in section 26.5-4-209 (1)(a), C.R.S. To
implement this act, the department may use this appropriation for universal
preschool program.
       (4) For the 2026-27 state fiscal year, $35,741 is appropriated to the
department of public health and environment. This appropriation consists
of $17,704 from the tobacco education programs fund created in section
24-22-117 (2)(c)(I), C.R.S., $17,704 from the prevention, early detection,
and treatment fund created in section 24-22-117 (2)(d)(I), C.R.S., and $333
from the tobacco tax cash fund created in section 24-22-117 (1)(a), C.R.S.
To implement this act, the department may use this appropriation as
follows:
       (a) $17,704 from the tobacco education programs fund for tobacco
education, prevention, and cessation program administration;
       (b) $17,704 from the prevention, early detection, and treatment fund
for cancer, cardiovascular disease, and chronic pulmonary disease grants;
and
PAGE 56-HOUSE BILL 26-1289
      (c) $333 from the tobacco tax cash fund for appropriation from the
tobacco tax cash fund to the general fund.
      (5) For the 2026-27 state fiscal year, $333 is appropriated to the
department of public health and environment. This appropriation is from the
general fund exempt account created in section 24-77-103.6 (2), C.R.S. To
implement this act, the department may use this appropriation for
immunization operating expenses.
       SECTION 42. Effective date. This act takes effect upon passage;
except that section 40 of this act takes effect only if the annual general
appropriation act for the 2026-27 state fiscal year becomes law, in which
case section 40 takes effect upon the effective date of this act or of the
annual general appropriation act for state fiscal year 2026-27, whichever is
later.
       SECTION 43. Safety clause. The general assembly finds,
determines, and declares that this act is necessary for the immediate
preservation of the public peace, health, or safety or for appropriations for
PAGE 57-HOUSE BILL 26-1289
the support and maintenance of the departments of the state and state
institutions.
____________________________        ____________________________
Julie McCluskie  James Rashad Coleman, Sr.
SPEAKER OF THE HOUSE  PRESIDENT OF
OF REPRESENTATIVES  THE SENATE
____________________________        ____________________________
Vanessa Reilly  Esther van Mourik
CHIEF CLERK OF THE HOUSE  SECRETARY OF
OF REPRESENTATIVES  THE SENATE
       APPROVED________________________________________
                          (Date and Time)
                 _________________________________________
                Jared S. Polis
                GOVERNOR OF THE STATE OF COLORADO
PAGE 58-HOUSE BILL 26-1289