Colorado moves to end tax breaks, create new family credit
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Democratic state lawmakers unveiled four bills Tuesday to close corporate tax loopholes and create a new tax credit for families.
Why it matters: Together, the measures represent a sweeping attempt to reshape Colorado's tax code, one that would force some businesses to pay higher state taxes amid economic uncertainty.
State of play: The bill sponsors framed the package as a counter to federal tax changes in President Trump's "big beautiful bill that they say favor corporations and the wealthy.
- Colorado's tax code is based on federal law, so state lawmakers need legislation to decouple.
The existing tax breaks on the chopping block include:
- A provision that allows corporations to deduct the salaries of their top 10 leaders as operating expenses.
- Four tax breaks in Trump's bill that allow various write-offs and deductions, such as one that benefits industrial and manufacturing companies.
- Other tax credits in state law that lawmakers called ineffective and unnecessary, such as vendor discounts on nicotine and tobacco products.
- A sales tax exemption for downloadable software purchases.
The intrigue: The legislation would create a new tax credit for families making less than $96,000 annually.
- It is modeled on the existing Family Affordability Tax Credit, which an independent report found lowered child poverty rates 37% and family poverty 32% in Colorado.
- This tax credit only takes effect when the state collects a certain level of revenue, and it won't hit that bar for the next fiscal year.
The fine print: It's unclear how much new revenue the state will get by raising taxes, and lawmakers don't know the size of the tax break for families.