On May 30, 2025, COL LEG reported governor signed bill, effective Aug. 6, 2025.
On May 5, COL LEG passed bill re incentives for self-owned business.
COL LEG passed HB 25-1021 related to tax incentives for employee-owned businesses.
Adds new sections to COL LEG 39-22, in Colorado revised statutes, re income taxes.
Document dated May 5, 2025, received from COL LEG May 20, summarized May 22.
Bill Provisions
Creates two income tax subtractions for income tax years commencing on/after Jan. 1, 2027, but before Jan. 1, 2038, re State capital gains and worker-owned cooperatives.
Makes changes to the tax credit for conversion or expansion costs for employee business ownership credit, and extends the credit through income tax year 2031.
Specifies that the aggregate amount of credits that can be claimed for each income tax year commencing on or after Jan. 1, 2026, but before Jan. 1, 2032, is $3 million.
Increases eligible percentage of conversion/expansion costs to claim for credit to 75% beginning in tax year 2026 and maintains existing dollar caps for different conversions.
Businesses or nonprofits that provide services to businesses that qualify to convert or expand to employee ownership are eligible to receive 75% credit of the costs incurred.
Credit to expand to employee ownership must not exceed $167,000, including costs for staff salaries/benefits, marketing and outreach, consulting and technical assistance.
Additionally, the support costs exclude any costs that are considered conversion or expansion costs that can be claimed in the credit for employee business ownership.
Legislative History
On Jan. 8, 2025, bill introduced in House; on Apr. 28, 2025, bill was passed in House.
On Apr. 29, 2025, introduced in Senate; on May 5, 2025, passed with amendments.
On May 5, 2025, House concurred with Senate amendments and repassed the bill.
Effectiveness
Upon approval, provisions take effect at 12:01am on day following the expiration of the ninety-day period after final adjournment of the general assembly, with exceptions.
May 30, 2025 COL LEG Governor Approval
On May 30, 2025, COL LEG reported governor signed bill, effective Aug. 6, 2025.
Regulators
COL LEG
Entity Types
Corp
Reference
Act, 5/30/2025; Bill HB25-1021, 5/5/2025; Citation: COL LEG 39-22;
