As the legislative session enters its final stretch, several tax proposals are advancing that could have a significant impact on Colorado employers. This week, we’re watching a package of bills, House Bills 1221, 1222 and 1223, that would increase costs for businesses and add new complexity to the state’s tax system.
All three measures have been added to the Colorado Chamber’s Job Killers and Wallet Watchdog lists due to their impact on employers, economic competitiveness and the state’s cost of living.
HB 1221 would raise taxes on Colorado businesses by limiting the use of existing tax credits, restricting net operating loss deductions and narrowing the alternative minimum tax credit. These are long-standing provisions that many employers rely on and scaling them back increases costs on job creators and weakens Colorado’s economic competitiveness.
HB 1222 takes a different approach but raises similar concerns. The bill would decouple Colorado from certain federal tax provisions, limiting deductions that are currently allowed under federal law. This would require businesses to calculate taxes differently at the state level further complicating Colorado’s already complex tax code. This approach would discourage investment in the state and make Colorado less competitive compared to other states.
HB 1223 which has been added to the Chamber’s Wallet Watchdog list, would repeal the sales and use tax exemption for downloaded software. This change would make many common software purchases subject to state tax, increasing costs for both businesses and consumers that rely on digital tools.
Together, these bills represent a broader trend of proposals that would increase taxes on Colorado employers. According to Chamber analysis, they are part of a group of measures that could add hundreds of millions of dollars in new annual costs to businesses, raising concerns about the state’s competitiveness and cost of doing business.
As the session comes to a close, HB 1221, HB 1222 and HB 1223 will continue to be closely monitored as they move through the legislative process.