Income tax imposed on individuals, estates, and trusts - single rate - report - tax preference performance statement - legislative declaration - definitions - repeal

(c) Except as otherwise provided in section 39-22-627, subject to subsection

(2) of this section, with respect to taxable years commencing on or after January 1, 2022, a tax of four and forty one-hundredths percent is imposed on the federal taxable income, as determined pursuant to section 63 of the internal revenue code, of every individual, estate, and trust.

(2) Prior to the application of the rate of tax prescribed in subsection (1), (1.5), or (1.7) of this section, the federal taxable income shall be modified as provided in subsections (3) and (4) of this section.

(3) There shall be added to the federal taxable income:

(a) Any federal net operating loss deduction carried over from a taxable year beginning prior to January 1, 1987;

(b) An amount equal to the interest income which is excluded from gross income for federal income tax purposes pursuant to section 103 (a) of the internal revenue code less amortization of premium on obligations of any state or any political subdivision thereof, other than interest income on obligations of the state of Colorado or any political subdivision thereof which are issued on or after May 1, 1980, and other than interest income on obligations of the state of Colorado or any political subdivision thereof which were issued prior to May 1, 1980, to the extent that such interest is specifically exempt from income taxation under the laws of the state of Colorado authorizing the issuance of such obligations. The amount of such interest shall be the net amount after reduction by the amount of the deductions related thereto which are required by the internal revenue code to be allocated to such classes of interest.

(c) Repealed.

(d) (I) For income tax years beginning on and after January 1, 1992, for those taxpayers who deduct state income taxes pursuant to section 164 (a)(3) of the internal revenue code, an amount equal to the deduction claimed; except that such amount shall be limited to the amount required to reduce the federal itemized amount computed under section 161 of the internal revenue code to the amount of the standard deduction allowable under section 63 (c) of the internal revenue code.

(II) For income tax years beginning on or after January 1, 2000, for two individuals whose federal taxable income is determined on a joint federal return and who deduct state income taxes pursuant to section 164 (a)(3) of the internal revenue code, an amount equal to the deduction claimed; except that such amount shall be limited to the amount required to reduce the federal itemized amount computed under section 161 of the internal revenue code to an amount equal to double the amount of the basic standard deduction allowable under section 63

(c)(2) of the internal revenue code in the case of an individual federal return for an individual who is not the head of a household plus any additional standard deduction allowable under section 63 (c)(3) of the internal revenue code, if applicable.

(e) (I) Any expenses incurred by a taxpayer with respect to expenditures made at, or payments made to, a club licensed pursuant to section 44-3-418 that has a policy to restrict membership on the basis of sex, sexual orientation, gender identity, gender expression, marital status, race, creed, religion, color, ancestry, or national origin. Any such club shall provide on each receipt furnished to a taxpayer a printed statement as follows: The expenditures covered by this receipt are nondeductible for state income tax purposes.

(II) The general assembly finds, determines, and declares that the people of the state of Colorado desire to promote and achieve tax equity and fairness among all the state's citizens and further desire to conform to the public policy of nondiscrimination. The general assembly further declares that the provisions of this paragraph (e) are enacted for these reasons and for no other purpose.

(l) For income tax years ending on and after the enactment of the March 2020 Coronavirus Aid, Relief, and Economic Security Act, Pub.L. 116-136, referred to in this section as the CARES Act, but before January 1, 2021, and for income tax years beginning on and after the enactment of the CARES Act, but before January 1, 2021, an amount equal to the difference between a taxpayer's net operating loss deduction as determined under section 172 (a) of the internal revenue code before the amendments made by section 2303 of the CARES Act and the taxpayer's net operating loss deduction as determined under section 172 (a) of the internal revenue code after the amendments made by section 2303 of the CARES Act;

(m) For income tax years ending on and after the enactment of the CARES Act, but before January 1, 2021, and for income tax years beginning on and after the enactment of the CARES Act, but before January 1, 2021, an amount equal to a taxpayer's excess business loss as determined under section 461 (l) of the internal revenue code without regard to the amendments made by section 2304 of the CARES Act, but with regard to the technical amendment made by section 2304

(b)(2)(B) of the CARES Act;

(o) For income tax years commencing on or after January 1, 2021, an amount equal to the deduction allowed under section 199A of the internal revenue code for a taxpayer who files a single return and whose adjusted gross income is greater than five hundred thousand dollars, and for taxpayers who file a joint return and whose adjusted gross income is greater than one million dollars; except that this subsection (3)(o) does not apply to a taxpayer who is required to file a schedule F, profit or loss from farming, or successor form, as an attachment to a federal income tax return for the tax year in which the taxpayer claims the deduction allowed under section 199A of the internal revenue code.

(p) Except as otherwise provided in subsection (3)(p.5) of this section, for income tax years commencing on or after January 1, 2022, for taxpayers who claim itemized deductions as defined in section 63 (d) of the internal revenue code and who have federal adjusted gross income in the income tax year equal to or exceeding four hundred thousand dollars:

(I) For a taxpayer who files a single return, the amount by which the itemized deductions deducted from gross income under section 63 (a) of the internal revenue code exceed thirty thousand dollars; and

(II) For taxpayers who file a joint return, the amount by which the itemized deductions deducted from gross income under section 63 (a) of the internal revenue code exceed sixty thousand dollars.

(p.5) (I) [Editor's note: This version of the introductory portion of subsection

(3)(p.5)(I) is effective unless the ballot issue described in section 22-82.9-213 is approved by the people at the next statewide election or unless the ballot issue described in section 22-82.9-212 and the ballot issue described in section 22-82.9-213 are rejected by the people at the next statewide election.] For income tax years commencing on or after January 1, 2023, for taxpayers who claim itemized deductions as defined in section 63 (d) of the internal revenue code or the standard deduction as defined in section 63 (c) of the internal revenue code and who have federal adjusted gross income in the income tax year equal to or exceeding three hundred thousand dollars:

(p.5) (I) [Editor's note: This version of the introductory portion of subsection

(3)(p.5)(I) is effective if the ballot issue described in section 22-82.9-213 is approved by the people at the next statewide election.] For income tax years commencing on or after January 1, 2023, but before January 1, 2026, for taxpayers who claim itemized deductions as defined in section 63 (d) of the internal revenue code or the standard deduction as defined in section 63 (c) of the internal revenue code and who have federal adjusted gross income in the income tax year equal to or exceeding three hundred thousand dollars:

(p.5) (I) [Editor's note: This version of the introductory portion of subsection

(3)(p.5)(I) is effective if the ballot issue described in section 22-82.9-212 and the ballot issue described in section 22-82.9-213 are rejected by the people at the next statewide election.] For income tax years commencing on or after January 1, 2023, but before January 1, 2026, for taxpayers who claim itemized deductions as defined in section 63 (d) of the internal revenue code or the standard deduction as defined in section 63 (c) of the internal revenue code and who have federal adjusted gross income in the income tax year equal to or exceeding three hundred thousand dollars:

(A) For a taxpayer who files a single return, the amount by which the itemized deductions deducted from gross income under section 63 (a) of the internal revenue code exceed, or the standard deduction deducted from gross income under section 63 (c) of the internal revenue code exceeds, twelve thousand dollars; and

(B) For taxpayers who file a joint return, the amount by which the itemized deductions deducted from gross income under section 63 (a) of the internal revenue code exceed, or the standard deduction deducted from gross income under section 63 (c) of the internal revenue code exceeds, sixteen thousand dollars.

(I.5) [Editor's note: Subsection (3)(p.5)(I.5) is effective if the ballot issue described in section 22-82.9-212 and the ballot issue described in section 22-82.9-213 are rejected by the people at the next statewide election.] For income tax years commencing on or after January 1, 2026, for taxpayers who claim itemized deductions as defined in section 63 (d) of the internal revenue code or the standard deduction as defined in section 63 (c) of the internal revenue code and who have a federal adjusted gross income in the income tax year equal to or exceeding three hundred thousand dollars:

(A) For a taxpayer who files a single return, the amount by which the itemized deductions deducted from gross income under section 63 (a) of the internal revenue code exceed, or the standard deduction deducted from gross income under section 63 (c) of the internal revenue code exceeds, an amount that is greater than twelve thousand dollars, is three-quarters of the amount described in subsection (3)(p.5)(I.5)(B) of this section, and that the department of revenue determines that, in combination with the amount described in subsection

(3)(p.5)(I.5)(B) of this section, had it been used instead of the addition to federal taxable income required by subsection (3)(p.5)(I) of this section, would have reduced the amount of additional state income tax revenue for the 2023-24 state fiscal year generated by that addition to one hundred million seven hundred twenty-seven thousand eight hundred twenty dollars; and

(B) For taxpayers who file a joint return, the amount by which the itemized deductions deducted from gross income under section 63 (a) of the internal revenue code exceed, or the standard deduction deducted from gross income under section 63 (c) of the internal revenue code exceeds, an amount that is greater than sixteen thousand dollars, is one-third greater than the amount described in subsection (3)(p.5)(I.5)(A) of this section, and that the department of revenue determines that, in combination with the amount described in subsection

(3)(p.5)(I.5)(A) of this section, had it been used instead of the addition to federal taxable income required by subsection (3)(p.5)(I) of this section, would have reduced the amount of additional state income tax revenue for the 2023-24 state fiscal year generated by that addition to one hundred million seven hundred twenty-seven thousand eight hundred twenty dollars.

(II) [Editor's note: This version of subsection (3)(p.5)(II) is effective unless the ballot issue described in section 22-82.9-213 is approved by the people at the next statewide election or unless the ballot issue described in section 22-82.9-212 and the ballot issue described in section 22-82.9-213 are rejected by the people at the next statewide election.] For the 2023-24 state fiscal year and state fiscal years thereafter, the general assembly shall annually appropriate an amount at least equal to the amount of revenue generated by the addition to federal taxable income described in subsection (3)(p.5)(I) of this section, calculated without regard to any temporary rate reduction pursuant to section 39-22-627, but not more than the amount required, to fully fund the direct and indirect costs of implementing the healthy school meals for all program as provided in section 22-82.9-209. The provisions of subsection (3)(p.5)(I) of this section constitute a voter-approved revenue change, approved by the voters at the statewide election in November of 2022, and the revenue generated by this voter-approved revenue change may be collected, retained, appropriated, and spent without subsequent voter approval, notwithstanding any other limits in the state constitution or law. The addition to federal taxable income described in subsection (3)(p.5)(I) of this section does not apply for an income tax year that commences after the healthy school meals for all program, or any successor program, is repealed. Upon repeal of the healthy school meals for all program, or any successor program, the commissioner of education shall promptly notify the executive director in writing that the program is repealed.

(II) [Editor's note: This version of subsection (3)(p.5)(II) is effective if the ballot issue described in section 22-82.9-213 is approved by the people at the next statewide election.] For the 2023-24 state fiscal year and state fiscal years thereafter, the general assembly shall annually appropriate an amount at least equal to the amount of revenue generated by the addition to federal taxable income described in subsection (3)(p.5)(I) of this section, calculated without regard to any temporary rate reduction pursuant to section 39-22-627, to the healthy school meals for all program cash fund created in section 22-82.9-211. Subsection

(3)(p.5)(I) of this section constitutes a voter-approved revenue change, approved by the voters at the statewide election in November of 2022, and the revenue generated by this voter-approved revenue change may be collected, retained, appropriated, and spent without subsequent voter approval, notwithstanding any other limits in the state constitution or law. The addition to federal taxable income described in subsection (3)(p.5)(I) of this section does not apply for an income tax year that commences after the healthy school meals for all program, or any successor program, is repealed. Upon repeal of the healthy school meals for all program, or any successor program, the commissioner of education shall promptly notify the executive director in writing that the program is repealed.

(II) [Editor's note: This version of subsection (3)(p.5)(II) is effective if the ballot issue described in section 22-82.9-212 and the ballot issue described in section 22-82.9-213 are rejected by the people at the next statewide election.] For the 2023-24 state fiscal year and state fiscal years thereafter, the general assembly shall annually appropriate an amount at least equal to the amount of revenue generated by the addition to federal taxable income described in subsections (3)(p.5)(I) and (3)(p.5)(I.5) of this section, calculated without regard to any temporary rate reduction pursuant to section 39-22-627, but not more than the amount required, to fully fund the direct and indirect costs of implementing the healthy school meals for all program as provided in section 22-82.9-209. Subsections (3)(p.5)(I) and (3)(p.5)(I.5) of this section constitute a voter-approved revenue change, approved by the voters at the statewide election in November of 2022, and the revenue generated by this voter-approved revenue change may be collected, retained, appropriated, and spent without subsequent voter approval, notwithstanding any other limits in the state constitution or law. The addition to federal taxable income described in subsections (3)(p.5)(I) and (3)(p.5)(I.5) of this section does not apply for an income tax year that commences after the healthy school meals for all program, or any successor program, is repealed. Upon repeal of the healthy school meals for all program, or any successor program, the commissioner of education shall promptly notify the executive director in writing that the program is repealed.

(III) [Editor's note: Subsection (3)(p.5)(III) is effective if the ballot issue described in section 22-82.9-213 is approved by the people at the next statewide election.] This subsection (3)(p.5) is repealed, effective December 31, 2028.

(p.7) [Editor's note: Subsection (3)(p.7) is effective if the ballot issue described in section 22-82.9-213 is approved by the people at the next statewide election.]

(I) For income tax years commencing on or after January 1, 2026, for taxpayers who claim itemized deductions as defined in section 63 (d) of the internal revenue code or the standard deduction as defined in section 63 (c) of the internal revenue code and who have a federal adjusted gross income in the income tax year equal to or exceeding three hundred thousand dollars:

(A) For a taxpayer who files a single return, the amount by which the itemized deductions deducted from gross income under section 63 (a) of the internal revenue code exceed, or the standard deduction deducted from gross income under section 63 (c) of the internal revenue code exceeds one thousand dollars; and

(B) For taxpayers who file a joint return, the amount by which the itemized deductions deducted from gross income under section 63 (a) of the internal revenue code exceed, or the standard deduction deducted from gross income under section 63 (c) of the internal revenue code exceeds two thousand dollars.

(II) In addition to the funding appropriated in subsection (3)(p.5) of this section, for the 2026-27 state fiscal year and every state fiscal year thereafter, the general assembly shall annually appropriate an amount at least equal to the amount of revenue generated by the addition to federal taxable income described in this subsection (3)(p.7) to the healthy school meals for all program cash fund created in section 22-82.9-211. The provisions of this subsection (3)(p.7) constitute a voter-approved revenue change, approved by the voters at the statewide election in November 2025, and the revenue generated by this voter-approved revenue change may be collected, retained, appropriated, and spent without subsequent voter approval, notwithstanding any other limits in the state constitution or law. The addition to federal taxable income described in this subsection (3)(p.7) does not apply for an income tax year that commences after the healthy school meals for all program, or any successor program, is repealed. Upon repeal of the healthy school meals for all program, or any successor program, the commissioner of education shall promptly notify the executive director in writing that the program is repealed.

(r) Notwithstanding subsection (3)(o) of this section, for income tax years commencing on or after January 1, 2018, an amount equal to the deduction taken under section 199A of the internal revenue code, except to the extent the deduction is otherwise disallowed under section 265 of the internal revenue code, for an electing pass-through entity owner of an electing pass-through entity, as such terms are defined in section 39-22-342, that makes the election allowed in subpart 3 of part 3 of this article 22.

(t) [Editor's note: This version of subsection (3)(t) is effective until January 1, 2026.] For income tax years commencing on or after January 1, 2025, 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.

(t) [Editor's note: This version of subsection (3)(t) is effective January 1, 2026.] For income tax years commencing on or after January 1, 2025, 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) [Editor's note: Subsection (3)(u) is effective January 1, 2026.] The amount of any overtime compensation excluded or deducted from federal gross income.

(4) There shall be subtracted from federal taxable income:

(a) An amount equal to any interest income on obligations of the United States and its possessions to the extent included in federal taxable income;

(a.5) Repealed.

(b) To the extent included in federal adjusted gross income, the portion of any gain or loss from the sale or other disposition of property having a higher adjusted basis for Colorado income tax purposes than for federal income tax purposes on the date such property was sold or disposed of in a transaction in which gain or loss was recognized for purposes of federal income tax that does not exceed such difference in basis;

(c) The amount necessary to prevent the taxation under this article of any annuity or other amount of income or gain which was properly included in income or gain and was taxed under the laws of this state for a prior tax year, to the taxpayer, or to a decedent by reason of whose death the taxpayer acquired the right to receive the income or gain, or to a trust or estate from which the taxpayer received the income or gain;

(d) Repealed.

(e) (I) The amount of any refund or credit for overpayment of income taxes imposed by this state or any other taxing jurisdiction to the extent included in gross income for federal income tax purposes but not previously allowed as a deduction for Colorado income tax purposes;

(II) The purpose of the subtraction authorized in this subsection (4)(e) is to avoid re-taxing a taxpayer's state income tax refund when a state refund is required to be included as income on the taxpayer's federal return pursuant to the internal revenue code;

(III) The effectiveness of the subtraction authorized in this subsection (4)(e) is measured by the number of taxpayers claiming the subtraction and the total amount of state refunds claimed as subtractions from Colorado taxable income;

(f) (I) For income tax years commencing on or after January 1, 1989, amounts received as pensions or annuities from any source by any individual who is fifty-five years of age or older at the close of the taxable year, to the extent included in federal adjusted gross income;

(II) For income tax years commencing on or after January 1, 1989, amounts received as pensions or annuities from any source by any individual who is less than fifty-five years of age at the close of the taxable year if such benefits are received because of the death of the person originally entitled to receive such benefits and only to the extent such benefits are included in federal adjusted gross income;

(III) (A) Amounts subtracted under this subsection (4)(f) are capped at twenty thousand dollars per tax year for any individual who is fifty-five years of age or older but less than sixty-five years of age at the close of the taxable year. For income tax years commencing on or after January 1, 2025, the cap set forth in this subsection (4)(f)(III)(A) is calculated by first considering the total amount of social security benefits a taxpayer received that were included in federal taxable income at the close of the taxable year. If the total amount of such social security benefits exceeds the cap set forth in this subsection (4)(f)(III)(A), and the taxpayer's adjusted gross income for the applicable tax year is less than or equal to seventy-five thousand dollars if filing individually or ninety-five thousand dollars if filing jointly, then the cap is increased to an amount equal to the total amount of such social security benefits.

(B) Amounts subtracted under this subsection (4)(f) are capped at twenty-four thousand dollars per tax year for any individual who is sixty-five years of age or older at the close of the taxable year. For income tax years commencing on or after January 1, 2022, the cap set forth in this subsection (4)(f)(III)(B) is calculated by first considering the total amount of social security benefits a taxpayer received that were included in federal taxable income at the close of the taxable year. If the total amount of such social security benefits exceeds the cap set forth in this subsection

(4)(f)(III)(B), then the cap is increased to an amount equal to the total amount of such social security benefits.

(C) For the purpose of determining the subtraction allowed by this subsection (4)(f), in the case of a joint return, social security benefits included in federal taxable income shall be apportioned in a ratio of the gross social security benefits of each taxpayer to the total gross social security benefits of both taxpayers.

(D) As used in this subsection (4)(f), pensions and annuities means retirement benefits that are periodic payments attributable to personal services performed by an individual prior to his or her retirement from employment and that arise from an employer-employee relationship, from service in the uniformed services of the United States, or from contributions to a retirement plan that are deductible for federal income tax purposes. Pensions and annuities includes distributions from individual retirement arrangements and self-employed retirement accounts to the extent that such distributions are not deemed to be premature distributions for federal income tax purposes, amounts received from fully matured privately purchased annuities, social security benefits, and amounts paid from any such sources by reason of permanent disability or death of the person entitled to receive the benefits.

(E) 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 general purpose of the tax expenditure created in subsection

(4)(f)(III)(B) of this section is to provide tax relief for certain individuals and that the specific purpose of the tax expenditure is to provide such tax relief to persons aged fifty-five and older in light of the increase in property tax rates in the income tax year commencing on January 1, 2023. The general assembly and the state auditor shall measure the effectiveness of the exemption allowed by this section based on the total amount of social security benefits in excess of twenty thousand dollars per individual per tax year that individuals aged fifty-five to sixty-four, inclusive, subtract from their federal taxable income when calculating their state taxable income.

(F) The department of revenue, in consultation with the state auditor, shall collect the information necessary for the state auditor to measure the effectiveness of the income tax subtraction allowed by this section based on the total amount of social security benefits in excess of twenty thousand dollars per individual per tax year that individuals who are aged fifty-five to sixty-four, and whose adjusted gross income is less than or equal to seventy-five thousand dollars if filing individually or ninety-five thousand dollars if filing jointly, subtract from their federal taxable income when calculating their state taxable income.

(g) Repealed.

(h) (I) Prior to January 1, 2025, any amount contributed to a medical savings account by an employer pursuant to section 39-22-504.7 (2)(e), to the extent such amount is not claimed as a deduction on the taxpayer's federal tax return.

(II) This subsection (4)(h) is repealed, effective December 31, 2028.

(i) (I) (A) For income tax years commencing on or after January 1, 1998, an amount equal to the portion attributable to interest and other income of a distribution under a qualified state tuition program that is distributed for the purpose of meeting qualified higher education expenses of a designated beneficiary, to the extent such amount is included in federal taxable income;

(B) Before January 1, 2031, an amount equal to the portion attributable to interest and other income of a distribution under a qualified ABLE program that is distributed for the purpose of meeting qualified disability expenses of a designated beneficiary, to the extent such amount is included in federal taxable income;

(C) Subsection (4)(i)(I)(B) of this section and this subsection (4)(i)(I)(C) are repealed, effective January 1, 2035.

(II) (A) For income tax years commencing on or after January 1, 2001, but before January 1, 2022, an amount equal to all payments or contributions made during the taxable year under an advance payment contract, to a savings trust account, or otherwise in connection with a qualified state tuition program established by collegeinvest created in section 23-3.1-203, or to a qualified state tuition program that is affiliated with an educational institution in the state and that is established and maintained pursuant to section 529 of the internal revenue code or any successor section.

(B) Except as provided in subsection (4)(i)(II)(C) of this section, for income tax years commencing on or after January 1, 2022, an amount equal to all payments or contributions, not to exceed twenty thousand dollars per taxpayer per beneficiary for a taxpayer who files a single return, or thirty thousand dollars per taxpayer per beneficiary for taxpayers who file a joint return, made during the taxable year under an advance payment contract, to a savings trust account, or otherwise in connection with a qualified state tuition program established by collegeinvest created in section 23-3.1-203, or to a qualified state tuition program that is affiliated with an educational institution in the state and that is established and maintained pursuant to section 529 of the internal revenue code or any successor section, or, before January 1, 2031, in connection with a qualified ABLE program. Notwithstanding subsection (4)(i)(III)(D) of this section, collegeinvest may treat a change in beneficiary as a nonqualifying distribution if the change was made for the purpose of evading the limit in this subsection (4)(i)(II)(B).

(C) For income tax years commencing on or after January 1, 2023, the limits specified in subsection (4)(i)(II)(B) of this section are annually adjusted by the percentage change in the combined average annual costs of tuition and room and board for all state institutions of higher education, as defined in section 24-30-1301

(18). The department of higher education shall annually calculate the percentage change described in this subsection (4)(i)(II)(C) and shall provide the calculation to the department of revenue by a deadline determined by the department of revenue. The department of revenue may round the adjusted limits to the nearest hundred dollars.

(III) No subtraction is allowed pursuant to this subsection (4)(i) to the extent that such payments or contributions are excluded from the taxpayer's federal taxable income for the taxable year. Any subtraction taken under this subsection

(4)(i) is added to the account holder's taxable income in the taxable year or years in which any distribution, refund, or any other withdrawal is made pursuant to an advance payment contract, from a savings trust account, or otherwise in connection with a qualified state tuition program for any reason other than:

(A) To pay qualified higher education expenses;

(B) As a result of the beneficiary's death or disability;

(C) As a result of receiving a scholarship and as long as the aggregate amount of distributions, refunds, or withdrawals made pursuant to this subsection

(4)(i)(III)(C) do not exceed the amount of the scholarship provided during such tax year; or

(D) As a result of a change in designated beneficiary, if the change complies with section 529 (c)(3)(C)(ii) of the internal revenue code.

(III.5) No subtraction is allowed pursuant to this subsection (4)(i) to the extent that such payments or contributions are excluded from the taxpayer's federal taxable income for the taxable year. Before January 1, 2031, any subtraction taken under this subsection (4)(i) is added to the account holder's taxable income in the taxable year or years in which any distribution, refund, or any other withdrawal is made pursuant to an advance payment contract, from a savings trust account, or otherwise in connection with a qualified ABLE program for any reason other than:

(A) To pay qualified disability expenses;

(B) As a result of the beneficiary's death or disability; or

(C) As a result of a change in designated beneficiary, if the change complies with section 529A (c)(1)(C)(ii) of the internal revenue code.

(D) This subsection (4)(i)(III.5) is repealed, effective January 1, 2035.

(IV) As used in this subsection (4)(i), unless the context otherwise requires:

(A) Designated beneficiary has the same meaning as defined in section 529

(e)(1) of the internal revenue code.

(B) Qualified higher education expense has the same meaning as defined in section 529 (e)(3) of the internal revenue code, and expenses for fees, books, supplies, and equipment required for the participation of a designated beneficiary in an apprenticeship program as defined in section 529 (c)(8) of the internal revenue code.

(C) Qualified state tuition program means a qualified tuition program as defined in section 529 (b) of the internal revenue code.

(D) Qualified ABLE program, before January 1, 2031, means a qualified ABLE program as defined in section 529A (b) of the internal revenue code.

(E) Qualified disability expense, before January 1, 2031, has the same meaning as defined in section 529A (e)(5) of the internal revenue code.

(IV.5) Subsections (4)(i)(IV)(B) and (4)(i)(IV)(C) of this section and this subsection (4)(i)(IV.5) are repealed, effective January 1, 2035.

(V) Beginning January 1, 2022, and annually thereafter, collegeinvest shall provide the department with a secure electronic report containing information for the 529 qualified state tuition program's account owners and third-party contributors necessary for the administration of the deduction allowed in this section. The report must include:

(A) The name and social security number, and the contribution amount, of all Colorado taxpayers making a contribution to a collegeinvest account in the reporting tax year commencing on or after January 1, 2021;

(B) The name and social security number, and the contribution amount, of any other Colorado taxpayer making a contribution to a collegeinvest account in the reporting tax year commencing on or after January 1, 2021, who intends to participate in the deduction allowed in this section; and

(C) The name and social security number, and the distribution amount, of each account holder of a collegeinvest account who is also a Colorado taxpayer making a distribution in the reporting tax year commencing on or after January 1, 2021, and the reason, if any, for the distribution.

(VI) The purpose of the deduction authorized in this subsection (4)(i) is to create additional incentives for saving for college tuition not already created by other state or federal law.

(VII) The purposes of the deduction authorized in subsection (4)(i)(I)(B) of this section are to provide support to individuals with disabilities and their families and to provide an incentive for individuals with disabilities and their families to set aside money in an account to cover future disability-related expenses.

(j) to (l.5) Repealed.

(m) (I) Except as provided in subparagraph (VII) of this paragraph (m), for any income tax year commencing on or after January 1, 2001, for any individual who claims the basic standard deduction allowed under section 63 (c)(2) of the internal revenue code on the individual's federal return and, therefore, cannot claim an itemized deduction for charitable contributions pursuant to section 170 of the internal revenue code, an amount equal to the amount of any deduction based upon the aggregate amount of charitable contributions in excess of five hundred dollars that the individual could have claimed pursuant to section 170 of the internal revenue code if the individual had not claimed the basic standard deduction.

(II) Any state income tax modification allowed pursuant to the provisions of subparagraph (I) of this paragraph (m) shall be published in rules promulgated by the executive director in accordance with article 4 of title 24, C.R.S., and shall be included in income tax forms for that taxable year.

(III) to (VI) Repealed.

(VII) For any income tax year commencing on or after January 1, 2015, but before January 1, 2020, any individual who claims an income tax credit allowed in section 39-22-536 may not claim the deduction set forth in this paragraph (m) for the food contribution to the hunger-relief charitable organization.

(n) Repealed.

(n.5) (I) (A) For income tax years commencing on or after January 1, 2014, but prior to January 1, 2017, and for income tax years commencing on or after January 1, 2020, but prior to January 1, 2025, an amount equal to fifty percent of a landowner's costs incurred in performing wildfire mitigation measures in that income tax year on his or her property located within the state; except that the amount of the deduction claimed in an income tax year shall not exceed two thousand five hundred dollars or the total amount of the landowner's federal taxable income for the income tax year for which the deduction is claimed, whichever is less.

(A.5) For income tax years commencing on or after January 1, 2017, but prior to January 1, 2020, an amount equal to one hundred percent of a landowner's costs incurred in performing wildfire mitigation measures in that income tax year on his or her property located within the state; except that the amount of the deduction claimed in an income tax year shall not exceed two thousand five hundred dollars or the total amount of the landowner's federal taxable income for the income tax year for which the deduction is claimed, whichever is less.

(B) In the case of two taxpayers filing a joint return, the amount subtracted from federal taxable income shall not exceed two thousand five hundred dollars in any taxable year. 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 deduction specified in this paragraph (n.5).

(C) In the case of real property owned as tenants in common, the deduction allowed pursuant to this paragraph (n.5) shall only be allowed to one of the individuals of the ownership group.

(II) A landowner who performs wildfire mitigation measures on his or her real property located within the state may claim the deduction authorized by this paragraph (n.5) if the wildfire mitigation measures are performed in a wildland-urban interface area.

(III) For purposes of this paragraph (n.5):

(A) Colorado state forest service means the Colorado state forest service identified in section 23-31-302, C.R.S.

(B) Costs means any actual out-of-pocket expense incurred and paid by the landowner, documented by receipt, for performing wildfire mitigation measures. Costs do not include any inspection or certification fees, in-kind contributions, donations, incentives, or cost sharing associated with performing wildfire mitigation measures. Costs do not include expenses paid by the landowner from any grants awarded to the landowner for performing wildfire mitigation measures.

(C) Landowner means any 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, and shall not include any partnership, S corporation, or other similar entity that owns private land as an entity.

(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.

(IV) This subsection (4)(n.5) is repealed, effective January 1, 2028.

(o) For income tax years commencing on or after January 1, 2011, an amount equal to any amount received as employer matching contributions to an adult learner's individual trust account or savings account made pursuant to part 3 of article 3.1 of title 23, C.R.S.;

(p) For income tax years commencing on or after January 1, 2014, any amount received as a grant from the military family relief fund created in section 28-3-1502, C.R.S., to the extent that it is included in federal taxable income;

(q) For income tax years commencing on or after January 1, 2013, an amount equal to any amount received as compensation for an exonerated person pursuant to section 13-65-103, C.R.S., on or after January 1, 2014, except as to those portions of the judgment awarded as attorney fees for bringing a claim under such section;

(r) For income tax years commencing on or after January 1, 2014, if a taxpayer is licensed under the Colorado Marijuana Code, article 10 of title 44, or its predecessor codes, an amount equal to any expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed by section 280E of the internal revenue code because marijuana is a controlled substance under federal law;

(r.5) For income tax years commencing on or after January 1, 2024, if a taxpayer is licensed pursuant to the Colorado Natural Medicine Code, article 50 of title 44, an amount equal to any expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed by section 280E of the internal revenue code because natural medicine is a controlled substance under federal law;

(s) Repealed.

(t) (I) For income tax years commencing on or after January 1, 2015, and prior to January 1, 2025, compensation that would be subject to withholding under section 39-22-604, received by a nonresident individual for performing disaster-related work in the state during a disaster period.

(II) For purposes of this paragraph (t):

(A) Declared state disaster emergency means a disaster or emergency event for which the governor has issued an executive order declaring a disaster emergency.

(B) Disaster period means a period that begins with the day of the governor's executive order declaring a state disaster emergency and that extends for a period of sixty calendar days after the expiration of the governor's executive order.

(C) Disaster-related work means repairing, renovating, installing, building, or rendering services that relate to infrastructure that has been damaged, impaired, or destroyed by a declared state disaster emergency or providing emergency medical, firefighting, law enforcement, hazardous material, search and rescue, or other emergency service related to a declared state disaster emergency.

(D) Infrastructure means property and equipment owned or used by communications networks, gas and electric utilities, water pipelines, and public roads and bridges and related support facilities that service multiple customers or citizens, including but not limited to real and personal property such as buildings, offices, lines, poles, pipes, structures, and equipment.

(III) This subsection (4)(t) is repealed, effective December 31, 2028.

(u) For income tax years commencing on or after January 1, 2016, an amount equal to any compensation received for active duty service in the armed forces of the United States by an individual who has reacquired residency in the state pursuant to section 39-22-110.5, to the extent that the compensation is included in federal taxable income;

(w) (I) For income tax years commencing on or after January 1, 2017, and prior to January 1, 2025, to the extent included in federal taxable income and as permitted under part 47 of this article 22, an amount equal to any interest and other income earned on the investment of the money in a first-time home buyer savings account during the taxable year.

(II) Any exclusion taken under subparagraph (I) of this paragraph (w) is subject to recapture under paragraph (k) of subsection (3) of this section as specified in section 39-22-4705.

(III) This subsection (4)(w) is repealed, effective December 31, 2028.

(x) (I) Except as otherwise provided in subsection (4)(x)(II) of this section, for income tax years commencing on or after January 1, 2018, all income earned, to the extent included in federal taxable income except as otherwise provided in subsection (4)(x)(IV) of this section, as a direct result of winning a medal while competing for the United States of America at the Olympic games.

(II) The subtraction provided for in subsection (4)(x)(I) of this section does not apply to a taxpayer whose federal adjusted gross income for the income tax year in which the taxpayer has income earned as a direct result of winning a medal, as determined prior to application of this subsection (4)(x), exceeds one million dollars or, if the taxpayer's filing status is married filing separately, exceeds five hundred thousand dollars.

(III) As used in this subsection (4)(x):

(A) Income earned as a direct result of winning a medal includes both the monetary value of the medal itself and any monetary award given for winning the medal by the United States Olympic committee or any sport-specific national governing body or Paralympic sport organization but does not include endorsement income or nonmonetary benefits.

(B) Olympic games means the summer and winter Olympic games and the summer and winter Paralympic games.

(IV) The monetary value of any medal won while competing for the United States of America at either the summer or winter Olympic games or the summer or winter Paralympic games shall be subtracted from federal taxable income regardless of whether or not said monetary value is included in federal taxable income.

(y) (I) For income tax years commencing on or after January 1, 2019, but prior to January 1, 2029, an amount equal to a qualified individual's military retirement benefits included in federal adjusted gross income, but not to exceed the following amounts:

(A) Four thousand five hundred dollars for income tax years commencing on or after January 1, 2019, but prior to January 1, 2020;

(B) Seven thousand five hundred dollars for income tax years commencing on or after January 1, 2020, but prior to January 1, 2021;

(C) Ten thousand dollars for income tax years commencing on or after January 1, 2021, but before January 1, 2022; or

(D) Fifteen thousand dollars for income tax years commencing on or after January 1, 2022, but before January 1, 2029.

(II) As used in this subsection (4)(y):

(A) Military retirement benefits means any retirement benefits received as a result of the individual's service in the armed forces of the United States.

(B) Qualified individual means an individual who is under fifty-five years of age at the close of the taxable year.

(III) (A) In accordance with section 39-21-304 (1), which requires each bill that extends a tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration if one was not previously included in the tax expenditure, the general assembly finds and declares that the purpose of the tax expenditure in this subsection (4)(y) is to provide tax relief to certain individuals, namely military retirees.

(B) The general assembly and the state auditor shall measure the effectiveness of this tax expenditure in achieving the purpose specified in subsection (4)(y)(III)(A) of this section by measuring whether military retirees are benefitting from the tax expenditure, and by how much.

(z) (I) Except as provided in subsection (4)(z)(II) of this section, for income tax years beginning on or after January 1, 2021, but before January 1, 2022, the sum of the amount by which taxable income for the specified tax years exceeds the taxable income for the modified specified tax years computed separately for each income tax year, plus the sum of any amounts added back by the taxpayer as specified in subsections (3)(l), (3)(m), and (3)(n) of this section.

(II) (A) The subtraction calculated under subsection (4)(z)(I) of this section applies after the application of the other subtractions provided for in this subsection (4) and is limited to the lesser of the taxpayer's Colorado taxable income or three hundred thousand dollars.

(B) Any amount of the subtraction calculated under subsection (4)(z)(I) of this section that a taxpayer may not claim by operation of subsection (4)(z)(II)(A) of this section may be carried forward to subsequent tax years as a subtraction from the taxpayer's federal taxable income until exhausted; except that each tax year's subtraction may not exceed the lesser of the taxpayer's Colorado taxable income or one hundred fifty thousand dollars for the income tax years commencing on or after January 1, 2022, but before January 1, 2026, and each year's subtraction may not exceed the taxpayer's Colorado taxable income in any income tax years thereafter. Any subtraction must be applied first to the earliest income tax years possible.

(III) A taxpayer that applies the subtraction allowed in this subsection (4)(z) with respect to qualified improvement property shall calculate the gain or loss on a sale of such qualified improvement property for purposes of the subtraction in subsection (4)(b) of this section using the basis reported on their federal income tax return at the time of the sale.

(IV) As used in this subsection (4)(z), unless the context otherwise requires:

(A) CARES Act means the March 2020 Coronavirus Aid, Relief, and Economic Security Act, Pub.L. 116-136.

(B) Colorado taxable income means federal taxable income as modified by this article 22 without regard to this subsection (4)(z).

(C) Retroactive provisions of the CARES Act means the changes made to the internal revenue code in sections 2303, 2304, 2306, and 2307 of the CARES Act.

(D) Taxable income for the modified specified tax years means the taxpayer's Colorado taxable income for tax years ending before March 27, 2020, as calculated under the internal revenue code and Colorado law applicable to the taxpayer's return as of the date the return was due, as modified by the application of the retroactive provisions of the CARES Act applied to the calculation of the taxpayer's federal taxable income, but only to the extent the taxpayer appropriately applied those provisions to the taxpayer's federal income tax returns for each tax year.

(E) Taxable income for the specified tax years means the taxpayer's Colorado taxable income for tax years ending before March 27, 2020, as calculated under Colorado law applicable to the taxpayer's return as of the date the return was due.

(cc) (I) For income tax years commencing on or after January 1, 2026, but before January 1, 2034, an amount equal to the amount of any Segal AmeriCorps Education Award received for service in the AmeriCorps national service program, which is used by the taxpayer during the income tax year.

(II) 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:

(A) The purpose of the income tax subtraction created in this subsection

(4)(cc) is to provide tax relief for certain individuals, specifically taxpayers who have received Segal AmeriCorps Education Awards for AmeriCorps service; and

(B) The general assembly and the state auditor shall measure the effectiveness of the subtraction in achieving the purpose specified in subsection

(4)(cc)(II)(A) of this section based on the number and aggregate amount of subtractions claimed in a tax year.

(III) The department of revenue shall maintain information about the number of taxpayers who claim the subtraction in a tax year and the aggregate amount of subtractions claimed in a tax year, in addition to any other information determined necessary by the department of revenue, to evaluate the effectiveness of the tax subtraction allowed in this subsection (4)(cc) in achieving the purpose specified in subsection (4)(cc)(II)(A) of this section, and shall provide this information upon request of the general assembly or the state auditor.

(IV) This subsection (4)(cc) is repealed, effective July 1, 2039.

(dd) (I) For income tax years commencing on or after January 1, 2027, but before January 1, 2038, an amount equal to qualifying capital gains that are subject to tax under this article 22 and that are realized by an owner during the taxable year for the qualified sale of a qualified business.

(II) As used in this subsection (4)(dd), unless the context otherwise requires:

(A) Office means the Colorado office of economic development created in section 24-48.5-101.

(B) Owner has the same meaning as set forth in section 39-22-542 (2)(h).

(C) Qualified business has the same meaning as set forth in section 39-22-542 (2)(i).

(D) Qualified employee-owned business has the same meaning as set forth in section 39-22-542 (2)(j).

(E) Qualified sale means the conversion to a qualified employee-owned business; except that the conversion must be by an increment of at least twenty percent of the total ownership of the entire qualified employee-owned business.

(F) Qualifying capital gains means the amount of net capital gains, as defined in section 1222 (11) of the internal revenue code, subject to the limitation set forth in subsection (4)(dd)(V) of this section.

(III) 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 the income tax subtraction provided in this subsection

(4)(dd) is to:

(A) Induce certain designated behavior by taxpayers, specifically for businesses to establish employee stock ownership plans or employee ownership trusts or to convert to a worker-owned cooperative; and

(B) Provide tax relief for certain businesses or individuals, specifically to businesses that establish employee stock ownership plans or employee ownership trusts or that convert to a worker-owned cooperative.

(IV) The general assembly and the state auditor shall measure the effectiveness of the subtraction in achieving the purpose specified in subsection

(4)(dd)(III) of this section based on the number and aggregate amount of subtractions claimed in a tax year.

(V) (A) On or before June 30, 2026, the office shall establish and post on its website the total amount of capital gains that may be subtracted from an owner's federal taxable income pursuant to this subsection (4)(dd), which amount is in effect for income tax years commencing on or after January 1, 2027, but before January 1, 2038, or until the office adjusts the amount as set forth in subsection

(4)(dd)(V)(B) of this section.

(B) After June 30, 2026, on or before June 30, 2027, and on or before June 30 of each year thereafter until June 30, 2036, the office may adjust the total amount of capital gains that may be subtracted from an owner's federal taxable income that the office has previously established in accordance with this subsection

(4)(dd)(V). The adjusted amount must be posted on the office's website and is in effect for income tax years commencing on or after January 1 of the year immediately following the year in which the adjustment is made but before January 1, 2038, or until the office subsequently adjusts the amount as set forth in this subsection (4)(dd)(V)(B).

(C) An owner may not subtract more than the amount of capital gains established by the office in accordance with subsection (4)(dd)(V)(A) or (4)(dd)(V)(B) of this section in the income tax year.

(D) Beginning in January 2027, and in January every year thereafter following a year in which the office adjusts the amount of capital gains that may be subtracted from an owner's federal taxable income pursuant to subsection

(4)(dd)(V)(B) of this section, the office shall include, as part of its presentation during its SMART Act hearing required by section 2-7-203, information concerning the amount of capital gains that may be subtracted from an owner's federal taxable income that the office has established pursuant to subsection

(4)(dd)(V)(A) or (4)(dd)(V)(B) of this section and the method that the office used to establish the amount.

(VI) This subsection (4)(dd) is repealed, effective July 1, 2042.

(ee) (I) For income tax years commencing on or after January 1, 2026, for a taxpayer who receives a payment pursuant to section 24-33.5-122 (4) that does not qualify for the federal income tax exemption described in section 101 (h) of the internal revenue code, including a payment that does not qualify as a result of the exceptions described in section 101 (h)(2) of the internal revenue code, an amount equal to the amount received pursuant to section 24-33.5-122 (4); and

(II) 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:

(A) The purpose of the income tax subtraction created in this subsection

(4)(ee) is to provide tax relief for certain individuals, specifically taxpayers who have received a payment in connection with the death of a first responder pursuant to section 24-33.5-122 (4); and

(B) The general assembly and the state auditor shall measure the effectiveness of the subtraction in achieving the purpose specified in subsection

(4)(ee)(II)(A) of this section based on the number and aggregate amount of subtractions claimed;

(III) The department of revenue shall maintain information about the number of taxpayers who claim the subtraction in a tax year and the aggregate amount of subtractions claimed in a tax year, in addition to any other information determined necessary by the department of revenue, to evaluate the effectiveness of the tax subtraction allowed in this subsection (4)(ee) in achieving the purpose specified in subsection (4)(ee)(II)(A) of this section, and shall provide this information upon request of the general assembly or the state auditor; and

(IV) Notwithstanding section 39-21-304 (4), the tax subtraction allowed in this subsection (4)(ee) extends indefinitely until no less than five years after the executive director of the department of public safety disburses the last payment in connection with the death of a first responder pursuant to section 24-33.5-122 (4).

(5) Repealed.