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DENVER, CO - Colorado Democrats today unveiled four new bills to rebalance Colorado’s tax code and put working people first after Congress passed H.R. 1, which granted massive tax breaks to corporations and the ultra-wealthy that cut off tax relief for families. The bills would create a new tax credit, modeled after the highly successful Family Affordability Tax Credit, to boost the incomes of hardworking Colorado families.
In recent years, Democrats in Colorado have expanded the state Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) and created the Family Affordability Tax Credit (FATC) to boost the incomes of hardworking Colorado families and lift children out of poverty. A 2026 report found that the EITC, CTC and FATC cut child poverty by 37-percent and family poverty by 32-percent. These tax credits were turned off for the next two tax years due to H.R. 1.
“We have a choice– we can give taxpayer-funded handouts to mega-corporations and the Jeff Bezos’ of the world or we can update Colorado’s tax code to benefit the hardworking people of our state,” said Rep. Lorena García, D-Unincorporated Adams County. “When the federal GOP passed H.R. 1 last year, most of the tax breaks went to corporations and the ultra-wealthy. This eliminated Colorado’s state tax breaks for working people, which have slashed child poverty by nearly 40-percent. Colorado Democrats are now closing special interest corporate tax breaks and handouts to boost the incomes of hardworking Coloradans.”
“Colorado’s tax code should work for the people of Colorado, not provide special treatment for monied interests that aren’t effective in advancing state goals,” said Senator Mike Weissman, D-Aurora. “Recent tax and other law changes at the federal level have been devastating. We must use this moment as an opportunity to examine our tax code and re-balance the scales toward working people. Cleaning up our tax code is a critical way we can mitigate the harms taking place in Washington and put Coloradans first.”
Beginning for 2026 taxes, the three bills that will be introduced today would create a new Family Affordability Credit that could be taken in addition to the CTC, EITC and FATC. The credit is revenue neutral – it will adjust based on available revenue, so that families receive all the benefits from modernizing the tax code.
Three bills that will be introduced today will create the new credit. The first bill prioritizes working families and ensures corporations and high-earners pay their fair share by closing tax loopholes that offer deductions for top executives’ salaries. A second bill mitigates the harm of H.R. 1 and would decouple Colorado’s tax code from four new federal tax deductions to rein in these corporate tax breaks, especially for out-of-state investments. A third bill would tax software the same, regardless of how it is acquired.
Additionally, a fourth bill will be introduced in the coming days and would modernize and simplify the tax code by repealing ineffective or unnecessary special tax exemptions and deductions to expand and extend tax credits for wildfire and beetle kill mitigation, job creators, and investments in clean energy.
Prioritizing Working Families, Reps. Yara Zokaie and Emily Sirota, Sens. Judy Amabile and Katie Wallace: This bill would close a tax loophole that allows corporations to deduct the salaries of their CEO, CFO and the next eight highest-paid executives—up to $1 million each—as ‘operating expenses,’ even if the executive doesn’t reside in Colorado.
“We’re closing tax loopholes for the ultra-wealthy and corporations so we can create a more fair tax code that puts money back into the pockets of hardworking Coloradans and lifts families out of poverty,” said Rep. Yara Zokaie, D-Fort Collins. “When people are struggling to juggle their rent, groceries and utility bills, Trump’s corporate tax breaks for million-dollar salaries are a slap in the face for hardworking Coloradans. With this bill, Colorado Democrats are cracking down on taxpayer funded corporate giveaways to restore the balance toward middle and lower income people.”
“Tax credits for working families and children are a lifeline, and they’re at risk because of the chaos from Washington,” said Senator Judy Amabile, D-Boulder. “H.R. 1 devastated our ability to fund tax credits that lift families out of poverty and give Colorado kids a chance to succeed. This bill is about setting Colorado’s tax code on Colorado’s terms, closing corporate tax loopholes, and putting everyday Coloradans first.”
“Colorado is at a crossroads– we can build an economy where everyone has a fair shot or we can protect tax breaks for CEO salaries and loopholes that allow the very wealthy to avoid paying their fair share,” said Rep. Emily Sirota, D-Denver. “The tax credits we created are helping families put food on the table, but if we don’t pass these bills, the largest corporations and wealthiest individuals will see their taxes cut while families pay more. This legislation is one of many steps that Colorado Democrats are taking to rebalance Colorado’s tax code toward working people so we can drive down child poverty and put more money back into families’ pockets.”
“Just because the federal government sold out working families for huge corporate tax breaks, it doesn’t mean Colorado should do the same,” said Senator Katie Wallace, D-Longmont. “This legislation closes tax loopholes to balance the scales back toward everyday Coloradans and ensure that corporations pay their fair share in our state. By doing so, we can mitigate the harms caused by H.R. 1 and uplift more of Colorado’s working families.”
The Alternative Minimum Tax (AMT) requires some high-income earners to pay a minimum amount of tax, regardless of how many deductions they are eligible for, but there is a state tax credit that reduces what they are required to pay under the AMT. The bill would repeal this credit, which only exists in three states. The bill would also lower the percentage of net operating loss deductions that corporations can deduct from their Colorado taxable income and shorten the length of time that they can carry those losses forward before claiming them, a technique that corporations use to avoid paying taxes year after year, even while making significant profits.
Mitigating the Harm of H.R. 1, Reps. Lorena García and Karen McCormick and Sen. Cathy Kipp: This bill would de-couple Colorado’s tax code from four business tax breaks created or expanded by H.R. 1, including certain write-offs and deductions for interest expenses on debt, especially for multi-national corporations.
“Colorado Democrats are focused on building an economy that rewards hardworking people in Colorado, which is why we’re limiting corporate tax breaks so we can lower taxes for middle and lower income people,” said Rep. Karen McCormick, D-Longmont. “H.R. 1 has already had devastating impacts on our state, and Colorado Democrats are taking every step we can to undo the harm and put working families first. Our legislation would end corporate handouts paid for by Colorado taxpayers, especially for out-of-state investments, so that our tax code rewards hardworking people and uplifts families, not the largest corporations.”
“The Federal H.R. 1 – the big, bad billionaires bill – included tax deductions for corporations that were automatically placed into our state tax code, whether or not they benefit Colorado businesses and workers,” said Senator Cathy Kipp, D-Fort Collins. “The changes proposed in this bill keep Colorado from spending our tax dollars on development outside of Colorado, instead putting those benefits toward the well-being of families and children in our communities.”
Updating and Simplifying the Tax Code, Reps. Lorena García and Kyle Brown and Sen. Weissman: This bill, which will be introduced in the coming days, would repeal ineffective or unnecessary tax exemptions and deductions and modify others to make Colorado’s tax code more consistent and efficient.
“We’re updating Colorado’s tax code to prioritize hardworking Coloradans, create jobs and reduce costs,” said Rep. Kyle Brown, D-Louisville. “H.R. 1 rigged Colorado’s tax code in favor of corporations and the 1%, leaving us to pick up the pieces to lessen the blow on hardworking Coloradans. With this bill, we’re leaving no stone unturned by closing tax loopholes and eliminating ineffective tax breaks to extend and expand tax credits for small businesses, wildfire mitigation and renewable energy that create jobs, boost incomes and save people money.”
The bill would repeal ineffective tax exemptions for metal bullion, coins and purchases regarding space flight. It would also eliminate vendor discounts for cigarettes, nicotine and tobacco products.
It also makes changes to existing tax credits, including:
Increasing access to the Community Food Access Tax Credit that offers small food retailers and family farms a refundable tax credit;
Renewing the Renewable Energy Enterprise Zone Investment Tax Credit to reward businesses that invest in projects that generate renewable energy; and
Expanding the Wildfire Mitigation Tax Credit by making it a refundable tax credit and increasing eligibility to boost wildfire mitigation efforts.
Expanding a tax credit for businesses that rehabilitate vacant properties.
Downloadable Software, Rep. Steven Woodrow, Speaker Pro Tempore Andy Boesenecker and Sen. Matt Ball: This bill would repeal the downloadable software exemption to ensure taxes on these products are consistent, no matter how or where they are purchased.
“We’re creating a more equitable tax code for Coloradans,” said Rep. Steven Woodrow, D-Denver. “This tax exemption on downloadable software has been inconsistently applied, so we’re bringing this legislation to prevent Coloradans from being taxed differently due to the way the product is being delivered. Our legislation equally applies sales tax across the board to modernize Colorado’s tax code and prioritize tax relief for working people.”
“After Congress changed our tax code to favor the wealthy, we’re stepping in to support working families with a new Family Affordability Credit,” said Senator Matt Ball, D-Denver. “This legislation will also modernize our tax code to treat downloadable software the same as software you’d purchase in store, which will enable us to put money back into the hands of families who need it.”
“Our bill would ensure sales tax on software isn’t being applied arbitrarily,” said Speaker Pro Tempore Andy Boesenecker, D-Fort Collins. “Whether someone purchases Microsoft Word online or in person, they should not be taxed differently. This bill would ensure that Coloradans could expect to pay the same taxes, no matter what zip code or manner in which they purchase software.”
The Colorado Office of the State Auditor reported that the antiquated sales tax exemption for certain downloadable software was being applied unevenly across the state, with 14-percent of vendors not applying the exemption at all.