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The House today passed two bills that would protect core services and close corporate tax loopholes after Republicans in Congress created a $1 billion hole in Colorado’s budget with massive corporate tax cuts.
HB25B-1002 would crack down on foreign tax havens and offshore bank accounts, and HB25B-1001 would limit tax breaks for higher-earning business owners by permanently decoupling from a federal tax giveaway.
“This legislation ends corporate subsidies and prevents corporations from hiding money overseas so they can dodge paying their fair share of taxes,” said Rep. Yara Zokaie, D-Fort Collins, sponsor of HB25B-1002. “Congressional Republicans’ budget handed billions of dollars in tax breaks to the wealthiest people and corporations, and it’s only fair that we close these loopholes and protect funding for teachers, health care and transportation. Everyday people can’t stash their income overseas to avoid taxes, and neither should billionaires and corporations.”
“The irresponsible Republican tax bill not only runs the largest deficit since World War II to give massive tax giveaways to large corporations, it also undermines the strength of our country and blasted a billion-dollar hole in Colorado's balanced budget,” said Rep. Bob Marshall, D-Highlands Ranch. “I sponsored this bill to close loopholes used by large multinational corporations to shield and hide their income in foreign tax havens, including those Trump's own Secretary of Commerce has called ‘tax scams’. It is disappointing that some colleagues would choose to vote to protect these tax scams used by large multinational companies and ultra-wealthy individuals with access to sophisticated tax planning to avoid paying taxes, which increases the burden upon small businesses and individuals to fund the state's essential services from roads to schools.”
HB25B-1002, which passed by a vote of 43-20, would crack down on foreign tax havens, offshore bank accounts and other tax loopholes for US companies that dodge Colorado taxes with foreign assets. Unless they can prove legitimate operations in the foreign country, Colorado requires companies incorporated in common tax havens, like Cayman Islands and Panama, to pay Colorado taxes to prevent international tax avoidance. For tax years beginning on or after January 1, 2026, the bill would expand the list of countries to include Hong Kong, Ireland, Liechtenstein, the Netherlands and Singapore.
In 2017, President Trump created a special tax break, now known as the Foreign-Derived Deduction Eligible Income (FDDEI) deduction, for multi-national businesses that kept their intangible assets in the US. The bill would decouple the state from the FDDEI to prevent companies from benefiting from larger Colorado tax breaks for investments and assets that are based outside of the state.
President Trump’s 2017 tax cuts also allowed pass-through businesses, like S corporations and real estate investment trusts, to avoid paying taxes on up to 20-percent of qualified business income. In 2020, the Colorado legislature passed the “Tax Fairness Act”, decoupling from this federal tax cut by creating an add-back for this deduction for high-income business owners with an income over $500,000 per year for single filers or $1 million per year for joint filers.
“Congressional Republicans passed a budget that adds even more tax breaks to high-earning businesses while kicking Coloradans off of their health insurance coverage and raising costs for all Coloradans,” said Rep. Emily Sirota, D-Denver, sponsor of HB25B-1001. “When Trump passed tax breaks that allowed high-earners to lop 20-percent off their taxable income in his first term, Colorado Democrats took action and decoupled from this federal giveaway for the wealthy. This bill would make Colorado’s decoupling permanent, and prioritize hardworking Coloradans.”
The legislature extended the decoupling and add-back through 2025. HB25B-1001 would make Colorado’s decoupling permanent, responding to the action by Republicans in Congress to make the tax giveaway permanent at the federal level in HR 1. The bill passed by a vote of 43-19.