DENVER, CO– Governor Jared Polis today signed HB21-1311 and HB21-1312, the tax fairness package that will boost economic support for hard working families and eliminate the business personal property tax for two-thirds of the businesses that currently have to pay it. Polis also signed SB21-293, which will temporarily reduce property taxes.
“Without a doubt, our tax code is more fair today because the package we passed and Governor Polis signed today puts working families and small businesses ahead of well-connected and wealthy special interests,” said Rep. Mike Weissman, D-Aurora. “Colorado will build back stronger because we made the choice to provide significant assistance to the families and small businesses who are critical to the success of our local communities by ending ineffective tax windfalls and loopholes for those at the very top.”
“Soon, over 300,000 families and tens of thousands of small businesses will see direct economic assistance for years to come because Democrats in the legislature made the decision to bring more fairness to our tax system,” said Rep. Emily Sirota, D-Denver. “The package Governor Polis signed today will expand opportunities for hard working Coloradans, families and small businesses instead of continuing tax breaks for the wealthiest individuals and largest corporations.”
HB21-1311, sponsored by Representatives Mike Weissman and Emily Sirota, would boost the incomes of over 300,000 hardworking Coloradans by increasing the state Earned Income Tax Credit (EITC) to 25 percent of the federal credit through tax year 2025. The bill also provides economic assistance to hard working Coloradans and families by funding the state’s Child Tax Credit, which was created in 2013, but has never been funded. In order to provide this relief, the bill closes loopholes primarily used for tax avoidance or which only benefit three-tenths of a percent of taxpayers.
HB21-1312, also sponsored by Representatives Weissman and Sirota and which was endorsed by the Colorado Chapter of the National Federation of Independent Businesses, would eliminate business personal property taxes (BPPT) for over two-thirds of the businesses that remit BPPT. Currently, businesses with under $7,900 in business personal property do not have to pay BPPT. The bill increases this exemption to $50,000. In addition to providing an important tax cut to tens of thousands of small businesses, raising the exemption means businesses will no longer have to complete and submit burdensome paperwork needed to claim the BPPT exemption. In order to provide this relief, the bill modifies ineffective tax subsidies for the largest businesses, such as strengthening the criteria insurance companies must meet in order receive a 50 percent discount on their insurance premium tax rate.
Many of the tax expenditures that these bills seek to close or limit were identified by the State Auditor as ineffective and only benefit a small number of businesses and Colorado’s wealthiest taxpayers. The package seeks to narrow expenditures that benefit only a few individuals and large businesses in order to provide broad tax relief to large numbers of hard working Coloradans and small businesses.
Governor Polis also signed SB21-293, sponsored by Majority Leader Daneya Esgar and Representative Matt Gray, which would temporarily lower property tax assessment rates on several classes of residential and commercial property. The bill creates three new subclasses of non-residential property: agricultural, lodging, and renewable energy production property. It also establishes multi-family residential property as a new subclass of residential property. The bill applies new, lower assessment rates to these property classes.
“Today, we are responsibly reducing property tax rates and targeting assistance to the Coloradans who need it the most, and at the same time, we are protecting Colorado’s local governments, fire districts, schools, police and local libraries that would be devastated by permanently losing nearly $1 billion in revenue every year,” said Majority Leader Daneya Esgar, D-Pueblo. “I’m proud the legislature came together to pass this bipartisan bill that will ensure rural Colorado doesn’t continue to bear the consequences of rising property values in more populated areas of the state.”
“The bill Governor Polis signed today thoughtfully creates new categories for properties, such as agricultural properties or single family homes, to temporarily provide direct relief where it’s needed most,” said Rep. Matt Gray, D-Broomfield. “This is a responsible approach that will help Coloradans and protect the critical services that our communities need right now, like our public schools, which are especially important to help Colorado build back stronger from the pandemic.”
The assessment rate on multi-family residences (apartment buildings, condominium buildings) would be lowered from 7.15 percent to 6.8 percent. The assessment rate on single family owner occupied primary residences would drop from 7.15 percent to 6.95 percent. For second homes and short term rental properties, the assessment rate would remain the same. The bill also expands the property tax deferral program to allow homeowners whose tax bills grow by more than four percent since the previous valuation period to defer the amount that exceeds the four percent growth, up to to $10,000. If a statewide measure passes to reduce residential property rates, it would only apply to multi-family properties.
For non-residential properties, agricultural and renewal energy production properties would see their rate reduced from 29 percent to 26.4 percent. If a statewide measure passes to reduce nonresidential property rates, it would only apply to lodging properties. Remaining commercial property rates would remain at 29 percent.