CO HB1391

Changes the calculation method for the ad valorem tax credit against Colorado's severance tax on oil and gas effective January 1, 2025, replacing actual tax assessments with a formula using prior year mill levies applied to current year gross income to reduce revenue volatility.

Implements new credit formula C = 0.7656 × GI × ML (where C is credit amount, GI is gross income, and ML is total mill levies) for tax years beginning January 1, 2025 and later.

Requires state officials to develop an implementation plan by January 15, 2024 with recommendations to shift the legal incidence of the severance tax from interest owners to oil and gas operators, including necessary legislative and administrative steps to maintain revenue neutrality.

Mandates electronic filing of severance tax returns and enhanced electronic data collection to improve administration and enforcement, with opportunities for increased data sharing between state and local agencies.

Appropriates $16,877 to the Governor's Office and $116,524 to the Department of Revenue for fiscal year 2022-23 to support implementation, including staffing for 2.1 additional full-time equivalents.