CO HB1021

Creates a state income tax subtraction for qualifying capital gains realized from selling a business (at least 20% ownership) to employees through an ESOP, employee ownership trust, or worker-owned cooperative, effective for tax years 2027-2037

Allows worker-owned cooperatives to subtract up to $1 million in federal taxable income annually from their state income taxes for tax years 2027-2037

Extends the existing employee-ownership tax credit program from 2027 to 2032 and increases the allowable percentage of conversion/expansion costs from 50% to 75% starting in 2026

Creates a new tax credit for "qualified support entities" (nonprofits or businesses that help companies convert to employee ownership), covering up to 75% of support costs with a maximum of $167,000

Reduces the annual cap on employee-ownership tax credit reservations from $10 million to $2 million for tax years beginning January 1, 2026