CO HB1222

For tax years beginning January 1, 2027, individual and corporate taxpayers must add back to their Colorado taxable income the expanded federal deductions for business interest (IRC §163(j)), bonus depreciation (IRC §168(k)), qualified production property depreciation (IRC §168(n)), and domestic R&D expenditures (IRC §174A) that were created or expanded by federal Public Law 119-21

Taxpayers required to make these add-backs may subtract the disallowed amounts over time in future years: business interest over 5 years, qualified property depreciation over 10 years, qualified production property over 38 years, and R&D expenditures over 4 years

Creates a new refundable Family Affordability Credit for resident individuals with children, providing a credit amount set by Legislative Council staff for each child age 5 or younger, and 75% of that amount for children ages 6-16

The Family Affordability Credit phases out by 6.875% for each $5,000 of adjusted gross income exceeding $15,000 for single filers or $25,000 for joint filers, with income thresholds adjusted annually for inflation

Legislative Council staff must annually calculate the credit amount so that total credits claimed equal the projected revenue gained from the business deduction add-backs, making the credit revenue-neutral to the state