December 2025 Updates
Information about the recent activities of the Office of Tax Policy is provided below. This information includes new and revised publications, rulemaking activities, and recently published letter rulings and information letters. Information about income tax changes for tax year 2025 are also provided below.
Rulemaking Activities
- Mandatory Electronic Filing and Payment – We recently announced a rulemaking hearing for proposed rules that would mandate electronic filing and payment for various taxes.
- Sales Tax Filing Schedules – We recently announced a rulemaking hearing for proposed amendments to Rule 39-26-109 to increase the thresholds for annual and quarterly filing frequencies for sales tax returns.
Income Tax Changes for Tax Year 2025
The following tables provide information about credits and subtractions that are new for tax year 2025, expiring, or have been adjusted in some way for tax year 2025.
New Credits for Tax Year 2025
The following credits take effect for tax year 2025. The bill number for the enacting legislation and links for additional information and resources are provided below.
| Credit or Subtraction | Bill Number | Additional Information and Resources |
|---|---|---|
| Colorado Promise Tuition and Fee Credit | HB 24-1340 SB 25-319 | https://cdhe.colorado.gov/colorado-promise |
| Qualified Care Worker Credit | HB 24-1312 HB 25-1296 | https://tax.colorado.gov/DR1217 |
| Disability Assistance Credit | HB 24-1268 | https://tax.colorado.gov/dac |
| Aircraft Modification for Unleaded Fuel Credit | HB 24-1235 | See section 39-22-560, C.R.S., and the applicable form and instructions. |
| Employee Ownership Tax Credit to Strengthen and to Thrive | HB 24-1157 | Office of Economic Development and International Trade webpage regarding the credit |
| Affordable Housing in Transit- Oriented Communities Credit | HB24-1434 | Colorado Housing and Finance Authority webpage regarding the credit |
| Middle-Income Housing Credit | HB 24-1316 | Colorado Housing and Finance Authority webpage regarding the credit |
Expiring Credits and Subtractions
The following credits, carryforward credits and subtractions cannot be claimed for tax years 2025 and later. The bill number for related legislation and additional information regarding the expiration of the credit or subtraction are provided below.
| Credit or Subtraction | Bill Number | Additional Information and Resources |
|---|---|---|
| Carryforward credit for Food Contributed to Hunger-Relief Charitable Organizations | HB 14-1119 | New credits were last allowed in tax year 2019. Carryforward credits could be carried forward up to five years and cannot be claimed for tax years 2025 and later. |
| Catastrophic Health Insurance Subtraction | HB24-1036 | Subtraction not allowed for tax years 2025 and later. |
| Certified Colorado Disability Funding Committee License Fee Credit | HB24-1036 | New credits cannot be claimed for tax years 2025 and later, but allowable excess credits from prior years can be carried forward for up to five tax years. |
| Colorado Works Program Credit | HB24-1036 | New credits cannot be claimed for tax years 2025 and later, but allowable excess credits from prior years can be carried forward for up to three tax years. |
| Credit for Employer Paid Leave of Absence for Live Organ Donation | HB 18-1202 | New credits cannot be claimed for tax years 2025 and later, but allowable excess credits from prior years can be carried forward for up to five tax years. |
| Employer Contribution to Medical Savings Account Subtraction | HB24-1036 | Subtraction not allowed for tax years 2025 and later. |
| First Time Home Buyer Savings Account Interest Deduction | HB24-1036 | Subtraction not allowed for tax years 2025 and later. |
| Income-Qualified Senior Housing Income Tax Credit | HB24-1052 | Credit cannot be claimed for tax year 2025. |
| Medical Savings Account Subtraction | HB24-1036 | Subtraction not allowed for tax years 2025 and later. |
| Non-Resident Disaster Relief Worker Subtraction | HB24-1036 | Subtraction not allowed for tax years 2025 and later. |
| School-to-Career Investment Credit | HB24-1036 | New credits cannot be claimed for tax years 2025 and later, but allowable excess credits from prior years can be carried forward for up to five tax years. |
| Wildfire Mitigation Measures Subtraction | HB24-1036 | Subtraction not allowed for tax years 2025 and later. See Department publication Income Tax Topics: Wildfire Mitigation Measures for information about the Wildfire Mitigation Measures Credit allowed for tax year 2025. |
Inflation and Other Annual Adjustments
Several annual adjustments are made to credits and subtractions based on inflation or other factors. Adjustments made for tax year 2025 are summarized in the following table.
| Adjusted Item | Adjustment and Additional Information |
|---|---|
| State Sales Tax (TABOR) Refund | State Sales Tax (TABOR) Refund amounts were adjusted based on revenue in excess of the TABOR cap. See Income Tax Topics: State Sales Tax Refund for the amounts for tax year 2025. |
| CollegeInvest Contribution Subtraction | Annual inflation adjustment for per-beneficiary limit: $25,400 for single filers and $38,100 for joint filers. See Income Tax Topics: CollegeInvest Contribution Subtraction for additional information. |
| Colorado ABLE Contribution Subtraction | Annual inflation adjustment for per-beneficiary limit: $25,400 for single filers and $38,100 for joint filers. See Income Tax Topics: ABLE Contribution Subtraction for additional information. |
| Wildfire Mitigation Expenses Credit | Federal taxable income limit is adjusted for inflation from $126,300 to $129,200. See Income Tax Topics: Wildfire Mitigation Measures for additional information. |
| Innovative Motor Vehicle and Truck Credits | Credit amounts decrease for 2025 (DR 0617) and for 2026 (DR 0618). |
| Early Childhood Educator Income Tax Credit | Credit amounts are adjusted for inflation for tax year 2025. See the Early Childhood Educator Income Tax Credit Affidavit (DR 1703) for additional information. |
| Rural & Frontier Health Care Preceptor Credit | Credit amount increases for tax year 2025 from $1,000 to $2,000 per preceptorship and maximum total allowable credit increases from $1,000 for one preceptorship to $6,000 for three preceptorships. For additional information, see form DR 0366, Rural & Frontier Health Care Preceptor Credit, and its instructions. |