July Tax Policy 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.

Legislative Changes Taking Effect

• Tax on Interstate Telephone and Telegraph Service – Effective July 1, 2025, House Bill 25-1296 imposes sales tax on interstate telephone and telegraph services. Previously, sales tax had been imposed only on intrastate telephone and telegraph services.
• Medical Marijuana Sales Tax Exemption – Effective July 1, 2025, House Bill 25-1296 exempts from sales tax all sales of medical marijuana to any individual who presents a valid electronic benefits transfer (“EBT”) card or other form of identification used to receive state or federal benefits at the time of sale.
• Exemption for Certain Medium- and Heavy-Duty Motor Vehicles – Effective August 1, 2025, Senate Bill 25-230 restores the sales and use tax exemptions for certain medium- and heavy-duty motor vehicles. These motor vehicles were previously exempt from taxation, but House Bill 24-1036 had repealed this exemption effective January 1, 2025.

New and Revised Publications

• Income Tax Topics: Electric-Powered Lawn Equipment Credit – This publication was revised to provide additional information relating to quarterly electronic reports; to explain that sales tax is imposed on the full purchase price, without reduction for the amount of the required discount; and to further clarify guidance provided on various issues discussed in the publication.
• Sales & Use Tax Topics: Affordable Housing Projects – This new publication replaces FYI Sales 95. 

Rulemaking Activities

• Alternative Transportation Options Income Tax Credit – The Department recently adopted a new rule for the alternative transportation options income tax credit. The credit is allowed to employers that provide alternative transportation options to their employees commuting to work in Colorado.
• Miscellaneous Tax Rules – We recently announced a hearing for the revision or repeal of several income tax, sales tax, and use tax rules.
• Income Tax Withholding Rules – We recently requested public comment on several income tax withholding rules. 

Recently Published Private Letter Rulings (PLR) and General Information Letters (GIL)

• GIL-25-004 – Sales and Use Tax Due on the Fabrication and Installation of a Staircase System into Real Property by a Construction Subcontractor – A construction subcontractor who purchases construction and building materials for use in their job is the consumer of those materials and is liable for the payment of state sales and use tax on the purchase. In cases where a subcontractor uses the construction and building materials they purchased for a construction project to fabricate an item before building that item into a building or structure, the subcontractor’s fabrication labor is not subject to sales and use tax.