Wildfire Tax Benefits

House Bill 23-1240 creates a refundable exemption in rebuilding or repairing a residential structure due to a declared wildfire disaster between Jan. 1, 2020 and Dec. 31, 2022. 

Questions? Take a look at the Rebuilding After a Declared Wildfire Disaster FAQ webpage.

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• You owned a home when it was destroyed or damaged in a declared wildfire disaster in 2020, 2021 or 2022;
• You are rebuilding or repairing that home, or you have hired a contractor to rebuild or repair that home; and
• The replacement/repair costs exceed your homeowner’s insurance coverage under any policy associated with the home.

Before filing a claim for refund, a qualified homeowner must first obtain a building permit from the local government with jurisdiction to issue the building permit for the residential structure(s). However, you do not need to obtain a new building permit if you were already issued one. If you no longer have a copy of a previously issued building permit, the local government can help you acquire one. For more information and how to submit an Application for Wildfire Rebuild Exemption Certificate, see FAQ 6.

A landowner may claim an income tax subtraction for the actual out-of-pocket expenses they incur for wildfire mitigation measures performed in that tax year on their real property located within a wildland-urban interface area in Colorado. 

For tax years 2023 through 2025, landowners may also claim an income tax credit for wildfire mitigation measures if their federal taxable income does not exceed $120,000 for tax year 2023. For tax year 2024, the federal taxable income limit for the wildfire mitigation measures credit is $126,258. For tax years 2025, the federal taxable income limit will be adjusted annually for inflation. 

The publication Income Tax Topics: Wildfire Mitigation Measures provides general guidance regarding the wildfire mitigation subtraction and credit and supplements guidance provided in the Colorado Individual Income Tax Guide.

Landowners must complete and submit a Subtractions from Income Schedule (DR 0104AD) with their Colorado Individual Income Tax Return (DR 0104) to claim the subtraction. They must also submit copies of receipts documenting the actual out-of-pocket expenses incurred for wildfire mitigation measures either along with their return or by using the E-Filer Attachment function on Revenue Online.

Landowners must complete and submit an Individual Credit Schedule (DR 0104CR) with their Colorado Individual Income Tax Return (DR 0104) to claim the credit. They must also submit copies of receipts documenting the actual out-of-pocket expenses incurred for wildfire mitigation measures either along with their return or by using the E-Filer Attachment function on Revenue Online.