Business tax credit bill moves forward
Employers given more incentive to create Colorado jobs
The expansion of a job-growth incentive tax credit is gaining momentum at the Legislature.
Under current law, businesses can earn income tax credits over a five-year period for every job they create in Colorado.
The new bill would expand the availability of that credit to eight years and would make other modifications to an effort that received bipartisan support at the Legislature last year.
House Minority Leader Brian DelGrosso, R-Loveland, and Rep. Tracy Kraft-Tharp, D-Arvada, said the effort to expand the law is a testament to its popularity.
“While our economy is starting to move along, this is a bill that will help us move back to that robust state,” Kraft-Tharp said on the House floor on April 4, just before House members gave initial approval to the legislation.
The bill was expected to easily pass the House during a final vote, which was scheduled for April 7.
The changes to the bill are business friendly.
In addition to expanding the availability of the credit, the bill reduces a requirement that exists in the current law, which mandates that businesses must offer an employee 110 percent of the average county wage. The new bill lowers that requirement to 100 percent.
The bill also alters the “burden of proof” that companies must meet in order to qualify for the credit.
Currently, businesses must prove that the jobs likely would not have been located in Colorado had it not been for the credit. According to the bill's fiscal note, the changes to the bill “require employers to state that, without the credit, the probability of locating the jobs in Colorado would be reduced.”
But the tax credit has guardrails because it is performance-based. The new employee must be employed for a full year before the business receives the credit, which is equal to one-half of the amount of what employers pay for a worker's federal Social Security and Medicare taxes.
Aiding the bill's chances of becoming law is a reduced fiscal impact that was presented to the House Appropriations Committee just hours before it received a full vote in the House.
The original version of the bill would have cost the state $55 million through the 2027-2028 fiscal year. But fiscal analysts and bill sponsors managed to lower that amount to $30 million.
“It is important to keep Colorado competitive and continue to attract new businesses to the state,” Rep. Kraft-Tharp said in a statement after the House vote. “This bill will create good jobs and help more businesses hire workers.”