Tax laws

What Colorado’s New Tax Laws Could Mean for You and Your Business

Do you own a business?

The legislation is expected to generate nearly $ 150 million in annual revenue by changing the way various businesses pay their taxes.

The biggest sum will come from insurance companies. It will now be more difficult for them to claim a tax deduction that rewards companies with offices in Colorado, which the sponsors say has done little to encourage job growth. They will also lose a rule that allowed them to pay less tax on the sale of certain financial products, compared to other institutions.

Colorado will adopt a new method for calculating taxes owed by companies doing business in multiple states. By adopting the “Finnigan Method”, the state hopes to raise nearly $ 10 million in additional revenue per year.

The legislation will also result in higher tax bills for large retailers and oil and gas companies. In addition, the new law states that access to cloud computers should be taxed. and it is trying to crack down on offshore tax havens, among other changes.

Do you pay capital gains taxes?

Currently, Colorado taxpayers may be exempt from state capital gains tax in certain circumstances. This deduction will be largely eliminated from tax year 2022, forcing more people to pay state taxes when they sell assets such as land, stocks and businesses, in addition to taxes. federal. People who own certain farm property will still be able to claim a deduction.

Who will directly benefit:

Do you have children?

Starting in tax year 2022, the state will offer a child tax credit – essentially cash for households with children.

The credit will be available for individual filers earning less than $ 75,000 or households with less than $ 85,000 in income. The value of the credit will be based on federal child tax credits and will depend on the child’s age and household income. This can range from a few hundred dollars to $ 2,000 per child.

The credit is refundable, which means people who have no state tax obligations would simply receive a government check for that amount.

“We will devote more economic aid to our families, to our small businesses, to our workers who need it most,” said state representative Emily Sirota, cosponsor, adding that the new policies were the result of ‘years of work.

Do you own real estate?

Another law will temporarily reduce property tax rates for the 2022 and 2023 tax years. Taxes due for apartments would be reduced by about 5%. Single-family homes would get a discount of around 3%. Renewable agricultural and energy properties would get a 9 percent reduction. And the law also extends a tax deferral program that allows homeowners to delay paying property taxes when their bills go up too quickly.

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