Second Regular Session
Seventy-third General Assembly
STATE OF COLORADO
INTRODUCED
LLS NO. 22-0769.01 Ed DeCecco x4216
SENATE BILL 22-124
Senate Committees House Committees
Finance
A BILL FOR AN ACT
C
ONCERNING THE AUTHORITY OF A PASS -THROUGH BUSINESS ENTITY101
TO ELECT TO PAY STATE INCOME TAXES AT THE ENTITY LEVEL .102
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov
.)
The "SALT Parity Act" (act) was enacted in 2021 and, for income
tax years commencing on or after January 1, 2022, the act allows
pass-through entities to elect to pay state income tax at the entity level,
which allows the entity to claim an unlimited deduction at the federal
level for state and local taxes paid. While this election reduces federal
taxable income for the pass-through entity, it does not reduce Colorado
SENATE SPONSORSHIP
Woodward and Kolker, Hisey, Holbert, Kirkmeyer, Rankin
HOUSE SPONSORSHIP
Ortiz and Van Winkle, Lynch, Van Beber
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing statute.
Dashes through the words indicate deletions from existing statute. taxable income under current law.
The bill makes provisions of the act retroactive to January 1, 2018.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, 39-22-343, amend2
(1) as follows:3
39-22-343. Election. (1) Notwithstanding sections 39-22-201,4
39-22-302, and 39-22-322, and except as provided in subsection (2) of5
this section, for income tax years commencing on or after January 1, 20226
J
ANUARY 1, 2018, an S corporation or partnership may annually elect to7
be subject to tax at the entity level for the taxable period. The S8
corporation or partnership shall make the election on the return filed by9
such S corporation or partnership under section 39-22-601. The filing of10
such return is binding on all electing pass-through entity owners.11
SECTION 2. In Colorado Revised Statutes, 39-22-104, amend12
(3)(r) and (4)(aa) as follows:13
39-22-104. Income tax imposed on individuals, estates, and14
trusts - single rate - report - legislative declaration - definitions -15
repeal. (3) There shall be added to the federal taxable income:16
(r) Notwithstanding subsection (3)(o) of this section, for income17
tax years commencing on or after January 1, 2022
JANUARY 1, 2018, an18
amount equal to the deduction taken under section 199A of the internal19
revenue code, except to the extent the deduction is otherwise disallowed20
under section 265 of the internal revenue code, for an electing21
pass-through entity owner of an electing pass-through entity, as such22
terms are defined in section 39-21-342, that makes the election allowed23
in subpart 3 of part 3 of this article 22.24
(4) There shall be subtracted from federal taxable income:25
SB22-124-2- (aa) For income tax years commencing on or after January 1, 20221
J
ANUARY 1, 2018, an amount equal to the electing pass-through entity2
owner's distributive share of the electing pass-through entity's income3
attributable to the state that is taxed pursuant to the provisions of subpart4
3 of part 3 of this article 22 and income not attributable to the state that5
is taxed pursuant to the provisions of subpart 3 of part 3 of this article 22.6
SECTION 3. In Colorado Revised Statutes, 39-22-304, amend7
(3)(r) as follows:8
39-22-304. Net income of corporation - legislative declaration9
- definitions - repeal. (3) There shall be subtracted from federal taxable10
income:11
(r) For income tax years commencing on or after January 1, 2022
12
J
ANUARY 1, 2018, an amount equal to the electing pass-through entity13
owner's distributive share of the electing pass-through entity's income14
attributable to the state that is taxed pursuant to the provisions of subpart15
3 of part 3 of this article 22 and income not attributable to the state that16
is taxed pursuant to the provisions of subpart 3 of part 3 of this article 22.17
SECTION 4. Safety clause. The general assembly hereby finds,18
determines, and declares that this act is necessary for the immediate19
preservation of the public peace, health, or safety.20
SB22-124
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