HB 25-1139
Fiscal Note
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
HB 25-1139: INCOME TAX CREDIT FOR ELIGIBLE VETERANS
Prime Sponsors:
Rep. Keltie
Published for: House Finance
Drafting number: LLS 25-0681
Fiscal Analyst:
David Hansen, 303-866-2633
david.hansen@coleg.gov
Version: Initial Fiscal Note
Date: February 19, 2025
Fiscal note status: The fiscal note reflects the introduced bill.
Summary Information
Overview. The bill creates a refundable state income tax credit for veterans with a disability, equal to a
percentage of the property tax paid on the veteran’s primary residence.
Types of impacts. The bill is projected to affect the following areas on an ongoing basis:
State Expenditures
State Revenue
TABOR Refunds
Local Government
Appropriations. No appropriation is required.
Table 1
State Fiscal Impacts
Type of Impact
Budget Year
FY 2025-26
Out Year
FY 2026-27
Out Year
FY 2027-28
State Revenue -$94.8 million -$191.6 million -$204.5 million
State Expenditures $0 $684,775 $400,901
Transferred Funds $0 $0 $0
Change in TABOR Refunds -$94.8 million -$191.6 million Not Estimated
Change in State FTE 0.0 FTE 7.6 FTE 5.0 FTE
1
Fund sources for these impacts are shown in the tables below. Page 2
February 19, 2025 HB 25-1139
Table 1A
State Revenue
Fund Source
Budget Year
FY 2025-26
Out Year
FY 2026-27
Out Year
FY 2027-28
General Fund -$94.8 million -$191.6 million -$204.5 million
Cash Funds $0 $0 $0
Total Revenue -$94.8 million -$191.6 million -$204.5 million
Table 1B
State Expenditures
Fund Source
Budget Year
FY 2025-26
Out Year
FY 2026-27
Out Year
FY 2027-28
General Fund $0 $550,145 $311,937
Cash Funds $0 $0 $0
Federal Funds $0 $0 $0
Centrally Appropriated $0 $134,630 $88,964
Total Expenditures $0 $684,775 $400,901
Total FTE 0.0 FTE 7.6 FTE 5.0 FTE
Page 3
February 19, 2025 HB 25-1139
Summary of Legislation
Beginning with the 2026 tax year, the bill allows eligible veterans with at least a 10 percent
disability rating, and their surviving spouses or legal dependents, to claim a refundable tax credit
based on the amount of property tax the veteran pays. The value of the credit increases with
each 10 percentage points increase in the veteran’s disability rating. Figure 1 shows the amount
of property tax that can be claimed as a credit for each decile of disability rating.
Figure 1
Tax Credit Percent of Property Tax by Disability Rating
Assumptions
Based on data from the Department of Military and Veterans Affairs, there were about 134,000
veterans with a disability rating of at least 10 percent in Colorado in 2023, as shown in Table 2.
Table 2
Veterans by Disability Rating, 2023
Disability Rating Veterans
10% to 19% 19,019
20% to 29% 8,413
30% to 39% 8,156
40% to 49% 8,765
50% to 59% 7,234
60% to 69% 11,082
70% to 79% 11,726
80% to 89% 13,678
90% to 99% 13,944
100% 32,221
Total 134,238
Source: Colorado Department of Military
and Veterans Affairs.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
010% to
19%
20% to
29%
30% to
39%
40% to
49%
50% to
59%
60% to
69%
70% to
79%
80% to
89%
90% to
99%
100%
Tax Credit
Percent
Disability Rating Page 4
February 19, 2025 HB 25-1139
The estimates assume this population will increase about 3.9 percent each year based on the
increase in the disabled veteran population from 2015 to 2023 and that the distribution of
veterans among disability rating remains constant. According to data from the U.S. Census
Bureau, veterans with a disability rating of at least 10 percent have a homeownership rate of
about 79 percent. Assuming about 80 percent of eligible veterans utilize the tax credit, an
estimated 95,000 veterans will claim the credit for tax year 2026, 98,700 in tax year 2027, and
102,500 in tax year 2028.
Average home value for the fiscal note estimate reflects the average home value and tax rate for
veterans receiving the homestead property tax exemption, increased based on the
December 2024 Legislative Council Staff forecast for assessed values. Estimates are also adjusted
for the estimated number of disabled veterans receiving the homestead exemption.
State Revenue
The bill is expected to decrease General Fund revenue by $94.8 million in FY 2025-26 (half-year
impact), $191.6 million in FY 2026-27, $204.5 million in FY 2027-28, and larger amounts in later
years assuming property value growth and use of the credit by surviving spouses and
dependents. The bill reduces income tax revenue, which is subject to TABOR. The credit is
expected to average between about $2,000 to $2,100 through the analysis period.
State Expenditures
The bill increases state expenditures in the Department of Revenue (DOR) by about $685,000 in
FY 2026-27, $401,000 in FY 2027-28, and similar amount in later years. These costs, paid from
the General Fund, are summarized in Table 3 and discussed below. The bill also minimally affects
workload in the Department of Local Affairs, Division of Taxation, and the Department of
Military and Veterans Affairs.
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February 19, 2025 HB 25-1139
Table 3
State Expenditures
Department of Revenue
Cost Component
Budget Year
FY 2025-26
Out Year
FY 2026-27
Out Year
FY 2027-28
Personal Services $0 $432,525 $288,761
Operating Expenses $0 $9,728 $6,400
Capital Outlay Costs $0 $66,700 $0
GenTax Programming $0 $13,905 $0
ISD Programming Support $0 $7,070 $0
User Acceptance Testing $0 $3,232 $0
Office of Research and Analysis $0 $8,778 $8,702
Document Management and Tax Form $0 $8,207 $8,074
Centrally Appropriated Costs $0 $134,630 $88,964
Total Costs $0 $684,775 $400,901
Total FTE 0.0 FTE 7.6 FTE 5.0 FTE
Staff
In FY 2026-27, the bill requires 7.6 FTE in the DOR for tax examiners to review tax credit claims,
staff call centers, and respond to protests, as shown in Table 3. Personnel costs are prorated for
an October 2026 start date to prepare for filing returns in Spring 2027. A higher percentage of
reviews are required in the first year of the tax credit. In FY 2027-28, personnel costs are
expected to decrease along with required reviews, to 5.0 FTE, and similar amounts in later years.
The fiscal note assumes 10 percent of claims will be reviewed in the first year of the credit, and
5 percent in the second and later years. The fiscal note assumes complete information submitted
by county assessors to the department. If information submitted by assessors to the department
is incomplete, the percent of claims requiring review could be higher and costs may exceed the
fiscal note estimates.
Computer Programming and Testing
For FY 2026-27 only, the tax credits in the bill will require the department to program, test, and
update database fields in the GenTax software system. Costs include programming in Taxation
Services estimated at $13,905, representing 60 hours of contract programming at a rate of
$231.75 per hour. Costs estimated for associated user acceptance testing in Taxation Services
assume 101 hours at $32 per hour, totaling $3,232. The cost of ISD programming support in the
Executive Director’s Office includes 202 hours at $35 per hour for a total of $7,070. Page 6
February 19, 2025 HB 25-1139
Office of Research and Analysis
Expenditures in the Office of Research and Analysis in Taxation Services are required for tax
code changes impacting ongoing data management and reporting.
Document Management and Tax Form Changes
Document management costs to make changes to paper tax forms and process paper returns
are estimated at $8,207 in FY 2026-27 and $8,074 in FY 2027-28, and similar amounts in later
years. Expenditures for form changes occur in the Department of Personnel and Administration
using reappropriated DOR funds.
Department of Local Affairs, Division of Property Taxation
The bill requires the Division of Property Taxation in the Department of Local Affairs (DPT) to
create an application for taxpayers applying to county assessors for tax credit certificates in
consultation with the Department of Military and Veterans Affairs (DMVA). Development of the
application will require minimal workload and can be accomplished within existing
appropriations.
Department of Military and Veterans Affairs
The bill requires the DMVA to consult with DPT to develop an application for the bill’s tax credit.
Consultation for the application will require minimal workload and can be accomplished within
existing appropriations.
Centrally Appropriated Costs
Pursuant to a Joint Budget Committee policy, certain costs associated with this bill are
addressed through the annual budget process and centrally appropriated in the Long Bill or
supplemental appropriations bills, rather than in this bill. These costs, which may include
employee insurance, supplemental employee retirement payments, leased space, and indirect
cost assessments, are shown in the expenditure table above.
TABOR Refunds
The bill is expected to decrease the amount of state revenue required to be refunded to
taxpayers by the amounts shown in the State Revenue section above. This estimate assumes the
December 2024 LCS revenue forecast. A forecast of state revenue subject to TABOR is not
available beyond FY 2026-27. Because TABOR refunds are paid from the General Fund,
decreased General Fund revenue will lower the TABOR refund obligation, but result in no net
change to the amount of General Fund otherwise available to spend or save. Page 7
February 19, 2025 HB 25-1139
Local Government
The bill increases workload and costs for county assessors’ offices. Staff in these offices will be
required to accept applications for the credit under the bill, verify applicant eligibility, and credit
amounts. The bill may also require increased workload for county treasurers who bill and collect
property taxes. County assessors are required to award tax credit certificates to eligible
applicants, and submit information to the Department of Revenue to verify tax credit claims.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed.
State and Local Government Contacts
County Assessors
Information Technology
Local Affairs
Military Affairs
Personnel
Property Tax Division
Revenue
State Auditor
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit the General Assembly website.