Colorado 2025 Regular Session

Colorado Senate Bill SB136 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	First Regular Session
2	2	Seventy-fifth General Assembly
3	3	STATE OF COLORADO
4	4	INTRODUCED
5	5
6	6
7	7	LLS NO. 25-0749.02 Nicole Myers x4326
8	8	SENATE BILL 25-136
9	9	Senate Committees House Committees
10	10	State, Veterans, & Military Affairs
11	11	A BILL FOR AN ACT
12	12	C
13	13	ONCERNING AN EXPANSION OF THE STATE INCOME TAX SUBTRACTION101
14	14	FOR RETIREMENT BENEFITS TO ALLOW AN INDIVIDUAL TO102
15	15	SUBTRACT ALL SUCH BENEFITS FROM FEDERAL TAXABLE103
16	16	INCOME FOR THE PURPOSE OF CALCULATING STATE TAXABLE104
17	17	INCOME REGARDLESS OF THE INDIVIDUAL 'S INCOME OR AGE.105
18	18	Bill Summary
19	19	(Note: This summary applies to this bill as introduced and does
20	20	not reflect any amendments that may be subsequently adopted. If this bill
21	21	passes third reading in the house of introduction, a bill summary that
22	22	applies to the reengrossed version of this bill will be available at
23	23	http://leg.colorado.gov
24	24	.)
25	25	Current law allows any individual to deduct amounts, up to certain
26	26	caps based on the individual's age, received as pensions or annuities from
27	27	SENATE SPONSORSHIP
28	28	Pelton B.,
29	29	HOUSE SPONSORSHIP
30	30	Gonzalez R.,
31	31	Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
32	32	Capital letters or bold & italic numbers indicate new material to be added to existing law.
33	33	Dashes through the words or numbers indicate deletions from existing law. any source, to the extent included in federal adjusted gross income.
34	34	Notwithstanding the caps on the deduction for amounts received
35	35	as pensions or annuities from other sources, current law allows any
36	36	individual who is 65 years of age or older at the close of a taxable year to
37	37	subtract the total amount of social security benefits that the individual
38	38	received from the individual's federal taxable income, to the extent those
39	39	benefits were included in federal taxable income, when determining the
40	40	individual's state taxable income. Beginning January 1, 2025, this
41	41	subtraction is also allowed to any individual who is 55 years of age or
42	42	older and has an adjusted gross income for the applicable tax year that is
43	43	less than or equal to $75,000 if filing individually or $95,000 if filing
44	44	jointly.
45	45	For income tax years commencing on or after January 1, 2026, the
46	46	bill removes all caps on the deduction for amounts received as pensions
47	47	and annuities and allows any individual, regardless of age or income, to
48	48	subtract the total amount that the individual received as pension or
49	49	annuity income from the individual's federal taxable income, to the extent
50	50	that income was included in federal taxable income, when determining
51	51	the individual's state taxable income.
52	52	Be it enacted by the General Assembly of the State of Colorado:1
53	53	SECTION 1. In Colorado Revised Statutes, 39-22-104, amend2
54	54	(4)(f)(I), (4)(f)(III)(A), and (4)(f)(III)(B); repeal (4)(f)(III)(C) and3
55	55	(4)(f)(III)(D); and add (4)(f)(IV), (4)(f)(V), and (4)(f)(VI) as follows:4
56	56	39-22-104. Income tax imposed on individuals, estates, and5
57	57	trusts - single rate - report - tax preference performance statement6
58	58	- legislative declaration - definitions - repeal. (4) There shall be7
59	59	subtracted from federal taxable income:8
60	60	(f) (I) S
61	61	UBJECT TO THE PROVISIONS OF THIS SUBSECTION (4)(f), for9
62	62	income tax years commencing on or after January 1, 1989, amounts10
63	63	received as pensions or annuities from any source by any individual who11
64	64	is fifty-five years of age or older at the close of the taxable year, to the12
65	65	extent included in federal adjusted gross income;13
66	66	(III) (A) F
67	67	OR INCOME TAX YEARS COMMENCING PRIOR TO14
68	68	SB25-136-2- JANUARY 1, 2026, amounts subtracted under this subsection (4)(f) are1
69	69	capped at twenty thousand dollars per tax year for any individual who is2
70	70	fifty-five years of age or older but less than sixty-five years of age at the3
71	71	close of the taxable year. For income tax years commencing on or after4
72	72	January 1, 2025, the cap set forth in this subsection (4)(f)(III)(A) is5
73	73	calculated by first considering the total amount of social security benefits6
74	74	a taxpayer received that were included in federal taxable income at the7
75	75	close of the taxable year. If the total amount of such social security8
76	76	benefits exceeds the cap set forth in this subsection (4)(f)(III)(A), and the9
77	77	taxpayer's adjusted gross income for the applicable tax year is less than10
78	78	or equal to seventy-five thousand dollars if filing individually or11
79	79	ninety-five thousand dollars if filing jointly, then the cap is increased to12
80	80	an amount equal to the total amount of such social security benefits.13
81	81	(B) F
82	82	OR INCOME TAX YEARS COMMENCING PRIOR TO JANUARY 1,14
83	83	2026, amounts subtracted under this subsection (4)(f) are capped at15
84	84	twenty-four thousand dollars per tax year for any individual who is16
85	85	sixty-five years of age or older at the close of the taxable year. For17
86	86	income tax years commencing on or after January 1, 2022, the cap set18
87	87	forth in this subsection (4)(f)(III)(B) is calculated by first considering the19
88	88	total amount of social security benefits a taxpayer received that were20
89	89	included in federal taxable income at the close of the taxable year. If the21
90	90	total amount of such social security benefits exceeds the cap set forth in22
91	91	this subsection (4)(f)(III)(B), then the cap is increased to an amount equal23
92	92	to the total amount of such social security benefits.24
93	93	(C) For the purpose of determining the subtraction allowed by this
94	94	25
95	95	subsection (4)(f), in the case of a joint return, social security benefits26
96	96	included in federal taxable income shall be apportioned in a ratio of the27
97	97	SB25-136
98	98	-3- gross social security benefits of each taxpayer to the total gross social1
99	99	security benefits of both taxpayers.2
100	100	(D) As used in this subsection (4)(f), "pensions and annuities"3
101	101	means retirement benefits that are periodic payments attributable to4
102	102	personal services performed by an individual prior to his or her retirement5
103	103	from employment and that arise from an employer-employee relationship,6
104	104	from service in the uniformed services of the United States, or from7
105	105	contributions to a retirement plan that are deductible for federal income8
106	106	tax purposes. "Pensions and annuities" includes distributions from9
107	107	individual retirement arrangements and self-employed retirement10
108	108	accounts to the extent that such distributions are not deemed to be11
109	109	premature distributions for federal income tax purposes, amounts12
110	110	received from fully matured privately purchased annuities, social security13
111	111	benefits, and amounts paid from any such sources by reason of permanent14
112	112	disability or death of the person entitled to receive the benefits.15
113	113	(IV) (A) F
114	114	OR INCOME TAX YEARS COMMENCING ON OR AFTER16
115	115	J
116	116	ANUARY 1, 2026, ALL AMOUNTS RECEIVED AS PENSIONS OR ANNUITIES17
117	117	FROM ANY SOURCE BY ANY INDIVIDUAL WHO IS FIFTY -FIVE YEARS OF AGE18
118	118	OR OLDER AT THE CLOSE OF THE TAXABLE YEAR , TO THE EXTENT19
119	119	INCLUDED IN FEDERAL ADJUSTED GROSS INCOME ;20
120	120	(B) I
121	121	N ACCORDANCE WITH SECTION 39-21-304 (1), WHICH21
122	122	REQUIRES EACH BILL THAT CREATES A NEW TAX EXPENDITURE TO INCLUDE22
123	123	A TAX PREFERENCE PERFORMANCE STATEMENT AS PART OF A STATUTORY23
124	124	LEGISLATIVE DECLARATION , THE GENERAL ASSEMBLY FINDS AND24
125	125	DECLARES THAT THE GENERAL PURPOSE OF THE TAX EXPENDITURES25
126	126	CREATED IN THIS SUBSECTION (4)(f)(IV) IS TO PROVIDE TAX RELIEF FOR26
127	127	CERTAIN INDIVIDUALS AND THAT THE SPECIFIC PURPOSE OF THE TAX27
128	128	SB25-136
129	129	-4- EXPENDITURES IS TO PROVIDE SUCH TAX RELIEF TO INDIVIDUALS WHO1
130	130	RECEIVE PENSION OR ANNUITY BENEFITS . THE GENERAL ASSEMBLY AND2
131	131	THE STATE AUDITOR SHALL MEASURE THE EFFECTIVENESS OF THE3
132	132	EXEMPTION ALLOWED BY THIS SECTION BASED ON THE TOTAL AMOUNT OF4
133	133	PENSION AND ANNUITY BENEFITS THAT INDIVIDUALS SUBTRACT FROM5
134	134	THEIR FEDERAL TAXABLE INCOME WHEN CALCULATING THEIR STATE6
135	135	TAXABLE INCOME. THE DEPARTMENT OF REVENUE , IN CONSULTATION7
136	136	WITH THE STATE AUDITOR, SHALL COLLECT THE INFORMATION NECESSARY8
137	137	FOR THE STATE AUDITOR TO MEASURE THE EFFECTIVENESS OF THE INCOME9
138	138	TAX SUBTRACTION ALLOWED BY THIS SUBSECTION (4)(f)(IV) BASED ON10
139	139	THE TOTAL AMOUNT OF PENSION OR ANNUITY BENEFITS THAT INDIVI DUALS11
140	140	SUBTRACT FROM THEIR FEDERAL TAXABLE INCOME WHEN CALCULATING12
141	141	THEIR STATE TAXABLE INCOME.13
142	142	(V) F
143	143	OR THE PURPOSE OF DETERMINING THE SUBTRACTION14
144	144	ALLOWED BY THIS SUBSECTION (4)(f), IN THE CASE OF A JOINT RETURN,15
145	145	SOCIAL SECURITY BENEFITS INCLUDED IN FEDERAL TAXABLE INCOME16
146	146	SHALL BE APPORTIONED IN A RATIO OF THE GROSS SOCIAL SECURITY17
147	147	BENEFITS OF EACH TAXPAYER TO THE TOTAL GROSS SOCIAL SECURITY18
148	148	BENEFITS OF BOTH TAXPAYERS.19
149	149	(VI) A
150	150	S USED IN THIS SUBSECTION (4)(f), "PENSIONS AND20
151	151	ANNUITIES" MEANS RETIREMENT BENEFITS THAT ARE PERIODIC PAYMENTS21
152	152	ATTRIBUTABLE TO PERSONAL SERVICES PERFORMED BY AN INDIVIDUAL22
153	153	PRIOR TO THE INDIVIDUAL'S RETIREMENT FROM EMPLOYMENT AND THAT23
154	154	ARISE FROM AN EMPLOYER-EMPLOYEE RELATIONSHIP, FROM SERVICE IN24
155	155	THE UNIFORMED SERVICES OF THE UNITED STATES, OR FROM25
156	156	CONTRIBUTIONS TO A RETIREMENT PLAN THAT ARE DEDUCTIBLE FOR26
157	157	FEDERAL INCOME TAX PURPOSES . "PENSIONS AND ANNUITIES" INCLUDES27
158	158	SB25-136
159	159	-5- DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ARRANGEMENTS AND1
160	160	SELF-EMPLOYED RETIREMENT ACCOUNTS TO THE EXTENT THAT SUCH2
161	161	DISTRIBUTIONS ARE NOT DEEMED TO BE PREMATURE DISTRIBUTIONS FOR3
162	162	FEDERAL INCOME TAX PURPOSES , AMOUNTS RECEIVED FROM FULLY4
163	163	MATURED PRIVATELY PURCHASED ANNUITIES , SOCIAL SECURITY BENEFITS,5
164	164	AND AMOUNTS PAID FROM ANY SUCH SOURCES BY REASON OF PERMANENT6
165	165	DISABILITY OR DEATH OF THE PERSON ENTITLED TO RECEIVE THE BENEFITS .7
166	166	SECTION 2. Act subject to petition - effective date. This act8
167	167	takes effect at 12:01 a.m. on the day following the expiration of the9
168	168	ninety-day period after final adjournment of the general assembly; except10
169	169	that, if a referendum petition is filed pursuant to section 1 (3) of article V11
170	170	of the state constitution against this act or an item, section, or part of this12
171	171	act within such period, then the act, item, section, or part will not take13
172	172	effect unless approved by the people at the general election to be held in14
173	173	November 2026 and, in such case, will take effect on the date of the15
174	174	official declaration of the vote thereon by the governor.16
175	175	SB25-136
176	176	-6-