First Regular Session
Sixty-first General Assembly
LLS NO. 970137.01 MKD
HOUSE BILL 971110
STATE OF COLORADO
BY REPRESENTATIVE Lamborn
A BILL FOR AN ACT
CONCERNING CHANGES IN STATE INCOME TAX POLICY, AND,
IN CONNECTION THEREWITH, INCREASES THE AMOUNT OF PENSION AND ANNUITY
INCOME THAT MAY BE SUBTRACTED FROM FEDERAL TAXABLE INCOME FOR
PURPOSES OF CALCULATING STATE INCOME TAX AND ALLOWS A CREDIT AGAINST
STATE INCOME TAX FOR TUITION PAID TO QUALIFIED INSTITUTIONS OF
HIGHER EDUCATION LOCATED WITHIN THE STATE.
"Income Tax Pensions Tuition"
(Note: This summary applies to this bill as introduced
and does not necessarily reflect any amendments which may be subsequently
For income tax years commencing on and after January 1, 1998, increases from $20,000 to $30,000 the amount of pension and annuity income that may be subtracted from federal taxable income for state income tax purposes.
For income tax years commencing on and after January
1, 1997, allows an income tax credit for student fees and tuition
paid to qualified institutions of higher education located within
the state. Limits the tax credit to a certain dollar amount per
student per year. Provides that such credit may only be claimed
for 5 tax years for any one student.
Be it enacted by the General Assembly of the State of Colorado:
SECTION 1. 3922104 (4) (f), Colorado Revised Statutes, 1994 Repl. Vol., is amended to read:
3922104. Income tax imposed on individuals, estates, and trusts single rate. (4) There shall be subtracted from federal taxable income:
(f) (I) For income tax years commencing on or after January 1, 1989, amounts received as pensions or annuities from any source by any individual who is fiftyfive years of age or older at the close of the taxable year, to the extent included in federal adjusted gross income or as added in paragraph (c) of subsection (3) of this section;
(II) For income tax years commencing on or after January 1, 1989, amounts received as pensions or annuities from any source by any individual who is less than fiftyfive years of age at the close of the taxable year if such benefits are received because of the death of the person originally entitled to receive such benefits and only to the extent such benefits are included in federal adjusted gross income or as added in paragraph (c) of subsection (3) of this section.
(III) FOR INCOME TAX YEARS COMMENCING BEFORE JANUARY 1, 1998, amounts subtracted under this paragraph (f) shall not exceed twenty thousand dollars per tax year. FOR INCOME TAX YEARS COMMENCING ON AND AFTER JANUARY 1, 1998, AMOUNTS SUBTRACTED UNDER THIS PARAGRAPH (f) SHALL NOT EXCEED THIRTY THOUSAND DOLLARS PER TAX YEAR. For the purpose of determining the exclusion allowed by this paragraph (f), in the case of a joint return, social security benefits included in federal taxable income shall be apportioned in a ratio of the gross social security benefits of each spouse to the total gross social security benefits of both spouses. For the purposes of this paragraph (f), "pensions and annuities" means retirement benefits which are periodic payments attributable to personal services performed by an individual prior to his OR HER retirement from employment and which arise from an employeremployee relationship, from service in the uniformed services of the United States, or from contributions to a retirement plan which are deductible for federal income tax purposes. "Pensions and annuities" includes lumpsum distributions from pension and profit sharing plans to the extent that such distributions qualify for the taxaveraging computation under section 402 (e) (1) of the internal revenue code, distributions from individual retirement arrangements and selfemployed retirement accounts to the extent that such distributions are not deemed to be premature distributions for federal income tax purposes, amounts received from fully matured privately purchased annuities, social security benefits, and amounts paid from any such sources by reason of permanent disability or death of the person entitled to receive the benefits.
SECTION 2. Part 1 of article 22 of title 39, Colorado Revised Statutes, 1994 Repl. Vol., as amended, is amended BY THE ADDITION OF A NEW SECTION to read:
3922120. Student fees and tuition legislative declaration credit against state tax. (1) (a) THE GENERAL ASSEMBLY HEREBY FINDS AND DECLARES THAT:
(I) AN EDUCATED WORK FORCE IS IMPORTANT TO THE STATE'S ECONOMIC PROSPERITY AND, THEREFORE, POSTSECONDARY EDUCATION WITHIN THE STATE SHOULD BE ENCOURAGED;
(II) STUDENTS ATTENDING INSTITUTIONS OF HIGHER EDUCATION WITHIN THE STATE ARE MORE LIKELY TO WORK IN THE STATE UPON COMPLETING A DEGREE PROGRAM;
(b) FURTHER, IT IS THE INTENT OF THE GENERAL ASSEMBLY THAT HIGHER EDUCATION IN THE STATE BE MADE MORE ACCESSIBLE BY LESSENING THE INCOME TAX BURDEN ON THOSE PAYING FEES AND TUITION IN PURSUIT OF OR ON BEHALF OF A DEPENDENT IN PURSUIT OF A BACHELOR'S DEGREE AT AN INSTITUTION OF HIGHER EDUCATION IN THE STATE.
(2) FOR INCOME TAX YEARS COMMENCING ON AND AFTER JANUARY 1, 1997, A RESIDENT INDIVIDUAL MAY CLAIM A CREDIT AGAINST THE TAX DUE UNDER THIS ARTICLE FOR QUALIFIED POST SECONDARY EDUCATION COSTS PAID TO A QUALIFIED INSTITUTION OF HIGHER EDUCATION BY THE TAXPAYER DURING THE TAX YEAR AS A STUDENT OR ON BEHALF OF EACH STUDENT THAT THE TAXPAYER CLAIMS AS A DEPENDENT FOR FEDERAL INCOME TAX PURPOSES AS FOLLOWS:
(a) A RESIDENT INDIVIDUAL MAY CLAIM A CREDIT UNDER THIS SECTION FOR QUALIFIED POSTSECONDARY EDUCATION COSTS PAID TO A QUALIFIED INSTITUTION OF HIGHER EDUCATION FOR EACH STUDENT EACH TAX YEAR OR TWO HUNDRED FIFTY DOLLARS FOR EACH STUDENT FOR EACH TAX YEAR, WHICH EVER IS LESS.
(b) A CREDIT SHALL NOT BE CLAIMED UNDER THIS SECTION FOR MORE THAN FIVE TAX YEARS FOR ANY ONE STUDENT.
(c) THE DEPARTMENT OF REVENUE MAY REQUIRE REASONABLE PROOF FROM THE RESIDENT INDIVIDUAL OF THE FEES AND TUITION PAYMENTS FOR WHICH A CREDIT IS CLAIMED UNDER THIS SECTION.
(3) AS USED IN THIS SECTION:
(a) "QUALIFIED INSTITUTION OF HIGHER EDUCATION" MEANS AN INSTITUTION OF HIGHER EDUCATION, PUBLIC OR PRIVATE, OPERATING IN THE STATE OF COLORADO THAT:
(I) PROVIDES AN EDUCATIONAL PROGRAM FOR WHICH IT AWARDS A BACHELOR'S DEGREE OR PROVIDES NOT LESS THAN A TWOYEAR PROGRAM THAT IS ACCEPTABLE FOR FULL CREDIT TOWARD A BACHELOR'S DEGREE; AND
(II) IS NOT A PERVASIVELY SECTARIAN OR THEOLOGICAL INSTITUTION.
(b) "QUALIFIED POST SECONDARY EDUCATION COSTS" MEANS TUITION AND FEES PAID BY OR FOR A STUDENT THAT ARE UNIFORMLY REQUIRED TO BE PAID BY ALL STUDENTS AT THE QUALIFIED INSTITUTION OF HIGHER EDUCATION.
(c) "TUITION" MEANS TUITION PAID TO A QUALIFIED INSTITUTION OF HIGHER EDUCATION FOR CREDITS TOWARD A BACHELOR'S DEGREE OR CREDITS TOWARD A DEGREE PROGRAM OR FOR THE PURPOSE OF TRANSFERRING THOSE CREDITS TOWARD AN UNDERGRADUATE DEGREE PROGRAM LESS ANY REFUNDS OF TUITION RECEIVED BY THE RESIDENT INDIVIDUAL OR STUDENT FOR WHOM THE RESIDENT INDIVIDUAL PAID TUITION.
(4) THE CREDIT ALLOWED UNDER SUBSECTION (1) OF THIS SECTION MAY BE CLAIMED ONLY AFTER THE RESIDENT INDIVIDUAL HAS CLAIMED ALL OTHER AVAILABLE TAX CREDITS FOR WHICH THE RESIDENT INDIVIDUAL MAY CLAIM.
(5) IF THE CREDIT ALLOWED UNDER SUBSECTION (2) OF THIS SECTION EXCEEDS THE INCOME TAXES DUE ON THE RESIDENT INDIVIDUAL'S INCOME, THE AMOUNT OF THE CREDIT NOT USED AS AN OFFSET AGAINST INCOME TAXES SHALL NOT BE REFUNDED OR CARRIED FORWARD AS A TAX CREDIT AGAINST THE RESIDENT INDIVIDUAL'S SUBSEQUENT YEARS' INCOME TAX LIABILITY.
(6) IN THE CASE OF A PARTYEAR RESIDENT, THE CREDIT ALLOWED BY THIS SECTION SHALL BE APPORTIONED AS DETERMINED UNDER SECTION 3922110 (1).
SECTION 3. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.