Summary
Representatives Caldwell and Minority Leader Puglisi introduced a bill to reverse a state decoupling from a federal overtime deduction created by HR1; policy proponents said it helps working families, fiscal witnesses said the benefit would mainly go to higher‑income filers and would reduce state revenue; committee postponed the bill.
Representatives Caldwell and Minority Leader Puglisi asked the committee to undo a state statutory change that decoupled Colorado taxable income from a federal deduction for up to $25,000 of overtime income created in the federal HR1 legislation. Caldwell said the measure would restore a deduction for overtime pay and called the move a correction of an earlier action she described as a violation of the Taxpayer Bill of Rights (TABOR). "This bill is saying that we believe that you have to give voter approval because this is a net tax revenue change," she said.
Supporters framed the bill as help for working and middle‑income families, listing occupations that commonly collect overtime pay including nurses, firefighters and construction workers. Minority Leader Puglisi said the bill would keep more money in workers' pockets.
Nonpartisan and policy witnesses urged caution. Kathy White of the Colorado Fiscal Institute testified that the federal deduction would mainly benefit higher‑income taxpayers who claim overtime on their returns; she said that in Colorado the average deduction benefit would reduce state tax liability by about $63 per claimant and that many of those beneficiaries fall in the top income quintile. Bell Policy Center and other witnesses warned the bill would reduce revenue the state needs for education, health care and other services.
After questions and public testimony, the committee did not forward the bill and later voted to postpone it indefinitely.
