Summary
The House Appropriations Committee voted 7-3 to send a bill to the Committee of the Whole that would permanently remove the expiration date on Colorado
Representative Sirota, the bill sponsor, told the House Appropriations Committee she brought House Bill 25B-1001 to extend a Colorado add-back to the federal qualified business income (QBI) deduction for high-earners. The bill would remove the current statutory expiration of Jan. 1, 2026, for a state-level add-back that requires certain taxpayers to add back part of the federal QBI deduction to Colorado taxable income.
Why it mattered: witnesses from fiscal and local government groups told the committee the add-back protects state revenue that would otherwise shrink because of recent federal tax changes. Caroline Nutter, policy manager at the Colorado Fiscal Institute, testified the federal deduction disproportionately benefits the wealthiest filers and said preserving the add-back helps protect funds for schools, health care and infrastructure. Clear Creek County Commissioner George Marlin, speaking for Counties and Commissioners Acting Together, said the new federal law will shift costs for SNAP and Medicaid administration to states and counties and that the add-back is one of the tools Colorado has to avoid further local cuts. Joshua Mantel of the Bell Policy Center and a Colorado People's Alliance member also urged the committee to support the bill to preserve funding for safety-net programs.
Committee action and vote: Representative Sirota moved the bill to the Committee of the Whole with a favorable recommendation; Representative Velasco seconded. The roll call recorded 7 yes votes and 3 no votes with 1 excused; the motion passed. The committee debate focused on whether the add-back unfairly targets pass-through business owners or whether limiting the federal break at the state level is appropriate in light of now-permanent federal changes.
What supporters said: "Maintaining that limit ensures the tax breaks are targeted where they belong, and not concentrated among those at the very top," Caroline Nutter testified. Commissioner Marlin said the change in federal law will "shift hundreds of millions in new costs to the state and counties" and asked the committee to "protect our budget and by extension the work that counties do." Sponsor Sirota said removing the expiration is a "simple continuation of current law" aimed at avoiding cuts to Medicaid, K-12 and other services.
What opponents argued: several committee members and witnesses noted that pass-through income can be volatile year to year and that some small-business owners may see high personal income in specific years. Representative Taggart pressed for caution about labeling all pass-through owners as high earners, saying some take on substantial personal risk.
Next steps: The bill moves to the Committee of the Whole. If advanced there, it would proceed through the remaining legislative steps required to change Colorado tax treatment for affected filers.
