DENVER — The Colorado Senate on Aug. 23, 2025, approved House Bill 1002, a measure altering state treatment of certain corporate deductions tied to foreign jurisdictions, after rejecting an amendment that would have referred the measure to voters under the Taxpayer Bill of Rights (TABOR).

Supporters said the bill closes a loophole that lets companies shift income or intellectual property to lower-tax jurisdictions. "If you are a fan of corporations moving their money overseas, if you're a fan of rewarding those companies, you should vote no on this bill. If you are not a fan of that, I encourage you to vote yes," Senator Ball said when he moved the bill to the floor.

The bill creates a state corporate taxable-income "addition" for deductions tied to federal foreign-derived intangible income (FDII/FDDEI) treatment and adds five foreign jurisdictions to a list of places presumed to be used for tax avoidance beginning in tax year 2026, according to debate on the floor. The measure also authorizes the executive director of the Colorado Department of Revenue to exercise discretion under an economic-substance test to determine whether an affiliated corporation's incorporation in a listed jurisdiction is for economic reasons rather than tax avoidance.

Why it matters: Senators on both sides framed the debate as a mix of tax policy and constitutional process. The fiscal note cited on the floor estimated the bill would increase state income tax revenue by roughly $35.6 million in the partial 2025–26 fiscal year, about $72.2 million in 2026–27 and about $73.0 million in 2027–28. Opponents argued those revenue gains trigger TABOR's requirement that voters approve changes to tax policy that cause a net revenue gain.

Opponents repeatedly cited TABOR (Article X, Section 20 of the Colorado Constitution) and cited state statutory provisions used to align Colorado to federal tax filing. One opponent summarized the concern: "Any new tax tax rate increase ... we have to ask the people to raise the taxes," arguing the change should be referred to the ballot.

Floor debate centered on two intertwined questions: whether the change is a routine conformity/administrative action or a substantive tax-policy change that requires voter approval, and whether the bill would drive companies to relocate from Colorado. Senators warning about business flight pointed to other states where firms have moved headquarters; supporters said the measure is consistent with actions in other states and seeks to discourage shifting intangible assets to jurisdictions deemed tax-avoidant.

An amendment (labeled L2 on the floor) would have sent House Bill 1002 to the November 4, 2025, ballot. The amendment sponsor argued the state constitution requires advance voter approval for any tax-policy change that directly causes a net revenue gain. Multiple senators—across several speeches—said they supported that referral; others opposed it, citing Colorado Supreme Court guidance about when a revenue increase is "incidental and de minimis." After a standing division, the chair declared the amendment lost.

After further discussion, the Senate took final action on House Bill 1002. The bill was adopted on the floor; the clerk announced, "The ayes have it. That bill is adopted." The record on the floor did not include a roll-call tally attached to that final voice vote in the transcript excerpt.

What the bill does (as discussed on the floor): supporters and witnesses said the bill (1) creates a state-level addition to taxable income for a federal deduction related to foreign-derived income, (2) expands the list of foreign jurisdictions presumed to be used for tax-avoidance purposes (the debate named Hong Kong, Ireland, Liechtenstein, the Netherlands and Singapore as additions), and (3) preserves an administrative review path using the economic-substance test so corporate taxpayers could attempt to rebut the presumption.

What happens next: House Bill 1002 will proceed under the Senate's calendar following adoption. Senators also discussed related bills and committee scheduling for additional measures in the special session.

Quotes in context: all quoted material is from the Senate floor transcript of the Aug. 23, 2025, extraordinary session of the Colorado General Assembly and attributed to named or identified speakers in the transcript.

Less-critical details: the floor also recorded committee membership changes for the special session and a motion to lay over House Bill 1003 to Aug. 24, 2025. Those items were procedural and not part of the substantive HB1002 debate.