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Senate committee hears bill to convert HSA deduction into 25% state tax credit; motion to postpone passes 3–2
Summary
Sen. Carson presented legislation to create a 25% Colorado tax credit for Health Savings Account contributions, citing rising premiums and Legislative Council estimates that about 384,000 Coloradans use HSAs. After supportive testimony, the committee voted to postpone the measure indefinitely by a 3–2 reverse roll call.
Senator Carson told the committee she was introducing legislation to convert the state HSA deduction into a 25% tax credit for Health Savings Account contributions, saying the credit would return more tax dollars directly to Colorado families.
"I'm pleased to present legislation ... to create a 25% tax credit for Coloradans who make contributions to health savings accounts," Senator Carson said during the bill presentation. The sponsor described proposed caps of $500 for individuals, $1,000 for joint filers and $1,500 for family accounts and cited Legislative Council economists’ estimate that roughly 384,000 Coloradans make HSA contributions.
Supporters told the committee the credit would help working families and small businesses absorb higher premiums and out‑of‑pocket costs. Michael Jett McDonnell, a Denver resident, said the credit “empowers individuals rather than prescribing a one‑size‑fits‑all solution,” adding that HSAs allow families to plan for prescriptions, routine visits and higher costs down the road. Representatives of the Douglas County Economic Development Corporation and NEFA Colorado also urged a favorable response, arguing that tax incentives for HSAs would boost household financial security and make high‑deductible plans more viable for small businesses.
Committee discussion focused on incidence and equity. The sponsor and witnesses argued the credit would better target state tax relief to people using HSAs; other members raised concerns that tax‑favored accounts tend to be used more by higher‑income taxpayers and questioned the distributional impact on Colorado’s general fund.
A motion to send the bill to Appropriations with a favorable recommendation failed on a roll call. A subsequent motion to postpone the bill indefinitely by reverse roll call passed 3–2, ending further action in this committee at this hearing.
What happens next: With the committee motion to postpone indefinitely approved, SB 29 will not advance from this committee unless it is resuscitated by a subsequent motion or reintroduction.
