“Huge deal” tax-bill package seeks to roll back and decouple tax breaks
Visitors enter the Colorado Capitol via its north steps in January 2026.Posted By: Ed Sealover February 13, 2026
Democratic legislators are poised to unveil a quartet of bills next week that could decouple Colorado law from hundreds of millions of dollars in new federal tax breaks, end tax exemptions on downloadable-software sales and rein in several long-standing corporate deductions.
The bills, written in cooperation with the Colorado Fiscal Institute, are largely a reaction to last year’s federal passage of the “One Big Beautiful Bill” that offered significant corporate tax breaks and blew a hole in Colorado’s budget, CFI policy manager Caroline Nutter said. Because Colorado conforms its tax code to federal code, any cut in income produced by federal changes reflects in revenue reductions to the state government as well, leading to a $1.2 billion loss in revenue last year and contributing to this fiscal year’s $850 million budget shortfall.
Thus, the four-bill package has several aims, Nutter explained to the Colorado Chamber of Commerce Tax Council on Feb. 6. It seeks to restore state income-tax revenue that otherwise would be lost and direct it to credits for needy families in order to keep the changes revenue-neutral and avoid running afoul of the Taxpayer’s bill of Rights. And it seeks to reflect the increasing divide between Coloradans and federal Republican leaders on how states operate their tax systems and what they view as their priorities.
“It does have some more than just only technical changes,” Nutter said in speaking about one of the four bills in particular, though her statement reflects the tenor of the quartet of proposals. “Some of them are changes to align the tax code with sponsors’ values and what we believe Coloradans want.”
“Universal” impact on Colorado businesses
While business leaders are waiting to see details when the bills are introduced, which Nutter said could be as soon as Tuesday, many are raising concerns that the proposals will deal another significant blow to Colorado’s business atmosphere.
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