Colorado Offers Discounted State Tax Credits for Corporations

Recent legislation in Colorado opens an interesting avenue for corporations—particularly C corporations and insurance companies—to purchase state tax credits at a discount. Under HB 25B-1004, passed during Colorado’s August 2025 special session, the state will make available up to $125 million in tax credits. Participating entities may submit bids to acquire these credits at prices as low as 80 cents per dollar of credit value.

The program is designed to accelerate revenue into the state’s budget to address projected shortfalls for fiscal 2026. For corporations, it offers a planning opportunity to purchase future tax credits at a discount while optimizing current-year tax strategies.

Who Qualifies and How the Program Works

Participation in the program is limited to specific corporate taxpayers. To be eligible, applicants must meet defined criteria and follow the bidding process established by the Colorado Department of the Treasury, which outlines rules for applications, bidding, and payment.

Eligible entities include the following:

• C corporations subject to Colorado’s corporate income tax
• Insurance companies that pay the state’s insurance premium tax
• Taxpayers with an existing or reasonably anticipated Colorado tax liability

As part of the application process, companies must specify both the amount of credit they are seeking and the price they are willing to pay. The purchase price must be no less than the greater of:

• The fair market value of the credit on the offer date, or
• 80 percent of the credit’s stated amount

Once a bid is accepted, the taxpayer will receive a tax credit certificate documenting key details, including the approved credit amount, purchase price, the date the credit becomes available, and any applicable transfer or compliance requirements.

Timing, Use, and Forward-Planning Considerations

While the precise date when the credits can first be used has not yet been announced, legislative fiscal analysis indicates they will likely apply to tax years ending on or after July 1, 2026. The credits are nonrefundable, but if their value exceeds the tax owed in the first eligible year, they may be carried forward through December 31, 2033.

From a planning perspective, this program offers a window to lock in a tax credit at a discount, manage timing between tax years, and balance overall corporate tax exposure. However, participation requires careful attention to the corporation’s tax liability profile, available cash flow for the upfront purchase, and alignment with long-term tax strategies. Companies should also monitor guidance from the Treasury Department for updates on application timing, bidding rules, and potential restrictions on transferability.

Next Steps and Strategic Guidance

Whether this Colorado tax credit opportunity aligns with your overall tax strategy or introduces a new way to optimize your state tax position, our team can help you model potential savings, analyze projected tax liabilities, determine appropriate purchase volumes, and integrate the credit into your broader state and local tax planning.

Have questions or want to take advantage of this opportunity while the program is still new? Contact your CRI advisor to start the conversation. Our professionals will guide you through the bidding process, interpret evolving guidance, and help you make informed decisions that strengthen your organization’s financial position for the years ahead.