Educational Opportunity Tax Incentives

For purposes of calculating a taxpayer's Colorado taxable income, current state law begins from a base of the taxpayer's federal taxable income and provides for various modifications to that base, including subtractions from federal taxable income (state income tax deductions) in amounts equal to the full amounts of both contributions made by a taxpayer to the qualified state tuition program established by collegeinvest and distributions of investment earnings taken from the plan. For income tax years commencing on or after January 1, 2018, section 2 of the bill modifies these state income tax deductions by making the percentages of the amounts of contributions or distributions allowed to be subtracted from a taxpayer's taxable income dependent upon the amount of the taxpayer's federal adjusted gross income as follows:

• 200% of the amounts of contributions or distributions for a taxpayer whose federal adjusted gross income is less than $100,000;
• 100% of the amounts of contributions or distributions for a taxpayer whose federal adjusted gross income is $100,000 or more but less than $200,000;
• 50% of the amounts of contributions or distributions for a taxpayer whose federal adjusted gross income is $200,000 or more but less than $500,000; and
• 25% of the amounts of contributions or distributions for a taxpayer whose federal adjusted gross income is $500,000 or more.

For income tax years commencing on or after January 1, 2018, section 3 allows refundable state income tax credits for teaching or student teaching in rural schools as follows:

• A teacher who has graduated from an educator preparation program approved by the Colorado commission on higher education may claim a credit, in a specified amount that increases each year, for each of the first 5 years that the teacher teaches in one or more rural schools; and
• A student teacher who is a student in an educator preparation program approved by the Colorado commission on higher education and has worked as a student teacher in one or more rural schools for at least a specified number of days during an academic year may claim a one-time credit up to a specified maximum amount against tuition and fees paid for the educator preparation program.

To ensure that the credits are allowed only to qualified rural teachers and student teachers who are eligible for the credits, the department of education must coordinate with and annually submit a list of such teachers and student teachers to the department of revenue.

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)