Tax Intelligence · Episode 06
State Tax in Motion: How Colorado Rewrote Its Rules After the One Big Beautiful Bill
About This Episode
When Congress passed the One Big Beautiful Bill in July of 2025, the ripple effects landed squarely on state budgets. Colorado, a rolling conformity state, saw revenue projections shrink by as much as $1.2 billion, later revised to $783 million. The response was swift: a special session, five bills signed on August 28th of 2025, and two more significant measures in 2026. Every one of them is now on the radar of Colorado taxpayers, and several are already reflected on 2025 returns.
Marc Gordon, State and Local Tax Senior Manager at TaxOps, walks through the full slate of changes. He covers the permanent QBI add back, the repeal of the sales tax vendor fee, new provisions targeting multinational corporations, the insurance premium tax change, and the sale of discounted tax credits. He also revisits Colorado’s SALT parity election, an option many business owners can still claim for the 2025 tax year, and explains the three ways to make it.
Looking ahead to 2027, Marc examines two of the most consequential shifts: the expansion of sales tax to all computer software, including electronically delivered and mobile applications, and Colorado’s move toward default worldwide combined reporting for corporate taxpayers. Both carry real planning implications, and as Marc puts it, the space between now and then is your most valuable asset.
“The space between now and then is your planning window, and it’s the most valuable asset we can highlight right now.”
Marc Gordon
What You’ll Learn
- Why rolling conformity states like Colorado had to act quickly after the One Big Beautiful Bill, and how budget shortfalls drove the legislative agenda
- How the QBI add back became permanent at the state level, and which taxpayers it affects
- What the repeal of the sales tax vendor fee means for retailers collecting and remitting Colorado sales tax
- How the SALT parity election works, why it may still be available for the 2025 tax year, and the three ways to make it
- Why Colorado’s expansion of sales tax to all computer software, effective January 1, 2027, will raise software costs by roughly 8% for those not already paying in home rule jurisdictions
- How Colorado’s shift to default worldwide combined reporting can help or hurt depending on your fact pattern, and why the Water’s Edge election is binding for 10 years
In This Episode
Short Takes
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