The Signing of HB24-1157
The Signing of HB24-1157
New Legislation in Colorado
On June 4th, Colorado governor Jared Polis signed HB24-1157, a new law that provides statutory authority for the Colorado Employee Ownership Office, an entity initially established by Governor Polis through an executive order in 2020. This legislation effectively makes the Employee Ownership Office a permanent fixture. It also expands on previous tax credits aimed at incentivizing the adoption and expansion of employee ownership plans within businesses.
What does this mean?
Under the new law, eligible businesses can receive a refundable state income tax credit for costs associated with establishing or transitioning to employee ownership plans. This tax credit covers 50% of qualifying costs, granting up to $50,000 annually in savings. Businesses qualify if they have been partially or entirely owned by employees for fewer than 7 years. The employee ownership office within the Office of Economic Development and International Trade (OEDIT), now a statutory entity as part of HB24-1157, will administer these tax credits.
Additionally, the law extends a refundable income tax credit for the years 2025 to 2029, covering up to 50% of specified costs incurred by new employee owned businesses, not to exceed $50,000. New employee owned businesses, defined as those owned by employees for seven years or fewer, are eligible. The employee ownership can allocate up to $1.5 million in tax credits annually. For the 2024-25 state fiscal year, $145,847 is appropriated from the general fund to the office of the governor for use by the employee ownership office.
How will it impact employee ownership in Colorado?
The enactment of HB24-1157 is poised to have a significant impact on the landscape of employee ownership in Colorado, the law will likely pave the way for increased adoption for these structures across various industries. The stability that HB24-1157 will provide also makes it easier for employee-owned businesses to stick around and grow. The new tax breaks are also greatly significant because they make employee ownership more appealing for businesses considering it. By providing financial benefits for starting or expanding employee ownership plans, this legislation encourages more companies to consider adopting these structures and could potentially diversify Colorado’s economy. Overall, HB24-1157 is a big step forward for employee ownership in Colorado, signaling a commitment to fostering inclusive and sustainable economic development strategies that prioritize the well-being of workers and overall communities.