HB23-1081
Employee Ownership Tax Credit Expansion
Concerning the expansion of the tax credit for conversion costs for employee business ownership.
Session:
2023 Regular Session
Subject:
Bill Summary
Fiscal Policy & Taxes
Under current law, a qualified business is allowed a tax credit in the amount of 50% of the costs to convert the qualified business to a form of employee ownership. The tax credit is capped at $25,000 for converting a qualified business to a worker-owned cooperative or employee ownership trust, and capped at $100,000 for converting a qualified business to an employee stock ownership plan.
The bill:
- Increases the cap for converting a qualified business to a worker-owned cooperative or employee ownership trust from $25,000 to $40,000, and increases the cap for converting a qualified business to an employee stock ownership plan from $100,000 to $150,000;
- Expands the tax credit to include 50% of the costs of a qualified employee-owned business expanding its employee ownership by at least 20%, not to exceed $25,000;
- Expands the tax credit to include 50% of the costs of a qualified business converting to or expanding an alternate equity structure, not to exceed $25,000. An alternate equity structure is a
form of employee ownership wheremechanism under which an employer grants to employees a form of employee ownership, including an employee stock ownership plan, LLC membership, phantom stock, profit interest,profit sharing, restricted stock, stock appreciation right, stock option, or synthetic equity. The bill establishes certain minimum requirements for an alternate equity structure and requires the Colorado office of economic development in the office of the governor to develop guidelines for the types of employee ownership grants that qualify as an alternate equity structure. - Specifies that a qualified business or qualified employee-owned business may apply for and claim only one credit for the conversion or expansion costs per tax year.
(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)
(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)