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Tax Expenditures

Section 39-21-305(1)(d) and (e), C.R.S., requires the State Auditor to evaluate all of the State’s tax expenditures at least once every 5 years and publish a multi-year schedule for completing the evaluations by no later than September 15, 2017. The first evaluation report must be published by September 14, 2018, and subsequent reports must be published no later than September 15 each year thereafter.

Section 39-21-302, C.R.S., defines a tax expenditure as “a tax provision that provides a gross or taxable income definition, deduction, exemption, credit, or rate for certain persons, types of income, transactions, or property that results in reduced tax revenue.” Tax expenditures reduce the amount of tax collected from sales and use, income, insurance, alcohol, tobacco, fuel, and severance taxes. The Department of Revenue estimated in its 2016 Tax Profile & Expenditure Report that the revenue impact of tax expenditures in 2015 was $4.3 billion.

The Office of State Auditor identified 208 state tax expenditures that it will evaluate over the next 5 years based on a set schedule.

If you would like to provide input on the tax expenditures scheduled for review, click here.

The following infographic (click to view larger PDF file) provides examples of tax expenditures within the Colorado Tax Code:

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