HB 1003 — Insurance Premium Tax Rate for Home Offices

NOTE:HOUSE BILL 25B-l003 BY REPRESENTATIVE(S) Mabrey and Boesenecker, Bacon, Brown, Camacho, Clifford, Duran, Froelich, Garcia, Lieder, Lindsay, McCormick, Sirota, Smith, Story, Titone, Willford, Zokaie, McCluskie;

This bill has been prepared for the signatures of the appropriate legislative officers and the Governor.

To determine whether the Governor has signed the bill or taken other action on it, please consult the legislative status sheet, the legislative history, or the Session Laws.

HOUSE BILL 25B-1003 BY REPRESENTATIVE(S) Mabrey and Boesenecker, Bacon, Brown, Camacho,Clifford,Duran,Froelich,Garcia,Lieder,Lindsay,McCormick, Sirota, Smith, Story, Titone, Willford, Zokaie, McCluskie;

CCONCERNING ONCERNING ADJUSTMENTS TO THE INSURANCE PREMIUM TAX RATE TAX EXPENDITURE FOR A HOME OFFICE OR REGIONAL HOME OFFICEOFFICE. .

Be it enacted by the General Assembly ofofthe the State ofofColorado: Colorado:

(1)(I) The general assembly finds that, based on the office of the state auditor's 2 evaluations of the reduced insurance premium tax rate for a company with a home office or regional home office in Colorado, the reduced insurance premium tax rate was designed to create an incentive to maintain a substantial workforce presence in the state.

(a) The insurance premium tax rate tax expenditure has not met its intended purpose since, as evidenced by the office of the state auditor's 2020and2025evaluationsofthetaxexpenditure,thehiringandinvestmentand2025 evaluations ofthe taxexpenditure, the hiringandinvestment Capital letters or bold & italic numbers indicate new material added to existing law;

dashes through words or numbers indicate deletionsdeletionsfrom from existing law andandsuch such material is notnotpart part of the act.

levels of the vast majority of all insurance companies claiming the tax expenditure have not been substantiallyaffectedsubstantially bytheaffected presenceby of the presence ofthe tax expenditure;

and (b) In its 2025 evaluation of the insurance premium tax rate tax expenditure, the office ofofthe the state auditor found that, from 2022 through 2024, 15 of the 18 insurers that claimed the tax expenditure actually reducedtheirColoradoworkforcesbyabout4,300employees,whilethetaxreducedtheirColoradoworkforces byabout4,300 employees,whilethetax benefit that those insurers received from the tax expenditure increased by approximately $17,500,000.

(a) The primary purposes of repealing the reduced insurance premiumtaxrateforacompanywithahomeofficeorregionalhomeofficepremiumtaxrate for acompanywith ahome office orregional home office in Colorado are to better align the state's insurance premium tax code with the tax codes ofofotherstates, otherso states,that sothat Colorado is less ofofan an outlier regarding how insurance taxpayers compute their taxes owed, and to streamline insurance premium tax statutes byeliminatingby eliminating a tax expenditure that is not meeting its intended purpose;

and (b) Any revenue gain that results from the improved alignment of thestate'sinsurancepremiumtaxcodewiththetaxcodesofotherstatesand the streamliningstate's ofinsurancepremiumtaxcodewiththe taxcodes ofotherstates and the streamlining ofthe insurance premium tax statutes is:

(I) Incidental to the primary purpose of better aligning the state's insurance premium tax code with the tax codes ofofother other states;

(3) Therefore, the general assembly declares, consistent with the Coloradosupremecourt'sholdinginTABORFound.v.Reg'lTransp.Dist., CO 29, that legislation causing onlyan incidental and de minimis tax revenue increase does not amount to a new tax or a tax policy change that requires advance voter approval under section 20 of article X of the Colorado constitution,supreme thecourt's removalholding of the reduced insurance premium tax rate for a companywith a home office or regional home office in ColoradoTABOR PAGEFound. 2-HOUSE BILL 25B-1003 is neither a new tax nor a tax policy change that requires voter approval.

v.

Reg'/ Transp.

Dist., CO 29, that legislation causing only an incidental and de minimis tax revenue increase does not amount to a new tax or a tax policy change that requires advance voter approval under section 20 of article X of the Colorado constitution, the removal ofthe reduced insurance premium tax rate for a company with a home office orregional home office in Colorado PAGE 2-HOUSE BILL 25B-1003 is neither a new tax nor a tax policy change that requires voter approval.

In Colorado Revised Statutes, 10-3-209, amend (1)(b)(I)(l)(b)(I) introductory portion and (1)(b)(I)(B);(l)(b)(I)(B);

and add (1)(b)(IV)(l)(b)(IV) as follows:

(1) (b) (I) The rate of taxtashall shalISasbeIS as follows:

(B) For DIRECT WRITTEN PREMIUMS IN 2025, FOR companies maintainingahomeofficeoraregionalhomeofficeinthisstate,therateofmaintaining taxa onhome theoffice grossoraregional amounthome shalloffice beonepercent.Ointhis NANDAFTERstate, JANUARYthe 1,rate 2026,of THEtax TAXon RATEthe ISgross TWOamountshall PERCENTbeISone .percent.

(IV)ON S UBSECTIONS (1)(b)(I)(B), (1)(b)(II), (1)(b)(II.5), (1)(b)(II.7), AND (1)(b)(IIIOFAFTER THISJANUARY SECTION1, AND2026, THISTHE SUBSECTIONTAX (1)(b)(IV)RATE AREISTWO REPEALEDPERCENT. , EFFECTIVE DECEMBER 31, 2026.

(IV) SUBSECTIONS (l)(b)(I)(B), (l)(b)(II), (l)(b)(Il.5), (l)(b)(Il.7), AND ( 1)(b)(Ill) OF THIS SECTION AND THIS SUBSECTION (1)(b)(IV) ARE REPEALED, EFFECTIVEDECEMBER31, 2026.

The general assembly finds, determines, and declares that this act is necessary for the immediate preservation ofofthe the public peace, health, or safety or for appropriations for PAGE 3-HOUSE BILL 25B-1003 the support and maintenance of the departments of the state and state institutions.

____________________________ ____________________________ Julie McCluskie James Rashad Coleman, Sr.

SPEAKER OF THE HOUSE PRESIDENT OF OF REPRESENTATIVES THE SENATE ____________________________~~k-- ____________________________CoruYor Connor Randall Esther van Mourik ACTING CHIEF CLERK OF THE HOUSE SECRETARY OF OF REPRESENTATIVES THE SENATE APPROVED________________________________________t h APPROVED OY\1YJv(s.d'lAv3v~➔ 28 V J---~ C:45arv\ (Date and Time) _________________________________________ Jared S.

Polis/ GOVERNORGOVE OF THE STATE OFF COLORADO PAGE 4-HOUSE BILL 25B-1003