There is new legislation that directly impacts your Colorado charitable deductions. While this tax change will not apply to all of you, I believe it is important for you to be aware of this information.
The bill (H.B. 21-311) was part of a package to raise $400 million in revenues for the state to spend on priorities for lower-income families and small businesses, such as expanding the state child tax credit and Earned Income Tax Credit (EITC).
If they can pass laws at this level who will stop them at lower levels?
What You Need to Know:
- Colorado Governor Jared Polis recently signed legislation that will cap itemized deductions, including charitable giving, for those with an AGI of $400,000 or more, effective January 2022.
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- Individuals will be limited to $30,000
- Married filing jointly will be limited to $60,000
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- Individuals with an AGI of $500,000 or couples with an AGI of $1 million or more will be required to add back federally qualified business income deductions when determining their state taxable income.
- College Savings Plan contribution deductions will be capped at $20,000 for individuals and $30,000 for couples filing jointly.
- This new legislation only impacts Colorado residents and Colorado State Taxes.
“This is an area of constant churn. The Colorado law is the rare one that makes it all the way through the process,” said David L. Thompson, vice president of public policy for the National Council of Nonprofits. “This gets proposed in various states each two-year period but rarely passes,” he said, adding that Colorado is likely the only state that actively sought to cap the itemized deduction this year.
If you believe this will affect you, call me so we can talk through it.
If you’re not sure if it will affect you, call me so we can talk through it.
If you know this won’t affect you, but concerns you, call me so we can talk through it.
