C.R.S. § 39-22-543: Credit for wildfire hazard mitigation expenses - legislative declaration - definitions - repeal.

(1) The general assembly declares that the purpose of the tax expenditure in this section is to reimburse a landowner for the costs incurred in performing wildfire mitigation measures on the landowner's property located within the state.

(2) As used in this section, unless the context otherwise requires:

(a) "Costs" means any actual out-of-pocket expense incurred and paid by the landowner to a third-party service provider, documented by receipt, for performing wildfire mitigation measures. "Costs" does not include any inspection or certification fees, in-kind contributions, donations, incentives, or cost sharing associated with performing wildfire mitigation measures. "Costs" does not include expenses paid by the landowner from any grants awarded to the landowner for performing wildfire mitigation measures. "Costs" does not include any amount paid by the landowner for the purchase or rental of any article of tangible personal property for the landowner's own use.

(a.5) "Infestation mitigation measures" means the thinning of woody vegetation that is at risk of mountain pine beetle or spruce beetle infestation or that has been killed by mountain pine beetles or spruce beetles, if such activities meet or exceed any Colorado state forest service standards or any other applicable state rules.

(b) "Inflation" means the annual percentage change in the United States department of labor's bureau of labor statistics consumer price index for Denver-Aurora-Lakewood for all items paid by all urban consumers, or its applicable predecessor or successor index.

(c) "Landowner" means any individual owner of record of private land located within the state, including any easement, right-of-way, or estate in the land, and includes the heirs, successors, and assigns of such land. "Landowner" shall not include any partnership, S corporation, or other similar entity that owns private land as an entity.

(d) "Wildfire mitigation measures" means the creation of a defensible space around structures; the establishment of fuel breaks; the thinning of woody vegetation for the primary purpose of reducing risk to structures from wildland fire; or the secondary treatment of woody fuels by lopping and scattering, piling, chipping, removing from the site, or prescribed burning; so long as such activities meet or exceed any Colorado state forest service standards or any other applicable state rules.

(3) (a) The amount of the credit allowed by this section is the same whether it is claimed by a single taxpayer or two taxpayers who file a joint return. In the case of two taxpayers who may legally file a joint return but actually file separate returns, only one of the taxpayers may claim the credit specified in this section.

(b) In the case of real property owned by tenants in common or joint tenants, the credit allowed pursuant to this section is only allowed for one of the individuals of the ownership group.

(4) (a) For income tax years commencing on or after January 1, 2023, but prior to January 1, 2025, a landowner with a federal taxable income at or below one hundred twenty thousand dollars for the income tax year commencing on or after January 1, 2023, as adjusted for inflation and rounded to the nearest hundred dollar amount for each income tax year thereafter, is allowed a credit against the income taxes imposed by this article 22 in an amount equal to twenty-five percent of up to two thousand five hundred dollars in costs for wildfire mitigation measures. The maximum total credit in a taxable year is six hundred twenty-five dollars.

(b) For income tax years commencing on or after January 1, 2025, but prior to January 1, 2027, a landowner with a federal taxable income at or below one hundred twenty thousand dollars for the income tax year commencing on or after January 1, 2023, as adjusted for inflation and rounded to the nearest hundred dollars for each income tax year thereafter, is allowed a credit against the income taxes imposed by this article 22 in an amount equal to the landowner's costs incurred for wildfire mitigation measures in an amount up to one thousand dollars. The maximum total credit in a taxable year for a landowner is one thousand dollars.

(c) For income tax years beginning on or after January 1, 2027, but before January 1, 2031, a landowner with an adjusted gross income at or below three hundred thousand dollars for the income tax year beginning on or after January 1, 2027, as adjusted for inflation and rounded to the nearest hundred dollars for each income tax year thereafter, is allowed a credit against the income taxes imposed by this article 22 in an amount equal to the landowner's costs incurred for wildfire mitigation measures, infestation mitigation measures, or both in an amount up to two thousand dollars. The maximum total credit in a taxable year for a landowner is two thousand dollars.

(5) (a) If the amount of a credit under this section exceeds a taxpayer's actual tax liability for an income tax year beginning before January 1, 2027, the amount of the credit not used to offset the taxpayer's income tax liability is not refunded to the taxpayer and shall not be carried forward as a tax credit against the taxpayer's income tax liability in any subsequent tax year.

(b) For income tax years beginning on or after January 1, 2027, if the amount of a credit allowed by this section exceeds the taxpayer's income taxes due, the excess may not be carried forward and is refunded to the taxpayer.

(6) This section is repealed, effective January 1, 2040.