JOINT RELEASE: Legislation to Incentivize Employee-Owned Businesses Signed Into Law​

HB25-1021 implements an income tax credit for employee-owned businesses

GRAND JUNCTION, CO – Legislation sponsored by Senator Jeff Bridges, D-Arapahoe County, and Representative William Lindstedt, D-Broomfield, to create tax incentives for employee-owned businesses was signed into law on Friday.

“Employee-owned businesses create a higher quality of life for workers, including higher wages, lower turnover, and better benefits and job security,” Bridges said. “Investing in employee ownership means investing in a more secure future for Colorado’s working families, and I’m proud to have championed this policy to encourage business owners to invest in their employees’ futures, too.”

“Employee-owned businesses are good for Colorado and make it easier for your favorite locally-owned businesses to stay in your neighborhood,” said Lindstedt. “This law creates new tax credits specifically for employee-owned businesses, saving them money and encouraging other businesses to convert to an employee-owned business model.” 

Transitioning to an employee-owned model helps small businesses focus on investing in their employees and serving their communities. Cosponsored by Senator Mark Baisley, R-Woodland Park, and Representative Rick Taggart, R-Grand Junction, HB25-1021 creates several new tax deductions and credits for businesses with an employee ownership model. In addition to the new tax incentives, the legislation extends the existing Employee Ownership Tax Credit within the Office of Economic Development and International Trade through tax year 2031.

The Employee Ownership Tax Credit, created by HB21-1311, was previously equal to 50 percent of the conversion costs for a business that converts to a worker-owned cooperative, an employee stock ownership plan, or an employee ownership trust. HB25-1021 makes the tax credit equal to 75 percent of the conversion cost, up to $167,000. The income tax credit is fully refundable.