Colorado is set to scrap its long-standing tax break for insurers with home or regional offices, shaking up how insurance companies are taxed in the state - if a newly introduced bill becomes law.
House Bill 25B-1003, introduced in the Colorado General Assembly, would end the insurance premium tax rate expenditure for companies that keep a home office or regional home office in Colorado. The change would take effect beginning in the 2026 calendar year, repealing the reduced insurance premium tax rate for qualifying insurers.
The tax break was originally designed to encourage insurers to maintain a substantial workforce presence in Colorado. According to the legislative declaration, and based on evaluations by the Office of the State Auditor, the General Assembly finds that, even after criteria were amended in House Bill 21-1312, insurance companies continued to qualify for the reduced rate despite not maintaining or increasing their overall employment in the state. The benefit from the rate reduction may increase even if companies do not increase employment, since the tax benefit is based on premiums collected—and premiums are rising nationwide.
Lawmakers say the main reason for the proposed change is to better align Colorado’s insurance premium tax code with those of other states. The bill states that Colorado is currently an outlier in how insurance taxpayers compute their taxes owed, and this repeal is meant to address that. The legislative declaration clarifies that any revenue gain from this change is incidental and de minimis, and is not the primary purpose of the bill.
Currently, for direct written premiums in 2025, companies maintaining a home office or regional home office in Colorado pay a tax rate of one percent. House Bill 25B-1003 would repeal the relevant subsections effective December 31, 2026, removing this reduced rate.
The bill does not introduce new insurance policy clauses or requirements for insurance products. Its focus is on the tax rate for companies with a home office or regional home office in Colorado and aligning state tax policy with that of other states. The legislative declaration references the Colorado Supreme Court’s holding in TABOR Found. v. Reg’l Transp. Dist., 2018 CO 29, stating that this change does not amount to a new tax or a tax policy change requiring voter approval.
The sponsors of the bill are Representatives Mabrey and Boesenecker in the House and Senators Weissman and Gonzales J. in the Senate.
For insurance professionals, the message is clear: if passed, the reduced insurance premium tax rate for maintaining a home or regional office in Colorado will be repealed starting in 2026. The bill’s stated purpose is to align Colorado’s insurance premium tax code with those of other states and to address the fact that the current incentive is no longer effectively tied to employment growth in Colorado.
In sum, House Bill 25B-1003, as introduced, would repeal a tax incentive that no longer serves its intended purpose. Insurers operating in Colorado would be subject to the same tax rules as those in other states, with the change focused solely on the business side of the insurance industry—not on consumers or policy language.
