HB 22-1163

HB 22-1163, which has been signed into law, allows Colorado residents to deduct out-of-pocket medical expenses from their state income tax for the next seven years. This deduction is available if the expenses haven't already been claimed on federal taxes or covered by insurance or a medical savings account. The bill aims to provide relief to individuals who bear high healthcare costs by reducing their state tax burden. Since it has been signed, Colorado taxpayers can now start claiming this deduction when filing their 2023 state income tax returns.

Official Summary

The starting point for determining state income tax liability is federal taxable income. Federal taxable income is adjusted for additions and subtractions (deductions) that are used to determine Colorado taxable income, which amount is multiplied by the state's income tax rate of 4.55%. For the next 7 income tax years, the bill allows an individual to claim a deduction for qualifying out-of-pocket medical expenses, if the expenses are not: Claimed as a deduction on the taxpayer's federal income tax return; Paid or reimbursed from a medical savings account; or Paid or reimbursed by the taxpayer's insurance company.(Note: This summary applies to this bill as introduced.)