Summary#

HB 26-1419, Over-Refund of Excess State Revenues, is an enacted Colorado law that amends state law on over-refunds and makes an appropriation. It directs the state controller to adjust how a possible over-refund for fiscal year 2024–25 is used in later refund calculations, but only if a specified revenue test is met. Its stated goal is to correct for the timing of the effects of federal H.R. 1 on Colorado’s revenue accounting.

• If, in September 2026, the controller certifies that state revenue for fiscal year 2025–26 did not exceed Colorado’s constitutional spending limit, the controller must calculate the difference between the 2024–25 refund already certified and the refund that would have been required after accounting for revenue reductions caused by H.R. 1.
• The controller must make that calculation by November 16, 2026, working with the Office of State Planning and Budgeting and the Department of Revenue on the H.R. 1 revenue reduction.
• The resulting amount must be used in later calculations of over-refunds for fiscal years starting on or after July 1, 2026. No more than half of the amount may be used in any one fiscal year.
• The law appropriates $18,021 from the General Fund to the Office of the State Auditor for fiscal year 2026–27, based on an assumption that it needs an additional 0.2 full-time-equivalent employee.

What it means for you#

• Colorado taxpayers: If the required 2025–26 revenue condition is met, the adjustment may affect how much the state refunds in later years. The bill does not require taxpayers to repay refunds already received or change tax rates.
• State offices: The controller must make the calculation by the deadline if the condition is met. The Office of State Planning and Budgeting and the Department of Revenue help determine the H.R. 1-related revenue reduction. The Office of the State Auditor may use the appropriation to implement the law.
• General public: The law changes state refund accounting. It does not create a new public service or a new independent agency.

Money#

The law provides $18,021 for the Office of the State Auditor in fiscal year 2026–27; no estimate is given for its possible effect on future taxpayer refunds.

• The appropriation is from the General Fund and is based on an assumption of 0.2 additional FTE.
• The bill sets no dollar estimate for the adjustment to later refunds. No publicly available information.

What is unclear#

• The supplied materials do not include the existing statutes being amended, so the exact current over-refund calculation and how this adjustment fits into it could not be verified.
• The bill does not set out a detailed method for deciding how much of the 2024–25 revenue reduction was caused by H.R. 1.
• The special adjustment applies only if the September 2026 certification says 2025–26 revenue did not exceed the spending limit. The bill does not direct this adjustment if that condition is not met.
• The bill does not explain how the adjustment would affect any particular taxpayer’s refund.
• The bill does not specify a public review or appeal process for the controller’s calculation.

Case for#

• The bill appears intended to address a timing problem: according to its findings, H.R. 1 became law after the end of fiscal year 2024–25, so its effect on 2025 income-tax revenue was recorded in the next fiscal year.
• If that timing caused the state to certify too large a 2024–25 refund, adjusting later calculations could account for the revenue reduction without requiring taxpayers to return past refunds.
• The adjustment is conditional and capped at half the calculated amount in any one fiscal year.

Case against#

• One concern is that the law could reduce refunds in later years based on a recalculation of a refund already certified for 2024–25.
• The bill does not give a detailed formula for attributing revenue changes to H.R. 1, which could make the amount difficult for the public to check.
• It is unclear how the adjustment would affect individual taxpayers or how the calculation could be challenged.
• If the 2025–26 revenue condition is not met, this provision does not make the adjustment, even though the law’s stated goal is to correct the earlier accounting.