Colorado has begun selling insurance premiums and income tax credits to raise $100 million to shore up the state’s budget and pay for insurance subsidies.

A law approved by the legislature this year authorized the Treasury Department to sell up to $125 million in tax credits to insurance firms and C corporations to raise $100 million, which would help pay down some of the state’s $800 million budget shortfall.

Analysts assumed that the legislation would raise up to $103.2 million in the
current fiscal year – but decrease revenues by up to $75 million in the next year, and up to $50 million in FY 2027-28.

In a news release, the Colorado Department of the Treasury announced it has partnered with Advantage Capital to execute the sale on behalf of the state.

“The increasing severity of Colorado’s budget challenges poses a risk to essential services, including K-12 education and healthcare,” said Treasurer Dave Young. “We are proud to be part of the solution by generating immediate revenue for the General Fund—all while ensuring the long-term fiscal stability of Colorado.”

Passed during the 2025 Special Session, HB 25B-1004 authorizes the Treasury to sell $125 million in tax credits for tax years 2026 through 2029. Up to $100 million in sale proceeds will be directed to the General Fund to cover state funding shortfalls resulting from changes to the federal tax code.

State Rep. Sean Camacho, who co-sponsored the bill, said the law would generate “immediate revenue and protect the core state services that Coloradans rely on daily.”

Colorado has leveraged tax credit sales in recent years. Previously, the state sold insurance premium tax credits to fund a loan program for small businesses.

In the coming days, Advantage Capital and the Treasury will send information to eligible insurance companies, which must submit their commitment to buy credits by Dec. 15.

Following this deadline, Advantage Capital will extend the sale opportunity to other qualifying taxpayers, such as C corporations.