Colorado suspends its sales and use tax exemption for space flight property from 2027 to 2029 under HB26-1289

What changed in detail

Colorado House Bill 26-1289, “Concerning modification of certain tax expenditures”, became law after the Governor signed it on 3 June 2026. The General Assembly’s bill summary lists the state sales and use tax exemption for property used in space flight among the tax expenditures the act adjusts.

The act repeals that exemption effective 1 January 2027 and reinstates it beginning 1 January 2030. Property used in space flight is therefore subject to state sales and use tax for 1 January 2027 to 31 December 2029.

The same act makes other sales and use tax changes listed in the bill summary, including a new exemption for construction and building materials used by rail carriers under public passenger rail contracts and an extension of the exemption for wood from beetle-killed trees. These are separate provisions and are not part of this change.

What it means

This is a three-year suspension, not a permanent repeal, so exemption certificates and tax-engine rules for space-flight property should be switched off for 2027–2029 and planned to switch back on in 2030 rather than deleted. Purchases contracted in 2026 but delivered or first used in Colorado from 1 January 2027 are the cases most likely to be mis-taxed. The bill summary covers state tax; how home-rule cities treat the same property should be checked separately.