Colorado's wildfire mitigation tax credit — the current rules
Search for this credit and you’ll find pages mixing the old subtraction, the 2023–2024 credit, and the larger credit that began in 2025. Here are the current rules from the Colorado Department of Revenue directly.
- You hold a qualifying ownership interest in private Colorado land where the work occurs.
- Your federal taxable income is within that tax year's limit: $129,200 for 2025; Colorado currently lists 2026 and 2027 as TBD.
- A third-party service provider performs qualifying defensible-space, fuel-break, thinning, or woody-fuel treatment work to applicable state standards.
- You count only actual out-of-pocket cost—not grants, reimbursements, incentives, donated work, inspection/certification fees, or equipment you buy or rent for your own use.
- You keep itemized paid receipts and file DR 0104CR with the Colorado return. A tax professional should resolve property, entity, or expense questions.
The credit by tax year
- 2023 and 2024: 25% of qualifying costs, with a $625 annual credit limit.
- 2025 through 2027: 100% of qualifying third-party costs, with a $1,000 annual credit limit.
- It’s a credit — it comes off your Colorado tax bill, not just your taxable income. It is nonrefundable; unused credit is not carried forward.
- Income-limited: your federal taxable income must be under the year’s cap ($129,200 for tax year 2025). Revenue’s current table still labels the 2026 and 2027 limits TBD, so check the official page for the tax year you will claim.
- Starting in 2025, qualifying expense means work paid to a third-party service provider. Your own time, donated work, and equipment you buy or rent for your own use do not qualify.
- Out-of-pocket means exactly that: costs reimbursed by a county cost-share, grant, or incentive aren’t yours to claim. Keep the program award and the contractor’s paid itemized invoice so the amounts can be separated.
How to claim it
File the Individual Credit Schedule (DR 0104CR) with your Colorado return, and submit receipts documenting the expenses — attached to the return or via the E-Filer Attachment tool on Revenue Online. Keep contractor invoices itemized: what was cut, where, and when.
Why you’ll see different numbers elsewhere
Two reasons. First, Colorado previously offered a wildfire mitigation subtraction (a deduction, not a credit) — tax years 2024 and prior — and plenty of pages still describe that regime. Second, some sites simply quote stale caps. When a figure matters to your budget, the Department of Revenue’s pages beat any blog, including this one — which is why every number here links to them.
Stack it with your county’s money
County assistance and the credit can both matter, but a grant or incentive does not become a creditable expense. Determine the homeowner’s documented qualifying out-of-pocket amount only after assistance is accounted for:
- Summit: 50/50 Wildfire Council grants
- La Plata and Archuleta: Wildfire Adapted Partnership cost-share
- Boulder: Wildfire Partners rebates
- El Paso: CSFD stipends in the city WUI
The stack changes the economics of a serious defensible-space project: a cost-share can reduce the bill, and the 2025–2027 credit can offset up to $1,000 of qualifying remaining cost, subject to income and tax-liability limits. The insurance discount your documented work can earn under the new score rules is the third layer.
The credit is currently written to run through tax year 2027. Use the rules and forms for the year the qualifying cost is paid, and do not treat this page as a tax determination for your return.