Formula - Rich Text code displaying on dynamic filter

Right, so DFs will not render in HTML.  I suggest you make two fields.

The Status field would be formula text.

If([Term End] > Today(),"Active", "Inactive")

The [Status colored] field or perhaps named [Status.] if you want to be sneaky and have a short name for reports would be a Rich text formula field 

Case([Status],
"Active",   "<div style=\"color:green;\">Active</div>",
"Inactive", "<div style=\"color:gray;\">Inactive</div>")

The use the [Status] field as the DF and the [Status.] field on the report.