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Tax credits will slash childhood poverty, boost incomes of middle and lower-income Coloradans, and save families money
DENVER, CO - The House today advanced two bills on a preliminary vote that would expand the state Earned Income Tax Credit and create the Family Affordability Tax Credit to boost the incomes of hardworking Colorado families.
Beginning tax year 2024, HB24-1311 would create the refundable Family Affordability Tax Credit. This credit would be available to parents with children 16 and younger. The maximum credit amount would be $3,200 per child and would be adjusted for income, inflation, economic growth, and unemployment.
“This historic effort will significantly reduce childhood poverty in Colorado, boost the incomes of hardworking families, and help millions of Coloradans who are feeling the greatest impacts of the cost of living in our state,” said Speaker Pro Tempore Chris deGruy Kennedy, D-Lakewood, sponsor of HB24-1311. “Tax credit policies that benefit children and families, who could see up to thousands of dollars back under this bill, will ensure our tax code works for more Coloradans and help address childhood poverty. I’m proud that we are passing legislation to help Coloradans afford essentials like rent payments and groceries and boost the incomes of thousands of families across the state.”
“There are over 133,000 Colorado kids living in poverty, and this bill, coupled with the Earned Income Tax Credit, will dramatically cut our child poverty rate,” said Rep. Jenny Willford, D-Northglenn, sponsor of HB24-1311. “These tax credits boost the incomes of our lower and middle-income families so they can keep their children safe and healthy by accessing quality health care, school supplies, and fresh food. Our bill would increase tax credits for Colorado parents and put millions of dollars back into the pockets of families with children.”
Under this bill, the amount of the new, refundable Family Affordability Tax Credit is a maximum of $3,200 for each child under 6, and a maximum of $2,400 for each child ages 6 to 16, and adjusted incrementally downward for income, inflation, economic growth, and unemployment.
Currently, the state Earned Income Tax Credit (EITC) is 38 percent of the federal EITC for tax year 2024, 25 percent for tax year 2025, and 20 percent for tax years beginning 2026. HB24-1134 would permanently expand the state EITC by setting it to a baseline of 50 percent of the federal EITC for tax year 2024, 35 percent for tax year 2025, and at least 30 percent for tax years beginning 2026, and allowing it to increase up to 50 percent in years of strong economic growth in 2025 and beyond.
“A recent analysis found that the top 1 percent of households receive more tax breaks than the bottom 80 percent combined,” said Rep. Mike Weissman, D-Aurora, sponsor of HB24-1134. “Colorado’s tax code should work for hardworking families, which is why we are putting thousands of dollars back in the pockets of the people who are most impacted by rising costs. Our bill would make our tax code more fair by boosting tax refunds for low and middle-income taxpayers and helping to reduce childhood poverty.”
“Growing up, the Earned Income Tax Credit rescued my family from the worst consequences of poverty. The EITC is one of the most important anti-poverty tools to help Colorado families make ends meet, pay for the car repairs that help them get to school and work, pay off their credit cards, and keep a roof over their heads,” said Rep. Manny Rutinel, D-Commerce City, sponsor of HB24-1134. “With this bill, we’re providing financial relief to hardworking Coloradans by expanding the Earned Income Tax Credit, increasing the Child and Dependent Care Tax Credit, and closing corporate tax loopholes so parents can provide a more stable life for their families.”
In addition to permanently expanding the EITC for Colorado families, the bill would merge the Child and Dependent Care Tax Credit and the Low-income Child Care Expenses Tax Credit to create the Child and Dependent Care Tax Credit (CDCTC) with an adjusted gross income cap of $60,000. HB24-1134 would expand the scope of qualified dependents to match the federal definition, by including dependents in addition to children under the age of 13. It would also increase the CDCTC to 70 percent of the federal credit. Additionally, the bill would modernize Colorado’s corporate tax laws, making them more consistent with other states’ laws.