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May 14, 2024

JOINT RELEASE: SIGNED! Bill to Reduce Childhood Poverty

DENVER, CO - Governor Polis today signed legislation into law to expand the state’s Earned Income Tax Credit to boost the incomes of hardworking families.

"Our regressive tax structures means ultra wealthy individuals often end up receiving more, proportional tax breaks than hardworking families," said Rep. Mike Weissman, D-Aurora. “Colorado’s tax code should work for 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 law would make our tax code more fair by boosting tax refunds for low and middle-income taxpayers and helping to reduce childhood poverty.”

“Our tax code is skewed towards benefitting earners at the top, which is why I am fighting to pass measures like this that shift the balance towards all Coloradans,” Senator Nick Hinrichsen, D-Pueblo, said. “This legislation will provide significant relief for the folks who need it most, and make it easier for Colorado’s working families to get by.”

“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 law, 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.”

“Colorado’s working families deserve a break,” said Senator Chris Hansen, D-Denver. “These critical tax credits will put more money in their pockets, and make it easier to pay for necessities like groceries and rent. I’m proud to champion this new law that will lift folks out of poverty and will make life easier for Colorado families.”

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 25 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.

In addition to permanently expanding the EITC for Colorado families, the law 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) to help individuals with an adjusted gross income cap of $60,000 meet the high cost of child and dependent care. 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 law would modernize Colorado’s corporate tax laws, making them more consistent with other states’ laws.

More than 133,000 Colorado children currently live in poverty. This law, combined with other key legislative efforts, will help improve outcomes for low and middle income families.

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