Colorado’s new child tax credit: Lawmakers considering $700 million proposal

Low-income families in Colorado could receive about $2,500 per year if a new child tax credit is approved. Lawmakers are currently considering a proposal that would provide about $700 million a year in new child tax credits to nearly 300,000 families in Colorado. Funding for this program will come from Colorado’s budget surplus.

Colorado’s New Child Tax Credit – Who Can Get It?

Lawmakers are currently considering a proposal (HB24-1311) called the Family Affordability Tax Credit, which would revive the previous tax credit that was available for 2022. Rep. Jenny Willford is the bill’s sponsor.

“Expanding and distributing the child tax credit will create a healthier, happier future for our children and pave the way for economic success and economic prosperity,” said Rep. Willford.

Eligible families will receive up to $3,200 per child under 6 and $2,400 per child ages 6 to 16. This new child tax credit in Colorado is refundable, meaning even families with no year-end tax liability can get the cash.

Higher credits are available to families with the lowest incomes. That means single filers with income of $15,000 or less ($25,000 or less for joint filers) will receive the maximum credit. For those whose income exceeds the limit, the credit amount is gradually reduced.

If approved, Colorado’s new child tax credit could lift thousands of families out of poverty and make Colorado one of the states with the lowest child poverty rate, according to data from the nonprofit group Gary Advocacy.

Family Affordability Tax Credit – Can I Get Help?

Funding for Colorado’s new child tax credit would come from the state’s budget surplus. That means the $700 million intended for the program would likely be diverted from TABOR funds, which are used to distribute funds to taxpayers.

The idea of ​​diverting money from Tabor refund checks has been criticized by many. Some Republican lawmakers also raised concerns about the price of the bill, saying the credit would only be provided in good economic times.

On the other hand, supporters of the new child tax credit say sending the child tax credit is a legitimate use of TABOR surplus funds. Moreover, they claim the state has already sent billions of dollars in credits that reduce regular refund amounts.

Responding to criticism that the credit would only be available in good times, the bill’s sponsors said it would be scaled back for all income brackets if surpluses are not large enough to finance the full credit.

Despite these claims, it may be difficult for Colorado lawmakers to win support for a new child tax credit because so many other proposals also target the state’s budget surplus. Surpluses, on the other hand, are limited because they are equal to the revenue the state collects beyond the spending limits set by TABOR.

HB24-1311, the bill approved by the House Finance Committee earlier this week, still has a long way to go. The bill next goes to the House Appropriations Committee.