How much can I get?

Coloradans will receive a larger Earned Income Tax Credit (EITC) as the Governor signs new legislation. The new bill temporarily doubles Colorado’s earned income tax credit to bring it in line with the federal EITC. This new bill is the first bill of the 2024 legislative session.

What was the need for this new law?

On Wednesday, Governor Polis signed HB24-1084 (Repeal and Re-Enact Increase in Earned Income Tax Credit). The bill is sponsored by Representatives Jenny Willford and Mary Young, and Senators Chris Kolker and Rhonda Fields. The new bill specifically repeals and reenacts HB23B-1002.

Qualifying Coloradans can now increase their federal earned income tax credit from 25% to 50% in 2023. Colorado’s increased Earned Income Tax Credit would use approximately $182.5 million in state revenue, exceeding the limits set by the Taxpayer Bill of Rights (TABOR).

Governor Polis approved the first EITC increase since a special session in November. But in December, state Rep. Scott Bottoms filed a lawsuit against Assembly Speaker Julie McCluskie and Gov. Polis to block the increase.

At the time, Bottoms argued that the bill violated the Colorado Constitution and that he was not given the opportunity to speak on the bill during the November special session. Bottoms also claimed the Speaker ignored his request to read the entire bill aloud.

The new law repealed and re-enacted the challenged version. He also said the new bill creates uncertainty for Coloradans who will be eligible for the 2023 credit, citing Bottoms’ lawsuit.

“To resolve this uncertainty by removing all doubt arising from litigation regarding the constitutionality of the laws enacted by HB 1002, this bill repeals and re-enacts those laws,” reads a summary of the bill.

Colorado’s Earned Income Tax Credit: Who Can Get It and How Much?

Households earning up to $63,400 may be eligible for the federal EITC, depending on family size. Taxpayers without qualifying children can take a $600 federal deduction on their tax return. The tax credit is $3,995 for one child, $6,604 for two children, and $7,430 for three or more children.

However, the amount of federal credit varies depending on household size. For example, the income limits for a single filer range from $17,640 (no children) to $56,838 (with three children). For married couples filing jointly, the threshold is higher, ranging from $24,210 (no children) to $63,398 (with three or more children).

After the new law passes, eligible taxpayers will receive 50% of the federal tax credit claimed. Some residents who claim the federal EITC may also claim the Earned Income Tax Credit in Colorado. Non-residents are not eligible for the Colorado Earned Income Tax Credit (COEITC).

Taxpayers may be eligible for the COEITC even if they did not claim the federal EITC. For more information, visit the COEITC webpage.