A bill introduced this week by Colorado Democrats proposes to further expand state income tax relief for lower-earning workers and families with children.
House Bill 23-1112, sponsored by Democratic state Rep. Shannon Bird of Northglenn and Sens. Chris Hansen of Denver and Chris Kolker of Centennial, would raise the percentages at which Colorado matches the federal earned income tax credit and child tax credits.
Lawmakers last enlarged those state-level benefits in 2021, in what progressive groups hailed as a “paradigm shift” in Colorado tax policy. Under current law, certain 2023 tax filers will be able to claim a state earned income tax credit equal to 25% of the federal benefit, and a state child tax credit equal to up to 60% of the federal one for each child under six years old.
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HB-1112 would increase the state EITC percentage to 40% beginning in 2024. Percentages for state child tax credit would also increase on a sliding scale, up to a maximum of 70%, and the benefit could be claimed for each child age 17 or under, matching federal eligibility standards.
The child tax credit is available for single earners making less than $75,000 annually, or joint filers making less than $85,000 annually. HB-1112 would direct the Colorado Department of Revenue to adjust that limit annually for inflation.
As introduced, the bill, which was assigned to the House Finance Committee, would not make any other changes to the tax code, and projects to “reduc(e) state income tax revenue” by enlarging the credits. It has not yet received a fiscal analysis by nonpartisan legislative staff.
The federal child tax credit currently allows low- and middle-income families to claim up to $2,000 per child in tax relief. An expanded version championed by U.S. Sen. Michael Bennet of Colorado was temporarily enacted as part of a congressional COVID-19 relief package, but lapsed last year amid opposition from Republicans and Sen. Joe Manchin of West Virginia.
Lawmakers on the House Business Affairs and Labor Committee on Thursday also unanimously passed a separate bill aimed at expanding awareness of the expanded tax credits already on the books. House Bill 23-1006, sponsored by Democratic Reps. Mary Young of Greeley and Lindsey Daugherty of Arvada, would require Colorado employers to provide their workers written notice of the availability of the state and federal versions of the earned income and child tax credits.
“One of our top priorities this session is to make Colorado more affordable,” Daugherty said in a statement. “Under this bill, employers will provide important information to their employees that will connect them with the economic assistance that they are eligible for.”
— to news.google.com
