Colorado’s lower-income families may receive about $2,500 annually if a new child tax credit is approved. Lawmakers are currently considering a proposal that could give about $700 million annually in a new child tax credit from Colorado to almost 300,000 families. The money for the program would come from Colorado’s budget surpluses.
New child tax credit from Colorado – who will get it?
Lawmakers are currently considering a proposal (HB24-1311), called the Family Affordability Tax Credit, which revives an earlier credit that was offered in 2022. Rep. Jenny Willford is the sponsor of the bill.
“When we expand and distribute the child tax credit, we will create healthier, happier futures for our kids, and set them on a path towards economic success and economic prosperity,” Rep. Willford said.
Eligible families will receive up to $3,200 per child below six years and up to $2,400 per child ages six to 16 years. This new child tax credit from Colorado will be a refundable credit, which means even families with no end-of-year tax obligations could receive cash.
Higher credit will go to the families with the lowest income, i.e., single filers with an income of $15,000 or less ($25,000 or less for joint filers) will receive the maximum credit. The credit amount will gradually reduce for those with income above the limit.
If approved, the new child tax credit from Colorado could lift thousands of families out of poverty, making Colorado the state with the lowest child poverty rate, according to the data from the nonprofit Gary Advocacy.
Family Affordability Tax Credit – will it get support?
The money for the new child tax credit from Colorado will come from the state’s budget surpluses. In other words, the $700 million for the program will likely be redirected from the TABOR funds, which are used to distribute money to taxpayers.
The idea of diverting money away from Tabor refund checks has drawn criticism from many. Also, some Republicans raised concerns over the bill’s price tag and that the credit would only be offered in good economic times.
On the other hand, those in favor of the new child tax credit say that sending a child tax credit is the legitimate use of TABOR surplus dollars. Further, they argue that the state already sends billions of dollars in credits that reduce the money for general refunds.
In response to the criticism that the credit will only be offered in good times, the sponsors of the bill say the credit will be downsized for all income tiers if the surplus isn’t large enough to fund the full credit.
Despite the arguments, it could be hard for Colorado lawmakers to get support for the new child tax credit as many other proposals are also eyeing the state’s budget surplus. The surplus, on the other hand, is limited as it equals the revenue that the state collects beyond the spending limits set by TABOR.
Bill HB24-1311, approved by the House Finance Committee earlier this week, still has a long way to go. Next, the bill heads to the House Appropriations Committee.
