Colorado Expands Earned Income Tax Credit
Colorado Governor Jared Polis (D) signed legislation to expand the state Earned Income Tax Credit (EITC) from 15% to 20% of the federal credit starting in 2022. The credit will increase temporarily to 25% in 2023 before returning to 20% in 2026.
In addition to increasing the value of the credit, the legislation also expands eligibility to filers as young as 18. Colorado is one of seven states who allow younger residents to claim the EITC.
In addition to the EITC expansion, the legislation also funded the state Child Tax Credit (CTC), which hasn’t been funded since its enactment in 2013. The state CTC will also be available to filers using Individual Taxpayer Identification Numbers. According to the Bell Policy Center, 200,000 more Coloradans will benefit from this expansion.
Advocates note the CTC will benefit local economies by making child care more accessible for small business owners. The credit will “generate $1.50-$2.00 in economic activity for every dollar paid out to parents,” said Lindsey Vigoda, outreach and policy director at Small Business Majority.
In celebration of the expansion, the state of Colorado will recognize July 15 as Child Tax Credit Day.
To learn more about other state-level tax credits across the country, visit our 50-state map here.