HB 17-1002 (Pettersen & Exum/Kefalas) Renewing the Child Care Tax Credit for Low Income Families

Originally Posted: January 13, 2017
Last Updated: May 12, 2017

Summary

Many working families in our state who struggle to get by on low wages aren’t getting the full benefit of a common-sense tax break. That’s because federal government put overly tight limits on the Child and Dependent Care Credit. Colorado changed those limits so that all people, even those with the lowest incomes, who work hard can keep more of what they make to pay for safe and reliable child care. HB 17-1002 simply continues, for another 3 years, the Colorado Child Care Tax Credit for families who earn too little to qualify for the Federal Child and Dependent Care Credit or the Colorado Child Care Tax Credit under the traditional formula Colorado law provides a permanent income tax credit for child care expenses to families earning $60,000 or less, but due to a glitch in the relationship between federal and state tax laws, families making less than $25,000 have historically had little, if any, access to the credit. That changed in 2014 with legislation that the Children’s Campaign helped champion that extended the credit to families making less than $25,000 who can claim a maximum credit of $500 for a family with one child and $1,000 for a family with two or more children. Families must be working, earning less than $25,000 a year, and paying for child care. Without legislative action, low-income families who incur child care expenses so they can work will see a tax increase next year.

Position

The Children’s Campaign strongly supports this bill as one way to continue to provide all families with the ability to work and access quality child care. For families making less than $25,000 a year, this tax credit makes a significant impact. Some 33,000 families have benefitted from this credit each of the past several years, offsetting their child care costs by nearly $5 million.

Current Status

The bill passed the Senate on a vote of 25-10 on third reading. To address the budget impact of the bill, an amendment was added that will trigger on the tax credit for the 2017 tax year when the June revenue forecast comes in, but ensures that the credit is available next year and the year after regardless of the June revenue forecast.

Previous Statuses


May 5, 2017

The bill passed the House on a strong bipartisan vote of 47-16 and is now awaiting a hearing in the Senate Finance Committee.

March 3, 2017

Passed the House Finance Committee on a bipartisan 12-1 vote and now heads to the House Appropriations Committee.

February 24, 2017

Scheduled to be heard in the House Finance Committee on Monday, Feb. 27 at 1:30 p.m. in LSB-A

January 13, 2017

Introduced in the House – Assigned to the House Finance and Appropriations Committees.