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A new state tax credit worth thousands of dollars is now available to many Colorado families with children under 17.
It鈥檚 called the family affordability tax credit and is expected to help hundreds of thousands of cash-strapped families across the state. Lawmakers and advocates who championed the credit during last year鈥檚 legislative session see it as a chance to address Colorado鈥檚 high cost of living and pick up where the federal government left off when its expanded child tax credit expired in 2021.
That expanded tax credit helped cut child poverty in America nearly in half to a historic low of 5.2% in 2021. By 2023, child poverty rates jumped to 13.7%.
Since then, several states have expanded or created their own child tax credits. Colorado, which already had a child tax credit for families with young children, created the family affordability credit to provide more financial help to families already getting the child tax credit and give new aid to lower income families with older children.
Here鈥檚 what you need to know about the new credit.
What is the family affordability tax credit?
It鈥檚 a new state tax credit for lower income Colorado families with children under 17. It was created during the 2024 legislative session and is now available for the first time to families filing their 2024 tax returns.
Eligible families can get a tax credit of up to $3,200 for each child who was 5 or younger as of Dec. 31, 2024, and up to $2,400 for each child who was 6-16 years old as of Dec. 31, 2024. The size of the credit goes down as family income goes up, eventually phasing out when single tax filers hit an adjusted gross income of more than $85,000 a year and joint tax filers hit an adjusted gross income of more than $95,000 a year.
How is it different from Colorado鈥檚 child tax credit?
The family affordability tax credit is much bigger than the state鈥檚 child tax credit and includes families with older children. For example, a single mother who earned $30,000 in tax year 2024 and has a 4-year-old and 7-year-old would receive a family affordability tax credit of $4,445 and a state child tax credit of $600. (The state child tax credit is only available to lower income families with children under 6.)
It鈥檚 also worth noting that, unlike the state child tax credit, the family affordability credit may not be available every year. That鈥檚 because lawmakers decided to offer it only in good economic times when the state collects enough surplus tax revenue to fund it. During bad years when the state collects too little surplus tax revenue, the state will reduce the amount of the credit or refrain from offering it at all.
How do I know if I鈥檓 eligible for family affordability credit?
Use the tax credit calculator from Get Ahead Colorado, which is run by the Colorado Department of Public Health and Environment. The online tool asks a few questions about your income and the number of kids you have and spits out a list of state and federal tax credits you may be eligible for, including the family affordability credit.
The tax credit calculator is available in dozens of languages by clicking on the 鈥淪elect Language鈥� button in the top right corner.
I don鈥檛 make enough to pay income taxes. Am I still eligible?
Yes, the family affordability tax credit is refundable. That means that even if eligible families owe nothing in taxes, the state will pay them the amount of the credit as long as they file a state tax return.
Families who earn enough to pay income taxes may still get money back if their family affordability credit exceeds the amount they owe the state.
I don鈥檛 have a Social Security number. Am I still eligible?
Possibly. Parents who don鈥檛 have a Social Security number may be eligible for Colorado鈥檚 family affordability tax credit if they have an Individual Taxpayer Identification number 鈥� or ITIN 鈥� and their eligible children have a Social Security number.
ITIN numbers are available from the Internal Revenue Service to certain individuals who are categorized as resident aliens or nonresident aliens, regardless of immigration status.
Will getting the family affordability tax credit reduce my SNAP benefits?
No. Tax credits are not considered income and will not negatively affect most benefits, including SNAP, TANF, and Medicaid.
Are there other tax credits for Colorado families with children?
Yes. Both the federal government and the state have earned income tax credits, which are available to lower income families with or without children. Both also offer child tax credits, with the federal version available to qualifying families with children under 17 and the Colorado version available to qualifying families with children under 6.
How can I get help filling out my tax returns?
You can use myfreetaxes.com, an online program offered through United Way. It鈥檚 also available in Spanish.
Another free option is getyourrefund.org/en, which allows filers earning under $67,000 a year to get online assistance from certified volunteers. It鈥檚 also available in Spanish.
For free in-person help from certified volunteers, consider the Colorado Volunteer Income Tax Assistance program, also known as VITA. Check this list for VITA sites, hours, and other details.
Finally, Get Ahead Colorado has a variety of other tax filing resources available.
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