For the second time in two months, Gov. Jared Polis on Wednesday signed a bill into law that temporarily doubles Colorado’s match of the federal Earned Income Tax Credit, boosting the amount of money that will go to working families this year.
The new law — the first legislation signed by Polis during the 2024 legislative session — increases the state’s match of the federal tax credit from 25% to 50% for the 2023 tax year only. The increase was first passed by lawmakers and signed by Polis in November, during the legislature’s property tax-themed special session.
But state Rep. Scott Bottoms, a Colorado Springs Republican, filed a lawsuit in December to stop the bill from becoming law. He alleged that House Speaker Julie McCluskie, a Democrat, violated constitutional procedure by ignoring his request to have the bill read aloud in its entirety.
The new bill repealed the version that was challenged and reenacted it. Lawmakers filed it explicitly to sidestep the process challenges to the special session bill, opting to repass it so the litigation wouldn’t leave the tax credit increase in limbo.
Households making up to about $63,400 may qualify for the federal EITC depending on their household size. The federal credit on their tax returns is $600 if they have no qualifying children, $3,995 for one child, $6,604 for two children and $7,430 for three or more children.
The state’s new match adds 50% of the federal credit claimed.
But federal EITC income limits vary by household size. For a single person, they range from $17,640 for a filer with no children to $56,838 for a filer with three children. The limits are higher for married couples filing jointly, ranging from $24,210 for no children to $63,398 for three or more children.
Colorado’s tax credit increase will tap into about $182.5 million in state tax revenue collected over the limit set by the Taxpayer’s Bill of Rights, or TABOR.
The new bill, HB24-1084, was sponsored by four Democrats and largely passed along party lines. Opposing Republicans argued it would redistribute tax refunds away from those who paid more in taxes, while Democrats argued the higher credits would help the people who most need them.
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