(MENAFN- ValueWalk) Coloradans will get more earned income tax credit (EITC) now that the governor has signed into law a new bill. The new bill temporarily doubles the earned income tax credit from Colorado to match the federal EITC. This new bill marks the first law of the 2024 legislative session.
What was the need for this new bill?
On Wednesday, Governor Polis signed into law HB24-1084 (Repeal & Reenact Earned Income Tax Credit Increase). The bill was sponsored by Representatives Jenny Willford and Mary Young, and Senators Chris Kolker and Rhonda Fields. The new bill specifically repeals and reenacts HB23B-1002.
Now, eligible Coloradans will get 50% of the federal earned income tax credit for 2023, up from 25%. The increased earned income tax credit from Colorado will use about $182.5 million in state tax revenue over the limit set by TABOR (Taxpayer's Bill of Rights).
Governor Polis first approved the increase in the EITC after the special session in November. In December, however, state Rep. Scott Bottoms filed a lawsuit against House Speaker Julie McCluskie and Governor Polis to block the increase.
Rep. Bottoms, at the time, claimed the measure was against the Constitution of the State of Colorado and that he wasn't given the opportunity to speak about the bill during the November special session. Also, Rep. Bottoms claimed that the House Speaker ignored his request to have the bill read aloud in its entirety.
The new bill repealed and reenacted the challenged version. Also, the new bill mentions Rep. Bottoms' lawsuit, saying it created uncertainty for Coloradoans eligible for the credit in 2023.
“To address this uncertainty by removing any doubt arising from the lawsuit regarding the constitutionality of the law enacted by HB 1002, the bill repeals and reenacts that law,” read the summary of the bill.
Earned income tax credit from Colorado: who will get it and how much?
Households with income up to $63,400 may qualify for the federal EITC depending on the number of family members. A taxpayer with no qualifying children can get $600 in federal credit on their tax return; the credit is $3,995 for one child, $6,604 for two children, and $7,430 for three or more children.
The federal credit amount, however, varies by household size. For instance, the income limit for a single filer ranges from $17,640 (with no children) to $56,838 (with three children). The threshold limit is even higher for married couples filing jointly, ranging from $24,210 (with no children) to $63,398 (with three or more children).
After the passage of the new bill, eligible taxpayers will get 50% of the federal credit claimed. Full-year and part-year residents who claimed the federal EITC can also claim the earned income tax credit from Colorado. Non-residents don't qualify for the COEITC (Colorado Earned Income Tax Credit).
Even if a taxpayer didn't claim the federal EITC, he or she may still be eligible for COEITC. Visit the
COEITC web page
for more information.
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