(MENAFN- ValueWalk) Colorado renters have sent a bill to the House that, if approved, will offer an income tax credit to qualified renters in the state. The Colorado tax credit for renters targets lower- and middle-income renters during 2024-26. Eligible renters could get as much as $2,000 in income tax credit.
Colorado tax credit for renters: who will get it and how much?
Earlier this week, the Colorado Senate approved the bill offering tax credits to renters by a 22-12 vote. The bill now heads to the House and, if approved, would create a nonrefundable income tax credit for renters who meet the income requirements.
To qualify for the Colorado tax credit for renters, the federal adjusted gross income of the taxpayers must be equal to or less than $75,000 (up to $150,000 for those filing a joint return). Another requirement is that renters must rent the taxpayer's primary residence in the state.
Eligible joint filers with gross income of up to $50,000 or less could get up to $2,000, while single filers with income up to $25,000 or less could get up to $1,000. The credit amount is reduced by $10 for each $500 income above the threshold. Renters won't be allowed to carry forward the credit.
Also, taxpayers who qualify for rent or heat assistance during the 2024, 2025 or 2026 calendar years will qualify for the full Colorado tax credit for renters, irrespective of the income-based reductions.
It must be noted that renters' credit won't be counted as income for calculating public assistance or affordable housing eligibility. Also, the bill notes that a renter may claim this new credit or other income tax credits for renters, but not both.
Senator Chris Kolker, Senator Chris Hansen, and Representative Lorena García are the sponsors of the bill.
Property tax relief also in the works
Separately, lawmakers are also considering a bill offering residents property tax relief. Democrats are working to introduce the bill soon to overhaul the state's property tax system to limit the rise in homeowners and businesses tax bills. Also, the bill aims to offer more relief to people with lower-value homes.
If approved, the bill would allow the homeowner to exempt 10% of their residence's value from taxation, with a limit of up to $75,000. The tax relief is estimated to result in a maximum savings of about $450 a year. The actual savings, however, will vary based on local rates.
Sen. Chris Hansen, the main sponsor of the bill, says the measure would effectively lower the property assessment rate from 7.06% to 6.4% for most homeowners, but the actual rate may not go down.
Basically, the property tax relief bill would spread out the increase in property value over several years to save homeowners from massive year-over-year jumps. Residential values, on average, increased by about 40% across the state last tax year.
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