CO Code § 39-22-123.5 (2021)
2021 Colorado Code|Title 39 - Taxation|Article 22 - Income Tax|Part 1 - General|§ 39-22-123.5. Earned Income Tax Credit - Not a Refund of Excess State Revenues - Trigger - Legislative Declaration - Repeal

  The general assembly hereby finds and declares that:   The federal earned income tax credit is a refundable tax credit for low- and middle-income working individuals and families whose earnings are below an income threshold;    The amount of the credit increases with income until the credit reaches a maximum level and then phases out, and this structure creates an incentive for people to work and earn more income;    Since its establishment in 1975, the credit has increased family income, reduced child poverty, and promoted employment by supplementing the earnings of low-wage workers, including military families;    The credit has a positive impact on the education and health of children living in poverty;    The credit has a positive economic impact on local economies and businesses because it puts more money in the hands of low- and middle-income working people who spend the money on immediate needs, such as groceries, school supplies, car repairs, rent, and health care;    The Colorado earned income tax credit created in section 39-22-123 is ten percent of the federal earned income tax credit, but it is a mechanism to refund excess state revenues as required by section 20 of article X of the state constitution;    This existing credit has not been in effect since 2001 because the refund has not been triggered; and    Now, therefore, it is the intent of the general assembly to establish a permanent and refundable state earned income tax credit for eligible Colorado taxpayers. The intended purpose of this credit is to help individuals and families achieve greater financial security and to help Colorado's economy.         For an income tax year commencing prior to January 1, 2022, a resident individual who claims an earned income tax credit on the individual's federal tax return is allowed an earned income tax credit against the taxes due under this article 22 that is equal to ten percent of the federal credit that the resident individual claimed on his or her federal tax return for the same tax year.    For income tax years commencing on or after January 1, 2022, but before January 1, 2023, and income tax years commencing on or after January 1, 2026, a resident individual who claims an earned income tax credit on the individual's federal tax return is allowed an earned income tax credit against the taxes due under this article 22 that is equal to twenty percent of the federal credit that the resident individual claimed on his or her federal tax return for the same tax year.      For income tax years commencing on or after January 1, 2023, but before January 1, 2026, a resident individual who claims an earned income tax credit on the individual's federal tax return is allowed an earned income tax credit against the taxes due under this article 22 that is equal to twenty-five percent of the federal credit that the resident individual claimed on his or her federal tax return for the same tax year. (c) (I) For income tax years commencing on or after January 1, 2023, but before January 1, 2026, a resident individual who claims an earned income tax credit on the individual's federal tax return is allowed an earned income tax credit against the taxes due under this article 22 that is equal to twenty-five percent of the federal credit that the resident individual claimed on his or her federal tax return for the same tax year.    This subsection (2)(c) is repealed, effective December 31, 2034. (2.5)   For income tax years commencing on or after January 1, 2020, but before January 1, 2022, a resident individual is allowed an earned income tax credit against the taxes due under this article 22 that is equal to ten percent of the federal credit that the resident individual would have been allowed, but for the fact that the resident individual, the resident individual's spouse, or one or more of the resident individual's dependents do not have a social security number that is valid for employment.    For income tax years commencing on or after January 1, 2022, but before January 1, 2023, and income tax years commencing on or after January 1, 2026, a resident individual is allowed an earned income tax credit against the taxes due under this article 22 that is equal to twenty percent of the federal credit that the resident individual would have been allowed, but for the fact that the resident individual, the resident individual's spouse, or one or more of the resident individual's dependents do not have a social security number that is valid for employment.    Repealed.      For income tax years commencing on or after January 1, 2023, but before January 1, 2026, a resident individual is allowed an earned income tax credit against the taxes due under this article 22 that is equal to twenty-five percent of the federal credit that the resident individual would have been allowed, but for the fact that the resident individual, the resident individual's spouse, or one or more of the resident individual's dependents do not have a social security number that is valid for employment. (d) (I) For income tax years commencing on or after January 1, 2023, but before January 1, 2026, a resident individual is allowed an earned income tax credit against the taxes due under this article 22 that is equal to twenty-five percent of the federal credit that the resident individual would have been allowed, but for the fact that the resident individual, the resident individual's spouse, or one or more of the resident individual's dependents do not have a social security number that is valid for employment.    This subsection (2.5)(d) is repealed, effective December 31, 2034. (2.7)   of the “American Rescue Plan Act of 2021”, Pub.L. 117-2.      For income tax years commencing on or after January 1, 2023, but before January 1, 2026, a resident individual is allowed an earned income tax credit against the taxes due under this article 22 that is equal to twenty-five percent of the federal credit that the resident individual would have been allowed under section 32 (n)(1) of the internal revenue code, notwithstanding the date limitation set forth in section 32 (n) of the internal revenue code as specified in section 9621 (a) of the “American Rescue Plan Act of 2021”, Pub.L. 117-2. (b) (I) For income tax years commencing on or after January 1, 2023, but before January 1, 2026, a resident individual is allowed an earned income tax credit against the taxes due under this article 22 that is equal to twenty-five percent of the federal credit that the resident individual would have been allowed under section 32 (n)(1) of the internal revenue code, notwithstanding the date limitation set forth in section 32 (n) of the internal revenue code as specified in section 9621 (a) of the “American Rescue Plan Act of 2021”, Pub.L. 117-2.    This subsection (2.7)(b) is repealed, effective December 31, 2034.                      Repealed.    The amount of the credit allowed under this section that exceeds the resident individual's income taxes due is refunded to the individual.    In the case of a part-year resident, the credit allowed under this section is apportioned in the ratio determined under section 39-22-110 (1).    The credit allowed under this section is not considered to be income or resources for the purpose of determining eligibility for the payment of public assistance benefits and medical assistance benefits authorized under state law or for a payment made under any other publicly funded programs.     History. Source: L. 2013: Entire section added,(SB 13-001), ch. 381, p. 2227, § 3, effective August 7. L. 2020: (1)(h) and (2) amended, (2.5) added, and (3) repealed,(HB 20-1420), ch. 277, p. 1360, § 5, effective July 11. L. 2021: (2.5)(a) amended and (2.5)(c) repealed,(HB 21-1002), ch. 5, p. 31, § 2, effective January 21; (2)(b) and (2.5)(b) amended and (2)(c), (2.5)(d), and (2.7) added,(HB 21-1311), ch. 298, p. 1772, § 4, effective June 23.    Cross references:    In 2013, this section was added by the “Colorado Working Families Economic Opportunity Act of 2013”. For the short title, see section 1 of chapter 381, Session Laws of Colorado 2013.    For the short title (“Tax Fairness Act”) in HB 20-1420, see section 1 of chapter 277, Session Laws of Colorado 2020.    For the legislative declaration in HB 21-1311, see section 1 of chapter 298, Session Laws of Colorado 2021.