2023 Colorado Revised Statutes › Title 39 - TAXATION (§§ 39-1-101 — 39-37-301) › SPECIFIC TAXES (§§ 39-20-101 — 39-37-301) › INCOME TAX (§§ 39-22-101 — 39-22-5508) › Article 22 - Income Tax (§§ 39-22-101 — 39-22-5508) › Part 1 - GENERAL (§§ 39-22-101 — 39-22-130) › Section 39-22-123.5 - [Effective Until 8/7/2024] Earned income tax credit - legislative declaration - repeal

(1)
The general assembly hereby finds and declares that:
(a)
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;
(b)
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;
(c)
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;
(d)
The credit has a positive impact on the education and health of children living in poverty;
(e)
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;
(f)
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;
(g)
This existing credit has not been in effect since 2001 because the refund has not been triggered; and
(h)
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.
(2)
(a)
(I)
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.
(II)
This subsection (2)(a) is repealed, effective December 31, 2032.
(b)
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.
(c)
(I)
For income tax years commencing on or after January 1, 2023, but before January 1, 2024, and for the income tax year commencing on January 1, 2025, 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.
(II)
This subsection (2)(c) is repealed, effective December 31, 2034.
(d)
(I)
For the income tax year commencing on January 1, 2024, 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 thirty-eight percent of the federal credit that the resident individual claimed on his or her federal tax return for the same tax year.
(II)
This subsection (2)(d) is repealed, effective December 31, 2034.
(2.5)
(a)
(I)
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.
(II)
This subsection (2.5)(a) is repealed, effective December 31, 2032.
(b)
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.
(c)
Repealed.
(d)
(I)
For income tax years commencing on or after January 1, 2023, but before January 1, 2024, and for the income tax year commencing on January 1, 2025, 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.
(II)
This subsection (2.5)(d) is repealed, effective December 31, 2034.
(e)
(I)
For the income tax year commencing on January 1, 2024, a resident individual is allowed an earned income tax credit against the taxes due under this article 22 that is equal to thirty-eight 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.
(II)
This subsection (2.5)(e) is repealed, effective December 31, 2034.
(2.7)
(a)
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 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, 2024, and for the income tax year commencing on January 1, 2025, 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.
(II)
This subsection (2.7)(b) is repealed, effective December 31, 2034.
(c)
(I)
For the income tax year commencing on January 1, 2024, a resident individual is allowed an earned income tax credit against the taxes due under this article 22 that is equal to thirty-eight 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.
(II)
This subsection (2.7)(c) is repealed, effective December 31, 2034.
(2.8)
(a)
For income tax years commencing on or after January 1, 2023, but before January 1, 2024, only, the rate of credit allowed for the resident individuals described in subsections (2), (2.5), and (2.7), of this section, respectively, is increased from twenty-five percent to fifty percent of the federal credit described in the respective subsections (2), (2.5), and (2.7) of this section.
(b)
The general assembly finds and declares that increasing the rate of the credit as specified in subsection (2.8)(a) of this section reduces the amount of state revenues, as defined in section 24-77-103.6 (6)(c), for the 2023-24 state fiscal year and is therefore, after excess state revenues for the 2022-23 state fiscal year are refunded pursuant to sections 39-3-209, 39-3-210, and any other refund mechanism provided for in law other than the refund mechanism provided for in part 20 of article 22 of this title, a reasonable method of refunding a portion of any remaining excess state revenues for the 2022-23 state fiscal year that are required to be refunded in the 2023-24 state fiscal year in accordance with section 20 (7)(d) of the state constitution.
(3)
Repealed.
(4)
The amount of the credit allowed under this section that exceeds the resident individual's income taxes due is refunded to the individual.
(5)
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)
.
(6)
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.
Amended by 2024 Ch. 1,§ 2, eff. 1/31/2024.
Amended by 2023EX1 Ch. 3,§ 1, eff. 11/20/2023.
Amended by 2023 Ch. 445,§ 1, eff. 8/7/2023.
Amended by 2021 Ch. 298, § 4, eff. 6/23/2021.
Amended by 2021 Ch. 5, § 2, eff. 1/21/2021.
Amended by 2020 Ch. 277, § 5, eff. 7/11/2020.
L. 2013: Entire section added, (SB 13-001), ch. 2227, p. 2227, § 3, effective August 7. L. 2020: (1)(h) and (2) amended, (2.5) added, and (3) repealed, (HB 20-1420), ch. 1360, p. 1360, § 5, effective July 11. L. 2021: (2.5)(a) amended and (2.5)(c) repealed, (HB 21 -1002), ch. 31, 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. 1772, p. 1772, § 4, effective June 23.
2023 Ch. 445, was passed without a safety clause. See Colo. Const. art. V, § 1(3).
This section is set out more than once due to postponed, multiple, or conflicting amendments.
(1) 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. (2) For the short title ("Tax Fairness Act") in HB 20-1420, see section 1 of chapter 277, Session Laws of Colorado 2020. (3) For the legislative declaration in HB 21-1311, see section 1 of chapter 298, Session Laws of Colorado 2021.