Tax Credit Availability

2025 Regular Session Introduced by Judy Amabile and 8 co-sponsors

Switches the base value for FATC and the expanded EITC from actual FY2024-25 revenue to the March 2024 forecast, likely reducing full credit availability in some years.

Governor Signed

Main purpose

HB 25-1335 modifies how Colorado determines the base value used to calculate the adjustment factor that controls the availability and size of two tax credits: the Family Affordability Tax Credit (FATC; §39-22-130) and the expanded State Earned Income Tax Credit (EITC; §39-22-123.5). The change replaces the use of actual FY 2024–25 TABOR‑subject revenue with the March 2024 Office of State Planning and Budgeting (OSPB) forecast estimate of FY 2024–25 revenue as the base for the compound annual growth‑rate calculation.

Key provisions and statutory changes

Amends the definition of “BV” (base value) in:

Colorado Revised Statutes §39-22-130 (Family Affordability Tax Credit), and
Colorado Revised Statutes §39-22-123.5 (Earned Income Tax Credit).

Under the bill, BV for the adjustment factor is the FY 2024–25 revenue estimate from the March 2024 OSPB revenue forecast (rather than actual FY 2024–25 revenue).

All other mechanics remain the same: the adjustment factor is the compound annual growth rate in TABOR‑subject revenue (excluding the amounts of these credits) between the BV (FY 2024–25) and the fiscal year that begins in the tax year at issue.

The adjustment factor thresholds remain:

≥ 3.75% → credits fully available;
< 3.0% → credits unavailable;
between 3.0% and 3.75% → prorated availability.

Who is affected

Intended beneficiaries: individuals and families eligible for the Family Affordability Tax Credit and the expanded State EITC.

State government: revenue and TABOR calculations can be affected indirectly because credit availability affects net state revenue subject to TABOR.

Joint Budget Committee and OSPB operations are implicated only in how forecasts are applied; statutory forecasting process otherwise unchanged.

Fiscal and practical impact

Legislative Council and JBC fiscal notes (initial and final) report no expected state revenue, expenditure, or TABOR refund impact under the March 2025 forecasts; no appropriation or state FTE required.

The bill makes it less likely (compared with using actual FY24–25 revenue if that turned out low) that credits will be fully available in future years, which could increase TABOR‑subject revenue and, correspondingly, TABOR refund obligations in some scenarios. The fiscal note characterizes any revenue gain as de minimis and incidental to the statutory purpose.

Procedural/timeline highlights

Introduced in the House: April 29, 2025 (assigned to Appropriations).

Passed House and Senate in May 2025 (no final amendments on 3rd readings).

Sent to Governor: May 13, 2025.

Governor signed: June 3, 2025 — effective upon signature (June 3, 2025).

Sponsors: Reps. Emily Sirota, Rick Taggart (primaries) and cosponsors; Sens. Jeff Bridges, Barbara Kirkmeyer (primaries) and cosponsors.

Context / intent

Legislative findings state the change reflects the General Assembly’s intent to use a FY 2024–25 revenue figure that would not unintentionally constrain the legislature’s general‑fund appropriations. The bill’s declaration also asserts any incidental revenue effect is de minimis and not a change in tax policy requiring voter approval under TABOR.

Bill