This bill refines how Colorado determines whether to offer the Family Affordability Tax Credit and the Earned Income Tax Credit (EITC) in a given year, based on projected state revenue growth.
KEY CHANGE
Current Law:
The availability of these credits depends on the compound annual growth rate (CAGR) between actual revenue in FY 2024–25 and projected revenue in a future fiscal year (linked to the tax year).
Bill Change:
The bill replaces the actual revenue figure for FY 2024–25 with the projected revenue from the March 2024 Office of State Planning and Budgeting forecast.
So, the calculation now compares forecasted-to-forecasted revenue growth instead of actual-to-forecasted.
WHY THIS MATTERS
Predictability: Using the March 2024 projection locks in a fixed baseline, making credit eligibility more predictable for budget planning.
Stability: Shields tax credit availability from unexpected fluctuations in actual revenue collection in FY 2024–25.
Budget Management: Helps the Joint Budget Committee better manage expectations and plan expenditures without revisiting prior-year adjustments.
The bill slightly adjusts how income-based tax credits are triggered, prioritizing budget forecast consistency over retroactive revenue outcomes.
Summary
Joint Budget Committee. The bill makes similar changes to both
the family affordability tax credit and the earned income tax credit. The bill modifies how the extent of the availability of both tax credits is determined. Under current law, the availability of both tax credits is determined by the compound annual growth rate between actual state revenue in state fiscal year 2024-25 and projected state revenue for the fiscal year that begins during the relevant state income tax year. Under the bill, the availability of both tax credits is determined by the compound annual growth rate between state revenue for state fiscal year 2024-25, as projected in the March 2024 office of state planning and budgeting revenue forecast, and projected state revenue for the fiscal year that begins during the relevant state income tax year.
