Continuation of Child Care Contribution Tax Credit

Second Regular Session
Seventy-fifth General Assembly
STATE OF COLORADO
CORRECTED INTRODUCED

LLS NO. 26-0459.01 Rebecca Bayetti x4348 HOUSE BILL 26-1004
House Committees Senate Committees
Finance
A BILL FOR AN ACT
CONCERNING A CONTINUATION OF THE INCOME TAX CREDIT FOR A101
QUALIFYING CONTRIBUTION TO PROMOTE CHILD CARE IN THE102
STATE.103
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov.)
Under current law, for income tax years commencing prior to
January 1, 2028, a taxpayer who makes a qualifying monetary
contribution to promote child care in the state is allowed an income tax
credit that is equal to 50% of the total value of the contribution, not to
exceed $100,000. The bill extends this tax credit for 10 years.
HOUSE SPONSORSHIP
McCluskie and Caldwell, Boesenecker, Bradfield, Camacho, Clifford, Gilchrist, Lindsay,
Lukens, Martinez, McCormick, Stewart K., Stewart R., Titone, Velasco, Zokaie
SENATE SPONSORSHIP
Coleman and Simpson, Bright, Jodeh, Kipp, Marchman, Michaelson Jenet, Pelton B.,
Pelton R.
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. Legislative declaration. (1) The general assembly2
finds and declares that:3
(a) A robust child care and education ecosystem is critical for4
Colorado's economy and the health and well-being of Colorado's children;5
(b) The child care contribution tax credit has been an essential6
source of funding for child care facilities throughout Colorado since7
1998, allowing individuals and corporations who make charitable8
contributions to child care facilities to receive 50% of their donations9
back in tax credits;10
(c) In 2022, the child care contribution tax credit benefitted11
approximately 18,000 Coloradans, who received additional revenue on12
their tax returns and generated $60 million for child care providers;13
(d) Throughout Colorado, child care providers use the child care14
contribution tax credit to open new child care centers in child care15
deserts, enroll families with low incomes who would otherwise be unable16
to access care, and recruit and retain staff;17
(e) The child care contribution tax credit supports the Colorado18
economy by empowering local businesses and supporting salaries for19
child care providers; and20
(f) In the face of uncertain federal support and a challenging state21
budget environment, renewing the child care contribution tax credit for22
10 years is critical to support Colorado child care and after-school23
providers, families, and local economies.24
SECTION 2. In Colorado Revised Statutes, 39-22-121, amend25
(1.5), (6.8)(a), and (7); and repeal (6.8)(c) as follows:26
HB26-1004-2-
39-22-121. Credit for child care facilities - legislative1
declaration - definitions - repeal.2
(1.5) For income tax years commencing prior to January 1, 20283
JANUARY 1, 2038, any taxpayer who makes a monetary contribution to4
promote child care in the state is allowed a credit against the income tax5
imposed by this article 22 in an amount equal to fifty percent of the total6
value of the contribution, except as otherwise provided in subsections (5)7
and (6.7) of this section.8
(6.8) (a) In accordance with section 39-21-304 (1), which requires9
each bill that extends a tax expenditure to include a AMEND THE tax10
preference performance statement as THAT IS part of a THE statutory11
legislative declaration if one was not previously included in OF the tax12
expenditure, the general assembly finds and declares that the general13
purpose of this tax expenditure is intended to induce certain designated14
behavior by taxpayers Specifically, AND THAT this tax expenditure is15
SPECIFICALLY intended to encourage taxpayers to make donations that16
promote child care IN THE STATE.17
(c) The department of revenue shall consult with the early18
childhood leadership commission created in section 26.5-1-302, the19
public-private collaboration unit in the department of personnel created20
in section 24-94-103 (2), and the department of early childhood created21
in section 26.5-1-104 (1) to study possible improvement to the tax credit22
allowed pursuant to this section and to develop recommendations for23
further measuring the effectiveness of the tax credit. On or before July 31,24
2024, the department of revenue shall deliver to the joint budget25
committee, the finance committees of the senate and the house of26
representatives, and the office of the state auditor the recommendations27
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developed pursuant to this subsection (6.8)(c). In addition to1
recommendations for further measuring the effectiveness of the tax credit,2
the recommendations must include recommendations for:3
(I) Improving the structure, oversight, and administration of the4
tax credit;5
(II) Developing mechanisms to inform taxpayers and eligible child6
care facilities and programs about the availability of the tax credit;7
(III) Ensuring the tax credit is equitably promoting child care in8
all communities; and9
(IV) Allowing donations of in-kind real property to qualify as an10
eligible contribution to promote child care.11
(7) This section is repealed, effective January 1, 2035 JANUARY12
1, 2045.13
SECTION 3. Act subject to petition - effective date. This act14
takes effect at 12:01 a.m. on the day following the expiration of the15
ninety-day period after final adjournment of the general assembly (August16
12, 2026, if adjournment sine die is on May 13, 2026); except that, if a17
referendum petition is filed pursuant to section 1 (3) of article V of the18
state constitution against this act or an item, section, or part of this act19
within such period, then the act, item, section, or part will not take effect20
unless approved by the people at the general election to be held in21
November 2026 and, in such case, will take effect on the date of the22
official declaration of the vote thereon by the governor.23
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