Colorado Suspends Family Affordability Tax Credit for 2026
State revenue forecasts fell below the required threshold, triggering a suspension of the tax benefit.
Updated on Oct. 21, 2026 in Taxes
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Colorado has suspended the Family Affordability Tax Credit for the 2026 tax year following a December 2025 revenue forecast that missed necessary growth targets. The credit, which was active in 2024, provided support to families with children under 17 to help offset the high cost of living.
Why it matters
The tax credit previously lifted 22,500 children out of poverty in Colorado, and its suspension is expected to reverse these gains. With basic expenses for a four-person family reaching $94,536 annually, the credit served as a critical buffer for thousands of households.
The credit was previously available to single filers earning up to $85,000 and joint filers up to $95,000. In 2024, it helped mitigate the impact of rising costs for 22,500 children, while out-of-pocket medical expenses pushed 16,700 children into poverty.
The details
The program provided relief for families with children under 17, a demographic facing significant financial pressure as household costs in Colorado significantly exceed the federal poverty guideline of $31,200 for a family of four. Without this credit, advocates fear an increase in child poverty rates, which stood at 107,200 children after accounting for other programs like SNAP and federal housing assistance.
Timeline
2024: The Family Affordability Tax Credit was active.
December 2025: State revenue forecast fell below the threshold for the credit.
2026 tax year: The tax credit is suspended.
September 2026: A report on poverty and tax credit impact was released.
January 2027: Lawmakers return to the Capitol for the budget session.
Market Dynamics
This policy change reflects a shift in how Colorado manages fiscal buffers relative to the federal poverty guideline for a family of four. The suspension marks a departure from recent tax relief expansions as state revenue cycles fluctuate.
Families that previously qualified for the credit should update their financial planning and tax withholding projections for the 2026 tax year to account for the reduced refund. Taxpayers relying on these credits should consult their personal tax professionals to evaluate their impact on household budgets.
The takeaway
The suspension of this credit emphasizes the volatility of state-funded assistance programs that are tied to specific revenue benchmarks. Residents should review their projected tax liability early to manage the loss of this refundable credit effectively.
What happens next
Lawmakers are scheduled to return to the Capitol in January 2027 to begin the next budget session, where potential revisions to the tax credit status may be discussed.
Further reading
For more information on state tax policy, visit the Colorado Taxes section.
Source note: This article includes information reported by Colorado Public Radio.
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