REPORT: Colorado’s ‘Affordability Tax Credit’ Effective at Lifting Children Out of Poverty

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This story by Lindsey Toomer appeared on Colorado Newsline on October 14, 2026.

Colorado’s most effective tool for reducing child poverty is a state-level family tax credit that’s in jeopardy for the current tax year, according to a new report from a Colorado nonprofit that aims to improve the wellbeing of children.

The Colorado Family Affordability Tax Credit, created by the state Legislature in 2024, pulled 22,500 children out of poverty in its first year of implementation, researchers estimated in the “Proof It Works” report from the Colorado Children’s Campaign and Columbia University’s Center on Poverty and Social Policy. Denver-based Gary Community Ventures helped fund the research that went into the report released Tuesday.

Low-income families who met certain requirements could claim a credit for each child in their household for the 2024 and 2025 tax years. The credit will likely not be available for families in the 2026 tax year, and if it is, it will be underfunded, nonpartisan state analysis predicts. The availability of the credit will be officially determined during the December economic forecast.

Maya Gould, vice president of research at the Colorado Children’s Campaign, who led the research in the report, said it’s encouraging to see a state investment successfully help kids.

Other state and federal programs helped reduce child poverty by increasing household resources that make it easier to afford basic necessities like food, housing and health insurance. But since their research found that the most effective tool is the state tax credit, which state leaders have complete control over, Gould said she hopes the report will convince those who control the budget that the tax credit is a worthwhile investment even in a tight budget year.

“That’s a place where we are able to make the decisions about how we want to invest, and how we want to support Colorado families in a way that … we don’t always have control over changes at the federal level,” Gould said.

Lawmakers on the bipartisan Joint Budget Committee had to cut about $1 billion to balance the budget this year, and future years are also projected to have significant budget challenges.

A separate report that evaluated the state tax credit found that it helped lower child poverty by 37% in Colorado.

Tax credits and government assistance programs like housing assistance, Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families also help bring kids out of poverty. Others including the Colorado Earned Income Tax Credit, The Colorado Child Tax Credit, the Women, Infants and Children program, and school lunch programs helped reduce poverty rates too.

The report found housing assistance, including federal subsidies and vouchers, brought almost 15,800 children out of poverty, and SNAP did the same for 11,600 children.

Data in the report is based on a measure the Center on Poverty and Social Policy developed that considers factors specific to Colorado, like cost of living and state programs, using data from the census bureau and state agencies. It goes further than federal poverty metrics to include the local context in Colorado, Gould said.

The federal government measures poverty based on income thresholds that vary by family size. If a family’s household income is less than the income threshold, they are considered in poverty. For example, according to 2026 guidelines, a family of four with an annual income of $33,000 or less is considered in poverty.

U.S. Sen. Michael Bennet, a Colorado Democrat, has led the push to renew a federal child tax credit enacted for one year as part of the American Rescue Plan Act in 2021. The federal tax credit allowed more low-income families, including those with no income at all, to claim up to $3,600 for each child up to age 6, and up to $3,000 per child ages 6 to 17. For the first time, families received the funds in monthly installments.

U.S. Census Bureau data found that the expanded tax credit cut child poverty nearly in half, with the rate falling from 9.7% in 2020 to a record low of 5.2% in 2021. But after the tax credit expired, it spiked again, rising to 12.4% in 2022.

Gould said while policies like the federal child tax credit also helped, state leaders from Colorado can only do so much to advocate to reinstate it, again emphasizing the state’s full control over the Family Affordability Tax Credit.

With the tax credit projected to lapse in the 2026 tax year, Democrats in the General Assembly advanced three bills during this year’s legislative session to fund a similar credit by rolling back certain corporate tax breaks. Together, the bills would have established a new credit of up to roughly $2,000 per child. But two of the three bills died in the final days of the session amid veto threats from Governor Jared Polis, capping the new credit at $260 for children under 6 and at $195 for children ages 6 to 16.