Continuation of Child Care Contribution Tax Credit

HOUSE BILL 26-1004

BY REPRESENTATIVE(S) McCluskie and Caldwell, Boesenecker, Bradfield, Camacho, Clifford, Gilchrist, Lindsay, Lukens, Martinez, McCormick, Stewart K., Stewart R., Titone, Velasco, Zokaie, Bacon, Brown, Carter, Duran, Froelich, Gonzalez R., Hamrick, Jackson, Lieder, Mauro, Nguyen, Paschal, Rutinel, Rydin, Sirota, Smith, Story; also SENATOR(S) Coleman and Simpson, Bright, Jodeh, Kipp, Marchman, Pelton B., Pelton R., Amabile, Ball, Benavidez, Bridges, Cutter, Daugherty, Exum, Gonzales J., Kolker, Lindstedt, Mullica, Roberts, Snyder, Sullivan, Wallace, Weissman.

CONCERNING A CONTINUATION OF THE INCOME TAX CREDIT FOR A QUALIFYING CONTRIBUTION TO PROMOTE CHILD CARE IN THE STATE.

Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Legislative declaration. ( 1) The general assembly finds and declares that: (a) A robust child care and education ecosystem is critical for Colorado's economy and the health and well-being of Colorado's children; (b) The child care contribution tax credit has been an essential

Capital letters or bold & italic numbers indicate new material added to existing law; dashes through words or numbers indicate deletions from existing law and such material is not part of the act.

source of funding for child care facilities throughout Colorado since 1998, allowing individuals and corporations who make charitable contributions to child care facilities to receive 50% of their donations back in tax credits; (c) In 2022, the child care contribution tax credit benefitted approximately 18,000 Coloradans, who received additional revenue on their tax returns and generated $60 million for child care providers; (d) Throughout Colorado, child care providers use the child care contribution tax credit to open new child care centers in child care deserts, enroll families with low incomes who would otherwise be unable to access care, and recruit and retain staff; (e) The child care contribution tax credit supports the Colorado economy by empowering local businesses and supporting salaries for child care providers; and (f) In the face of uncertain federal support and a challenging state budget environment, renewing the child care contribution tax credit for 10 years is critical to support Colorado child care and after-school providers, families, and local economies.

SECTION 2. In Colorado Revised Statutes, 39-22-121, amend (1.5), (6.8)(a), and (7); and repeal (6.8)(c) as follows: 39-22-121. Credit for child care facilities - legislative declaration - definitions - repeal.

(1.5) For income tax years commencing prior to January 1, 2028 JANUARY 1, 2038, any taxpayer who makes a monetary contribution to

promote child care in the state is allowed a credit against the income tax imposed by this article 22 in an amount equal to fifty percent of the total value of the contribution, except as otherwise provided in subsections (5) and (6.7) of this section. (6.8) (a) In accordance with section 39-21-304 (1), which requires each bill that extends a tax expenditure to include a AMEND THE tax preference performance statement as THAT IS part of a THE statutory legislative declaration if one ""as not previously included in OF the tax expenditure, the general assembly finds and declares that the general

purpose of this tax expenditure is intended to induce certain designated behavior by taxpayers Specifically, AND THAT this tax expenditure is SPECIFICALLY intended to encourage taxpayers to make donations that promote child care IN THE STATE. (c) The department oft c vcnuc shall consult with the ca1 ly childhood leadc1ship commission c1catcd in section 26.5-1-302, the public-piivatc collaborntion unit in the department of pc1sonnel c1catcd in section 24-94-103 (2), and the department of cady childhood c1catcd in section 26.5-1-104 (1) to study possible imprnvcmcnt to the tax c1cdit allowed pmsuant to this section and to develop 1ccommcndations fut fu1thc1 mcasm ing the cffecti vcncss of the tax c1 edit. On 01 bcfu1 c July 31, 2024, the departnxcnt of1cvcnuc shall dcli~c1 to the joint budget committee, the finance committees of the senate and the house of I ep1 cscntati vcs, and the office of the state auditm the 1ccommcndations developed pmsuant to this subsection (6.S)(c). In addition to 1ccommcndations fut furthc1 nrcasming the cffccti~ cncss of the tax c1 edit, the I ccommcndations must include 1ccommcndations fut . (I) Imprnving the stmctmc, ovc1sight, and administrntion of the tax c1cdit, (11) Developing mechanisms to infu1m taxpayc1s and eligible child ca1c facilities and prngrnms about the availability of the tax c1cdit, (Ill) Ensm ing the tax c1 edit is equitably prnmoting child cat c in all communities, and (IV) Allowing donations of in-kind I cal prnpcrey to qualify as an eligible contdbution to prnmotc child ca1c. (7) This section is repealed, effective January 1, 2035 JANUARY 1, 2045.

SECTION 3. Act subject to petition - effective date. This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 12, 2026, if adjournment sine die is on May 13, 2026); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within

such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.

Julie McCluskie SPEAKER OF THE HOUSE OF REPRESENTATIVES

James Rashad Coleman, Sr. PRESIDENT OF THE SENATE

Vanessa Reilly CHIEF CLERK OF THE HOUSE OF REPRESENTATIVES

Esther van Mourik SECRETARY OF THE SENATE

APPROVED on Thursday May 28th 2026 at 11:30am (Date and Time)

Jared S. Polis GOVERNOR OF THE STATE OF COLORADO