Colorado Suspends Family Tax Credit for 2026
Families with children will lose a key credit that helped cover costs due to a dip in state revenue.
Updated on Oct. 21, 2026 in Taxes
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Colorado has suspended the Family Affordability Tax Credit for the 2026 tax year after state revenue fell below required growth thresholds in December 2025. This refundable credit, which previously served families earning up to $95,000 jointly, will no longer be available to help offset household expenses.
Why it matters
The suspension removes a key financial resource that successfully lifted 22,500 Colorado children out of poverty in 2024. Families that relied on this credit to bridge the gap between basic living costs and income will need to reassess their household budgets for the 2026 tax season.
In 2024, the tax credit helped 22,500 children escape poverty, while 107,200 children remained in poverty statewide. Meanwhile, a four-person household in Colorado required an estimated $94,536 to cover basic expenses compared to the federal poverty guideline of $31,200.
The details
The tax credit was designed to trigger based on annual state revenue growth targets. Because the December 2025 revenue forecast failed to meet these specific legal benchmarks, the state is legally required to suspend the program. This means that families who previously qualified for the credit by earning up to $85,000 as single filers or $95,000 as joint filers will lose this direct cash benefit during the 2026 tax year.
Timeline
December 2025: State revenue forecast fell below the threshold for credit activation.
2026 tax year: The Family Affordability Tax Credit is officially suspended.
September 2026: Official report on poverty and tax credit impacts is released.
Money Landscape
The suspension of the credit contrasts with the 2024 landscape, where targeted state interventions were actively augmenting federal programs like SNAP. This shift reflects the volatility of tax benefits that are strictly tied to annual revenue growth targets.
Families who planned their household budget around this expected tax credit should look for ways to manage the loss of that income. Consult with a qualified tax professional to review your overall 2026 tax strategy and identify other potential credits for which you may be eligible.
The takeaway
The loss of the tax credit highlights the vulnerability of programs tied to fluctuating state revenue streams. Households should review their budget for 2026 to account for the reduced refund, and discuss potential adjustments with a qualified financial or tax professional.
What happens next
Lawmakers are scheduled to return to the Capitol in January 2027 for the new budget session, where they may debate the future of poverty-reduction policies.
Further reading
For more information on state tax programs, visit Colorado Taxes.
Source note: This article includes information reported by Colorado Public Radio.
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