More than 19,000 Colorado childcare workers benefit from new state tax credit in first year

“Sign up for Chalkbeat Colorado’s free daily newsletter to get the latest reporting from us, plus curated news from other Colorado outlets, delivered to your inbox. More than 19,000 Colorado childcare teachers and staff have taken advantage of a new $1,200 state tax credit for workers who support young children, older adults, or people with disabilities. The Care Worker Tax Credit was created by a 2024 state law and became available for the first time this spring when Coloradans filed returns for the 2025 tax year. It’s available to single filers who earn an adjusted gross income of $75,000 or less and joint filers who earn $100,000 or less. The income tax credit represents an effort by Colorado lawmakers to help early childhood educators, whose average pay is lower than many fast food and retail workers. It also takes a more expansive view of the workforce than some other initiatives by including people who care for young children outside of state-licensed facilities, often called family, friend, and neighbor caregivers. About 17,500 childcare workers providing state-licensed care, and 1,800 providing family, friend, and neighbor care sought the new tax credit this year, according to preliminary state data. That’s about $23 million worth of tax relief. “For too long, early childhood and direct care professionals have been undercompensated, despite the essential role they play in our communities and economy,” Lisa Roy, executive director of the Colorado Department of Early Childhood, said in a press release. “The Care Worker Tax Credit represents a meaningful step toward greater financial stability for these professionals who nurture Colorado’s children, support families, and strengthen communities every day,” she said. State officials said they won’t have numbers showing how many workers caring for older adults and people with disabilities took advantage of the tax credit until the fall. The care workers tax credit is a refundable tax credit, which means that eligible filers will get money back from the credit even if their tax bill is less than $1,200. For example, if their tax bill is $1,000, the tax credit will cover the bill, and the remaining $200 will be sent to the filer as a refund. Colorado has another tax credit available to some childcare workers, but it’s expiring after the 2025 tax year. Created by a 2022 state law to encourage early childhood educators to increase their credentials, the Early Childhood Educator Tax Credit provides credits between $872 and $1,743 depending on credential level. Child care workers who already filed their taxes but did not seek the Care Worker Tax Credit can still do so by amending their tax returns and filing the appropriate paperwork by Oct. 15. Ann Schimke is a senior reporter at Chalkbeat. Contact Ann at aschimke@chalkbeat.org .

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