SB 18-265

SB 18-265, also known as the Child Care Savings Account Income Tax Benefits bill, creates a savings account program for low-to-middle-income families in Colorado. Parents can open these accounts and receive tax credits worth up to 10% of their contributions, with a maximum credit of $250 per child care account each year. The money must be used only for child care expenses or bank fees; otherwise, there's a penalty. This bill benefits families earning less than $90,000 (or $180,000 for joint filers) by helping them save on child care costs and providing tax relief. Since the status is "signed," it means the governor has approved this legislation, making it official law in Colorado.

Official Summary

Section 1 of the bill establishes a child care savings account, which is an account with a financial institution from which an individual uses money to pay a child care facility for the care of a dependent who is less than 6 years old (account). To be eligible to create an account, an individual must have federal taxable income of less than $90,000, or, in the case of individuals filing a joint return, $180,000. A taxpayer may claim a credit that is equal to 10% of the amount that the taxpayer contributes to an account. The maximum credit allowed for an income tax year for a contribution to a single account is $250. A taxpayer may contribute to multiple accounts but cannot claim more than $25,000 of credits in an income tax year. A credit for a contribution to one's own account is refundable. All other credits are not refundable, but unused credits may be carried forward up to 5 years. Money in the account may only be used for payments to the child care facility or bank fees. If an individual uses money for an unauthorized purpose, then any credit given for such amount is subject to recapture in the year it is withdrawn and there is a penalty equal to 10% of the credit recaptured. The department of revenue is required to establish forms that an individual must annually file related to an account. Section 2 allows an account holder to subtract an amount equal to the interest or income earned during the income tax year from the money in an account from his or her federal taxable income.(Note: This summary applies to this bill as introduced.) , Read More

Related Legislation