The Colorado Senate has approved a bill that, if passed by the House, will provide an income tax credit to eligible renters in the state. The bill, aimed at lower- and middle-income renters, covers the years 2024-2026 and offers a potential tax credit of up to $2,000.
Who qualifies for the Colorado tax credit for renters and how much they could receive?
The bill, which passed the Senate with a 22-12 vote, would establish a nonrefundable income tax credit for renters who meet specific income requirements. To be eligible, a renter’s federal adjusted gross income must be $75,000 or less, or up to $150,000 for joint filers. Additionally, the renter must be renting their primary residence in Colorado.
Joint filers with a gross income of $50,000 or less could receive up to $2,000, while single filers with an income of $25,000 or less could receive up to $1,000. The credit is reduced by $10 for every $500 over the income threshold. Renters cannot carry forward any unused portion of the credit.
Renters who qualify for rent or heat assistance in 2024, 2025, or 2026 will be eligible for the full tax credit, regardless of any income-based reductions. Additionally, the renters’ credit will not be counted as income when determining eligibility for public assistance or affordable housing. The bill specifies that renters may claim this new credit or other existing income tax credits for renters, but not both.
Property tax relief is also under consideration
In a separate effort, lawmakers are working on a bill to provide property tax relief to Colorado residents. The proposed legislation aims to overhaul the state’s property tax system to limit increases in tax bills for homeowners and businesses, with a particular focus on offering more relief to those with lower-value homes.
If passed, the bill would allow homeowners to exempt 10% of their residence’s value from taxation, up to a limit of $75,000. This relief could lead to savings of up to $450 per year, though the actual savings will vary depending on local tax rates.
The bill’s main sponsor noted that the measure would effectively reduce the property assessment rate from 7.06% to 6.4% for most homeowners, although the actual rate may not decrease. The bill is designed to spread out increases in property values over several years, preventing significant year-over-year jumps. On average, residential property values across the state increased by approximately 40% in the last tax year.