The cost of living in Colorado is on the rise. To combat this, state representatives have unveiled a possible solution. The Colorado Child Care Tax credit proposes to expand the state’s existing child care tax credit by an estimated $14 million. Whether it passes is uncertain.
Child care in Colorado is among the most expensive in the country. Currently, these costs average $14,950 a year. This large figure accounts for nearly 19.5% of Colorado’s median family income. For single mothers, that percentage increases to a disturbing 49.8% of median income.
As it stands, Coloradans making less than $25,000 qualify for 50% of the federal child care tax credit on their state income taxes. Families making less than $35,000 qualify for 30%, and those making up to $60,000 can claim 10$ of the federal credit.
The new Colorado Child Care tax credit proposal would expand eligibility to those making up to $150,000 a year and provide 80 percent of the federal income tax credit. Supporters say they want to reward hard work, adding that even high-income earners struggle without the break.
Whether the bill will make it is unclear. Republican leaders in the state capitol are instead pushing a separate plan to cut the state income tax rate across the board by 0.2%, a tax break worth an estimated $365 million next year.
Cost of Living Concerns
Whether the new Colorado Child Care tax credit or the 0.2% tax cut goes through; skeptics wonder if either will substantially help the rising cost of living in Colorado. Wages in the state have grown by only 3% over the last 18 years despite a booming technology industry.
At the same time, housing costs have increased substantially. The average home-buyer needs a salary north of $80,000 per year to be able to afford a home and nearly half of all renters in the state are considered to be cost-burdened.
State lawmakers are looking at various solutions; including the proposed Colorado child care tax credit, various tax cuts, as well as tax increases to help subsidize the construction of affordable housing.
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