Colorado Child Tax Credit and EITC for Tax Year 2026: Smaller Credits, a Paused Family Affordability Credit, and How to Plan Now

Most of the time, the news about a tax credit is that it exists and you should claim it. This time the news is that two of Colorado’s family credits are getting smaller, the state announced it more than a year in advance, and the households that will feel it most are the ones with the least room to absorb it.

The Colorado Department of Revenue has posted two notices on its Child Tax Credit and Earned Income Tax Credit pages. The first: the Colorado EITC was 50% of the federal EITC amount for tax years 2024 and 2025, but will be reduced to 25% in tax year 2026. The second: the state must temporarily pause the Family Affordability Tax Credit for tax year 2026 (filed in 2027). Both changes hit the return you file in calendar year 2027, not the one you already filed.

The Department’s own framing is unusually direct about why it published this early: “The Taxation Division wants to help you plan your family budget early so you face no surprises when you file your 2026 income taxes in calendar year 2027.” That is a polite way of saying that a family used to a large spring refund should not build next year’s plans around this year’s number.

The Colorado Child Tax Credit itself is not paused and not reduced. It remains refundable, it remains available for children under age 6, and it is worth up to $1,200 per child. That credit is the sturdy part of this picture, and it is the reason this page is still worth your time.

Key Details at a Glance

What Actually Changed, and Why

Colorado’s Family Affordability Tax Credit has a switch built into it. Per the Department: “The tax credit is turned off in years where revenue projections fall below a threshold growth rate and resumes when projections anticipate revenues will exceed that rate.” For tax year 2026 the switch flipped off, and the Department names the trigger: “The credit was turned off for Tax Year 2026 because the December 2025 Economic Forecast projected insufficient revenue growth.”

That is worth understanding precisely, because “paused” is not “repealed.” The FATC is designed to resume when revenue projections recover. Nobody at the state has published a date for that, and you should not plan around one.

The EITC reduction is a separate decision, and the Department attributes both to the same pressure: “These adjustments are necessary due to current state revenue projections and a tough fiscal outlook.”

The scale is not small. The Department estimates the changes “will affect hundreds of thousands of Colorado Taxpayers who have dependent children under the age of 17,” and notes that “in the past, some families with the greatest financial need received more than $7,000 from these combined credits.” As rough guideposts, the state says the FATC “phases out completely for families earning around $95,000 annually” and the Colorado EITC “phases out for families earning around $65,000 annually.”

What Each Credit Is Worth, by Tax Year

The Department publishes a year-by-year table, which is the only reliable way to talk about these numbers.

The $1,200 figure is a maximum, not a flat per-child payment, and this is where a lot of households guess wrong. For tax year 2025 the Colorado CTC is a fixed amount per eligible child that steps down as income rises:

Single filers (which includes head of household and married filing separately, for this credit): AGI of $26,000 or less earns $1,200 per child; $26,001 to $51,000 earns $600; $51,001 to $77,000 earns $200.

Joint filers: AGI of $36,000 or less earns $1,200 per child; $36,001 to $61,000 earns $600; $61,001 to $87,000 earns $200.

Above those ceilings, the credit is gone. The brackets are indexed, so they move: the AGI limits were $75,000 single and $85,000 joint for tax years 2022 through 2024, and rose to $77,000 and $87,000 for tax year 2025. Colorado’s main Child Tax Credit landing page still displays the older $75,000/$85,000 figures, so if you see two different numbers on two state pages, the year-by-year table in Income Tax Topics: Child Tax Credit is the one to trust. Tax year 2026 brackets have not been published yet; the Department’s FAQ says only that the credit “will continue to be available for families with adjusted gross income under $77,000 ($87,000 for joint filers) and children under 6 years old.”

Whatever the year, the calculation lives on form DR 0104CN for that tax year. Do not estimate from a headline number.

Who Qualifies

Start with residency: these credits are for full-year or part-year Colorado residents who file a Colorado return. Part-year residents get an apportioned credit, using the percentage on line 34 of Form 104PN or 100%, whichever is less.

For the Child Tax Credit, the child must be under age 6 at the end of the tax year, must meet the federal relationship and residency tests described in IRS Publication 501, and must live with you for more than half the year. One Colorado-specific point that saves real money for real families: “a child does not need a social security number to qualify for the Colorado child tax credit.”

For the EITC, the ordinary path is qualifying for the federal EITC and carrying it onto DR 0104CR, lines 3 through 6. But Colorado also runs a parallel credit for people the federal rules exclude. You may claim the Colorado EITC on form DR 0104TN if you, your spouse, or your dependents have an ITIN or an SSN that is not valid for employment, or if you were under 25 with no qualifying children but hold a work-eligible SSN and meet the state’s rules for certain filers under age 25 — a category that specifically includes students, unaccompanied homeless youth, and former foster youth ages 18 to 24. If you can claim a federal EITC but had to leave out dependents solely because of an ITIN, DR 0104TN may get you a larger state credit than the standard route.

If You Have Not Filed Your Tax Year 2025 Return Yet

This matters right now, in mid-2026, and it is the most time-sensitive thing on this page. Tax year 2025 returns were due April 15, 2026. If you missed that date, Colorado grants an automatic six-month extension to October 15 with no form to file. The state is explicit that this works in your favor when you are owed money: “If you expect to get a Colorado income tax refund this year, but do not file your return by the due date, you can also use the extension to file your return by October 15th.”

That means a tax year 2025 return — with the EITC still at 50% and the Family Affordability Tax Credit still available at $3,273 and $2,455 per child — can still be filed through October 15, 2026. For a family with two young children, the difference between filing and not filing is measured in thousands of dollars, at the last tax year before both credits shrink.

The extension covers filing, not paying. If you owe, 90% of the liability had to be paid by April 15 to avoid penalties, through Revenue Online or the DR 0158-I extension payment form. If you are owed a refund, that caveat does not apply to you.

The Forms You Actually File

The sequence is fixed. Complete your federal return first, then build the Colorado return from it.

1. Colorado Individual Income Tax Return (DR 0104) — the return itself. Complete the Dependents table and mark the “Child Tax Credit” box.
2. Individual Income Tax Credit Schedule (DR 0104CR) — line 1 for the child tax credit and family affordability tax credit; lines 3-6 or line 9 for the EITC.
3. Colorado Child Tax Credit Schedule (DR 0104CN) — where the per-child amount is calculated.
4. DR 0104TN — only if you are claiming the Colorado EITC as an ITIN filer or a certain filer under age 25. Transfer the result to DR 0104CR line 9.

Free filing help exists and is worth using: MyFreeTaxes, GetYourRefund, Colorado VITA/TCE sites, AARP Tax Assistance sites, and the state’s own Revenue Online. The Department lists community help at Tax.Colorado.gov/Community-Tax-Help.

One Thing to Do Before Next Filing Season

The Department’s advice for households affected by these changes is to adjust withholding rather than absorb the shortfall as a refund surprise: “You can choose to adjust your paycheck wage withholding through your employer. Withholding more money from your paycheck will reduce your state tax obligation or increase your refund amount next year.”

There is a sharper version of this for anyone who used the Family Affordability Tax Credit to reduce withholding. If you previously gave form DR 0004 to your employer based on that credit, the state says to submit a revised DR 0004 that recalculates your withholding without it. Skipping that step is how a paused credit turns into an unexpected tax bill instead of just a thinner refund.

Planning Backward from April 15, 2027

February 2027: Collect W-2s and 1099s as they arrive. If a form is missing by late February, contact the employer or platform rather than waiting.

Late February to early March: Decide how you are filing. If you want a VITA or AARP appointment, book it — those calendars fill early, and free sites have capacity limits.

Mid-March: Draft the return. This is when you catch a Social Security number mismatch, an uncertain dependent claim, or self-employment totals that do not reconcile. Confirm which DR 0104CN bracket your AGI lands in before you assume a number.

Late March: Review and finalize. Check names, SSNs or ITINs, dependent claims, and direct deposit routing and account numbers.

Early April: File and save proof. Download the filed PDFs and keep confirmation numbers.

Required Materials

• Identification for you and your spouse if filing jointly: Social Security numbers or ITINs, dates of birth.
• Dependent information for each child: legal name exactly as it appears on the Social Security card, identification number, date of birth, and relationship.
• Income forms: W-2s, 1099s, and your own records for cash or self-employment income.
• Bank routing and account numbers for direct deposit.
• Prior-year return, which reduces data-entry errors and helps with continuity.
• Any state or IRS notices, especially identity verification letters.

Common Mistakes

Assuming the child qualifies because they qualified federally. The Colorado Child Tax Credit cuts off at age 6, not 17. A 7-year-old who earns you a federal credit earns you nothing on DR 0104CN.

Treating $1,200 as the amount rather than the ceiling. Most claimants land in the $600 or $200 bracket. Run the form.

Getting dependent claims wrong in shared custody. If two adults claim the same child, one return gets flagged. Settle it in advance under the IRS tiebreaker rules in Publication 501.

Skipping the state return. Filing federally does not claim these credits. Colorado credits require the Colorado return, and neither credit is automatic.

Not filing because you owe nothing. Both credits are refundable, meaning the excess is paid to you even with zero tax liability. Not filing is how eligible families receive nothing.

Ignoring DR 0104TN when it applies. ITIN filers routinely assume the EITC is closed to them. In Colorado, it is not.

Frequently Asked Questions

Is my current return affected by these changes? No. The Department is specific: “These updates apply only to Tax Year 2026. They will affect the tax returns that you file in calendar year 2027. Your current tax filings are not affected by this change.”

Is the Family Affordability Tax Credit gone permanently? No. It is paused for tax year 2026 and resumes when revenue projections exceed the threshold growth rate. No resumption date has been announced.

Can I still get the Colorado Child Tax Credit for tax year 2026? Yes. The CTC is neither paused nor reduced, though the published bracket amounts for tax year 2026 are not out yet.

What if my child has no Social Security number? The Colorado Child Tax Credit is allowed regardless of the federal SSN requirement. For the EITC, use DR 0104TN.

What if the deadline lands on a weekend? The state’s rule: if the due date or extension date falls on a weekend or legal holiday, the return or payment is due the next business day. April 15, 2027 is a Thursday, so it stands.

How to Claim

1. Complete your federal return first, including Schedule EIC and Schedule 8812 if they apply.
2. Check your AGI against the current-year brackets in Income Tax Topics: Child Tax Credit or the DR 0104CN for that tax year.
3. File DR 0104 with the Dependents table completed and the Child Tax Credit box marked.
4. Attach DR 0104CR and DR 0104CN, plus DR 0104TN if you are claiming the EITC as an ITIN filer or certain filer under age 25.
5. File by April 15, 2027 for tax year 2026, or use the automatic extension to October 15, 2027 if you need it and are not carrying a balance due.
6. If tax year 2025 is still unfiled, file it by October 15, 2026 while the 50% EITC and the Family Affordability Tax Credit still apply.
7. Revise your DR 0004 with your employer if you reduced withholding based on the Family Affordability Tax Credit.

For current rules, forms, and any update on when the Family Affordability Tax Credit resumes, check the Colorado Department of Revenue directly: https://tax.colorado.gov/ctc-eitc