Child and Dependent Care Tax Credit in Colorado

Colorado offers two credits targeting care. The first is the refundable Colorado child and dependent care tax credit, which is based on the federal credit and is available to:

• Taxpayers with an adjusted gross income less than or equal to $60,000
• The credit is equal to 50% of the federal CDCTC

The second credit is a nonrefundable Low Income Child Care Expenses Credit. This credit equals 25% of the taxpayer’s child expenses and is capped at $500 for a single dependent or $1,000 for two or more dependents. You can claim this tax credit if:

• You are a taxpayer with an adjusted gross income less than or equal to $25,000, who doesn’t have sufficient tax liability to qualify for the federal credit
• The credit is available for expenses associated with the care of a dependent age 13 or younger

Upcoming changes for Colorado child care credits:

Beginning tax year 2026, the two child care expense credits will be merged into one tax credit: the child and dependent care tax credit. This will have an adjusted gross income cap of $60,000.

• The new law will also match qualified dependents to the federal definition, which includes dependents other than a child age 13 or younger.
• The amount of the state CDCTC will also increase to 70% of the federal credit
• Beginning tax year 2027, the adjusted gross income cap will be adjusted for inflation

To claim the child care tax credit using TurboTax, follow these steps:

1. Start Your Tax Return: Go to TurboTax and begin a new tax return or continue an existing one.

2. Navigate to Deductions & Credits: Once you reach the section for deductions and credits, look for the area on child and dependent care expenses.

3. Enter Your Information: TurboTax will guide you through a series of questions about your dependents and the child care expenses you incurred. Be prepared to provide details like:

• The names and ages of your dependents.
• The amounts paid for child care services.
• The provider’s information (name, address, and tax identification number).