A pair of bills aimed at bridging support for low-income families by closing some corporate tax cuts died Monday afternoon for a lack of support — and sponsors of the biggest bill blame a veto threat from Gov. Jared Polis.
Heading into the legislative session this January, Democratic lawmakers were lauding a new tax credit that cut child poverty by more than a third, and worrying about its future amid a sour budget outlook. When it became clear the state would not have enough revenue to continue the credit this upcoming year, lawmakers unveiled a package of bills to close corporate tax cuts made at the federal level last year and reflected in the state tax code.
That money would go toward creating a separate tax program that would mirror the Family Affordability Tax Credit. The new credit would give low-income families a bridge of support while the state budget bounced back, supporters said.
On Monday, with just over two days left before lawmakers must adjourn, backers killed two of the three bills to fund the new credit for lack of support, leaving just a modified version of a third still in play.
And sponsors of the biggest of the bills, , laid the blame squarely on one man: Polis, the term-limited Democrat who the tax creditap effectiveness in his final State of the State. The governor threatened to veto the measures if lawmakers did not include income tax cuts, sponsors said.
“What this means is now that the 30% of families that were lifted out of poverty because of Colorado’s most aggressive anti-poverty tax credits are now going to be plunged back into poverty,” Rep. Lorena Garcia, an Adams County Democrat, said in an interview. “I wonder if the governor feels good about that.”
Tax credit helped reduce childhood poverty rate
In 2024, Colorado lawmakers created the Family Affordability Tax Credit. The credit sends money collected over the Taxpayer’s Bill of Rights revenue cap to low-income families. Families with more kids and lower incomes receive more money under the credit. More than 330,000 tax filers qualified for the credit when they filed their taxes in 2025, for an average credit of $2,700 per filer.
A backed by Denver-based Gary Community Ventures released in February found the credit, along with two other smaller credits, cut Colorado’s child poverty rate by 37%. That drop, from 11.6% to 7.3%, gave Colorado one of the lowest, if not the lowest, childhood poverty rates in the country. Researchers from St. Louis’s Washington University and North Carolina’s Appalachian State University called it “the most effective child poverty impacts” in the country.
Polis even name-checked the program and Colorado’s best-in-the-nation childhood poverty rate in his final State of the State address — albeit, lumped in with a celebration of cuts to property taxes and income taxes. The governor has long championed income tax cuts. When lawmakers debated the tax credit in 2024, Polis conditioned the credit on an income tax cut of .15 percentage points, or $450 million.
by nonpartisan legislative staff in 2025 found that nearly half of income tax cuts go to Colorado taxpayers with $200,000 or more in annual income, despite comprising only 8.3% of the population. Tax filers reporting less than $100,000, who make up more than 75% of the population, receive about a quarter of the total savings from income tax cuts.
Garcia and Sen. Cathy Kipp, a Fort Collins Democrat and the Senate sponsor of HB-1222, said Polis conditioned signing their measure into law on additional cuts to the income tax. He would otherwise veto the measure, they said. Kipp voluntarily killed the bill in a Monday afternoon Senate committee after acknowledging she did not have the support.
“It is clear that this bill will be vetoed unless we agree to reducing the state income tax, something that I believe is irresponsible,” Kipp, a Fort Collins Democrat, said shortly before killing her bill Monday afternoon.
In a statement, Polis’ spokesman, Eric Maruyama, didn’t address a question about whether Polis wanted an income tax cut as part of the package.
“The governor has long supported providing tax relief, including income tax relief for Colorado families,” Maruyama said in a statement after the bills were killed. “Colorado’s Family Affordability Tax Credit helped cut child poverty rates … and the governor supported strengthening this credit to help families while saving every Coloradan money on taxes.”
Businesses line up against bills
HB-1222 would have raised $330 million by limiting several business deductions that were created or expanded under the federal tax bill H.R.1, commonly known as the “One Big Beautiful Bill.” , which was also killed by sponsors Monday afternoon, sought to limit deductions for executive compensation and operating losses.
Sen. Judy Amabile, a Boulder Democrat and sponsor of HB-1221, said that bill also faced a veto threat and flagging support among other legislators. The bills were an attempt to rein in increasing income inequality and lift people out of poverty.
“We are giving preferential treatment to CEOs and corporations who are doing fine, and we are giving not-preferential treatment to people who are really struggling, who are working and contributing to our society,” Amabile said.
A third measure, , would send an estimated $77 million to the mirror credit by ending a sales tax exemption for digital software sales. That bill still lives, but it was amended to expand a utility bill write-off for restaurants.
The measures faced a barrage of opposition from business groups.
The business community supports policies to help every Coloradan “fully participate” in the state economy, Denver Metro Chamber of Commerce Vice President Leslie Oliver said in a statement. But these measures would have sapped nearly $500 million from businesses that could have otherwise been reinvested in employees, research, products, and more, Oliver said.
”While these bills were framed as targeted revenue measures, the reality is they would have imposed significant new tax burdens on employers — particularly small and growing businesses — at a time when businesses are already navigating rising operational costs and economic uncertainty,” Oliver said.
