Getting a Tax Break for Helping the Homeless? It's About to Get a Four-Year Extension.

What This Bill Actually Does

Let's talk about the Colorado Homeless Contribution Tax Credit (HCTC). Created a few years ago to help tackle the state's growing housing crisis, this program essentially gives taxpayers a massive discount on their state tax bill when they donate to approved nonprofits that help people experiencing homelessness. Under current law, this credit is scheduled to sunset at the end of tax year 2026. House Bill 26-1015 changes that expiration date, granting a four-year extension that keeps the credit alive and kicking through income tax year 2030.

So, how does it actually work? Instead of just a standard tax deduction—which only reduces your taxable income—this is a direct tax credit. That means it reduces your actual tax liability dollar-for-dollar. If you donate cash or in-kind gifts to an approved project, you get a credit equal to 25% of your contribution if the project is in a designated non-rural area. If you donate to a project in a rural area, the state sweetens the deal to 30%. According to the bill's legislative declaration, in its very first year, the program successfully leveraged 8,320 donations worth over $20.4 million. By 2024, nearly 10,000 taxpayers were claiming it to lower their tax burden.

The bill itself doesn't change the rules of the game; it just keeps the game going. You can still claim up to $100,000 in credits per tax year. Because the credit is nonrefundable, you can't use it to get a bigger refund check than what you actually owed in taxes. However, if your earned credit is larger than your tax bill, the law allows you to carry the excess credit forward for up to five subsequent tax years. By passing HB26-1015, lawmakers are signaling that this public-private partnership is working well enough to keep around until the end of the decade.

What It Means for You

If you are someone who regularly donates to charity—or if you've been looking for a smart, legal way to lower your Colorado income tax liability—this bill is a massive win for your financial planning. By extending the Homeless Contribution Tax Credit through 2030, you have a guaranteed, multi-year runway to strategically plan your charitable giving. It takes the sting out of your state tax bill while directly funding organizations working on the front lines of your community.

Let's do the math on how this actually impacts your wallet. Say your state income tax bill is usually $4,000. If you donate $10,000 to an approved rural homeless shelter in 2027, you earn a 30% credit. That knocks $3,000 right off your state tax bill, meaning you only owe the state $1,000. Last year, nearly 10,000 Coloradans used this exact mechanism, claiming an average of $648 each. Keep in mind, you have to donate to an organization specifically approved by the Division of Housing within the Department of Local Affairs (DOLA)—you can't just hand a check to any charity and expect the credit. But with 79 organizations currently on the state's approved list, you have plenty of local options.

Here is what you should do next to make the most of this extension:

• Verify your charities: Before you write your next charitable check, check DOLA's official HCTC website to see if your favorite local nonprofit is an approved project.
• Talk to your CPA: Bring up HB26-1015 in your next tax planning meeting. Ask if "bunching" your donations into a single year makes sense, given that you can carry unused credits forward for five years.
• Make your voice heard: The bill is currently working its way through committees. If you rely on this credit or want to see it pass, contact your local state representative.

What It Means for Your Business

For Colorado business owners, HB26-1015 is much more than a feel-good charity measure—it is a highly effective tool for corporate tax strategy. The tax credit is available to corporate taxpayers just as it is for individuals. Whether you run a local restaurant group, a general contracting firm, or a tech startup, donating to approved homeless service providers can significantly slash your corporate income tax liability. Plus, thanks to a 2024 legislative update, donations made through a qualified intermediary are now explicitly eligible for the credit.

Perhaps the most overlooked benefit for businesses is that the credit applies to in-kind contributions, not just cash. If you are a developer, contractor, or supplier, this is especially relevant. Let's say your construction company donates lumber, plumbing fixtures, or pro bono labor to build a transitional housing project that is approved by the state. The assessed value of those in-kind donations qualifies for the 25% to 30% tax credit. It's a fantastic way to offload surplus inventory or keep your crews busy during slow periods, all while generating a tangible financial return for your business and building serious goodwill in the community.

To take advantage of this pending extension, here are three things you should tackle this week:

• Audit your corporate giving: Look at where your business currently donates its time and money. If those organizations aren't HCTC-approved, consider shifting some funds to ones that are to capture that 25% to 30% return.
• Value your in-kind options: Have your operations and accounting teams assess the value of surplus inventory, materials, or services your business could feasibly donate to local housing projects over the next four years.
• Plan for 2027 and beyond: Now that the credit is highly likely to stick around until 2030, integrate this credit into your long-term corporate tax strategy rather than treating it as a use-it-or-lose-it perk that dies in 2026.

Follow the Money

Tax credits are essentially government spending by another name, and keeping this one around means less money flowing into state coffers. According to the nonpartisan fiscal note, extending the credit will reduce state General Fund revenue by $4.4 million in FY 2026-27 (since it only covers half the tax year), and then roughly $8.9 million to $9.3 million annually through the end of the decade. As more people and businesses find out about the credit, those numbers are expected to climb.

Because Colorado operates under the Taxpayer's Bill of Rights (TABOR), this drop in state revenue has a fascinating side effect: it lowers the total amount of money the state is required to refund to taxpayers. So, while individual donors get a targeted tax break, the state's overall TABOR refund pool shrinks by the exact same amount. On the administrative side, the state will continue spending about $158,832 a year to keep 1.5 full-time employees at the Division of Housing. These staffers are responsible for managing the program, reviewing applications, auditing the nonprofits, and preventing fraud.

Where This Bill Stands

HB26-1015 was introduced in the House on January 14, 2026, with strong bipartisan backing from its prime sponsors: Representatives McCormick and Taggart, alongside Senators Michaelson Jenet and Simpson. Having bipartisan sponsors from both urban and rural districts is typically a great sign for a bill's survival in a polarized Capitol.

On February 12, the House Finance Committee gave the bill a strong nod, referring it unamended to the House Appropriations Committee. "Unamended" means the committee liked the bill exactly as it was written and didn't feel the need to tack on any compromises or changes. Because the bill reduces state revenue by several million dollars a year, it must clear the Appropriations hurdle to ensure the state budget can absorb the hit. Given its bipartisan sponsorship and the proven track record of the existing program, its chances of passing are very high. Expect a vote on the House floor soon, followed by a similar journey through the Senate.