Working Past 65? Colorado Might Finally Give You This Tax Break.

The Bottom Line

If you or someone in your family is working past age 64, Colorado is looking to remove an old rule that locks seniors out of the state Earned Income Tax Credit. Starting in 2028, older low-to-moderate-income workers without dependents would finally get the same state tax break younger workers already receive.

What This Bill Actually Does

Under current law, the Earned Income Tax Credit (EITC)—both federal and state—comes with a strict age limit if you don't have qualifying children living with you. Once you hit your 65th birthday, you are cut off from claiming this credit, regardless of how much you work or how little you earn. During the pandemic, the federal government temporarily lifted both the minimum and maximum age requirements, and Colorado followed suit. But while the state permanently kept the change allowing younger workers (under 25) to claim the credit, the rule for seniors reverted back. This bill aims to fix that discrepancy by permanently removing the maximum age limit for the state's version of the credit.

If this legislation passes, older Coloradans who remain in the workforce—often out of financial necessity—would be treated exactly the same as their younger counterparts. The bill explicitly notes that many residents over 65 are still actively working, supporting local economies, and sustaining multigenerational households. By striking the age cap, the state acknowledges that an hour worked at age 66 deserves the same tax relief as an hour worked at 36.

The changes are set to take effect for tax years commencing on or after January 1, 2028. At that point, an eligible senior would calculate their state EITC just like anyone else: by taking a set percentage of what their federal credit would have been if the federal government didn't have an age cap. For context, the Colorado credit is currently calculated as 25 percent of the federal amount, though that percentage fluctuates based on state revenue conditions.

What It Means for You

If you are a working senior, or if you have parents who are still punching the clock, this bill represents a direct financial boost. Currently, if you are 65 or older and don't have a dependent child at home, you are entirely boxed out of the Earned Income Tax Credit, even if your income is identical to a 40-year-old who gets the break. By removing the age cap, an estimated 30,000 older Coloradans would suddenly qualify for this state tax refund starting in 2028.

The exact dollar amount you might see will depend on a few variables, primarily your income and the state's revenue situation. Colorado calculates its EITC as a percentage of the federal credit—often sitting at 25 percent. If you file your taxes as an older worker without dependents, you'll want to keep an eye on your income brackets as 2028 approaches to see if you qualify. Because the EITC is a refundable credit, it means that even if you don't owe any state income tax, you could still get a check in the mail just for filing and claiming it.

For multigenerational families, this is worth noting when you sit down for yearly financial planning. Many seniors work part-time jobs just to cover rising property taxes, groceries, and prescription costs. While the federal government will still deny the federal EITC to workers over 64 without dependents, Colorado stepping in to offer the state-level credit provides a modest, but meaningful, cushion. Make sure your tax preparer or software is aware of this shift once the 2028 tax year rolls around so you don't leave money on the table.

What It Means for Your Business

On its face, the removal of an age limit for a personal income tax credit doesn't add any new compliance hurdles, reporting requirements, or operational shifts for your business. You won't need to change how you run payroll or alter the W-2s you issue to your older employees. However, from a workforce retention and economic perspective, this shift is quietly significant for industries that rely heavily on older, part-time, or low-to-moderate-income workers.

Think about your staffing in retail, hospitality, consulting, or administrative support. Many businesses depend on the reliability and experience of employees aged 65 and older who choose to stay in or re-enter the workforce. By offering these workers a state-level financial incentive to keep working—via a refundable tax credit—Colorado is effectively subsidizing the wages of your lower-income senior staff. This makes part-time or modest-wage work slightly more lucrative for them without increasing your direct payroll costs.

Additionally, tax credits like the EITC are widely recognized for their local economic multiplier effect. The legislative declaration in the bill specifically points out that these benefits tend to flow directly back into local communities through everyday spending. If your business operates in consumer goods, groceries, or local services, putting roughly $6 million annually back into the pockets of 30,000 working seniors means that money is highly likely to be spent at local cash registers rather than parked in offshore savings accounts.

Follow the Money

Expanding tax breaks always comes with a price tag, and this bill is projected to reduce the state's General Fund revenue by $2.9 million in the first half-year (FY 2027-28), scaling up to about $6.1 million annually by FY 2029-30. Because income taxes are subject to the Taxpayer's Bill of Rights (TABOR), this reduction in state revenue will also lower the amount of money the state is required to refund to taxpayers when revenue caps are exceeded.

Administratively, the Department of Revenue (DOR) will need to spend about $514,000 in FY 2028-29 to get this rolling. That money covers the hiring of roughly 5 full-time employees to review claims, handle call center questions, and manage tax disputes, alongside costs for updating the GenTax software system and redesigning tax forms. Once the system is updated, the ongoing administrative cost settles at around $255,000 per year.

Where This Bill Stands

HB26-1240 is currently In Committee. The latest official action came on 05/14/2026: House Committee on Appropriations Lay Over Unamended - Amendment(s) Failed.

That means the bill is still in the committee stage, and it is currently sitting in the Finance. To keep moving, it would need to clear committee and then survive floor votes in both chambers.