Colorado Enacts Credit For Employer 529 Contributions

For tax years 2019-2021, Colorado has a new income tax credit is created for employers who contribute to an employee’s 529 qualified state tuition program. The available credit is equal to 20% of the contribution, for each employee per tax year. The maximum total credit that may be claimed for each employee is capped at $500 per tax year.

Employers and Employees

Under the legislation, an employer is a person doing business in Colorado. An employee is someone employed by an employer. This includes:

  • full-time employees;
  • part-time employees; and
  • permanent employees.

Planning Considerations for Tuition Program

The credit is not refundable or transferrable. Unused credits may be carried forward for up to three years. The unused credit amount must be applied first to the earliest income tax year possible.

H.B.1217, Laws 2018, effective August 8, 2018

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