Boosting Colorado’s Early Childhood Workforce: A new tax credit for everyone
By Lisa Jameson-Shea, Director of Development
Colorado’s dedication to supporting its early learning providers and making early childhood education more accessible for families continues with a new refundable state income tax credit. Starting in the 2026 tax year, qualifying workers and early childhood professionals, including Family, Friend, and Neighbor (FFN) providers, will be eligible for a $1,200 tax credit. This credit means more money in the pockets of those who dedicate their lives to nurturing the next generation, regardless of whether they owe taxes or not.
Why is this credit essential for FFN providers?
Family, Friend, and Neighbor (FFN) caregivers often operate outside formal structures, providing crucial care for many children, especially those from low-income families and families of color. These caregivers play a vital role, often offering flexible schedules and a trusted, familiar environment. Despite their essential role, FFN providers often face significant financial struggles and may not earn an income from providing care. This new tax credit is particularly impactful for them.
Financial lifeline: The $1,200 credit provides a significant boost to FFN providers’ economic well-being, helping them afford basic necessities like food, utilities, and housing.
Reduced turnover: By improving financial stability, the credit can help reduce educator turnover, leading to more consistent and stable care for young children, which is critical for their social and emotional development.
Breaking barriers: Colorado is the first state to include informal early learning educators in such a tax credit. This acknowledges and supports the invaluable role FFN care plays in Denver and throughout Colorado’s early learning system.
How does the credit directly affect parents in the community?
This tax credit isn’t just a benefit for caregivers; it has a direct and positive impact on parents and families throughout Denver.
Increased access to care: By supporting providers and reducing turnover, this credit aims to strengthen the workforce, potentially increasing the availability of quality care options for families who face challenges finding care. Currently, Colorado has a significant deficit in licensed early learning slots, and many areas are considered “early childhood education deserts”, due to the lack of available supply for miles.
Improved affordability: While the credit directly benefits educators, the stability it fosters within the early learning sector can indirectly help keep early childhood education costs more manageable in the long term, a particularly impactful factor in Colorado, which ranks among the states with the most expensive child care.
Peace of mind: Parents can have greater confidence knowing that the individuals caring for their children are receiving better financial support, potentially leading to a more stable and high-quality early learning experience for their children.
How does the credit boost the local economy?
Investing in early childhood education isn’t just about supporting families; it’s a wise economic strategy.
Supporting the workforce: Affordable and accessible early learning allows parents to enter or remain in the workforce, boosting labor force participation and increasing household incomes. Studies have shown that access to free early learning education can lead to moms working more hours per week and significantly increasing their labor force participation.
Increased productivity: Parents struggling with care challenges can experience lower productivity at work. By easing these burdens, the credit can improve employee focus and reduce absenteeism, leading to a more efficient and productive workforce.
Multiplier effect: Early childhood education spending has a multiplier effect in the economy. Studies have shown that early learning organizations spend a significant portion of their funds within Colorado, recirculating money into the local economy through staff salaries, benefits, and operational expenses.
In short, Colorado’s new early childhood education worker tax credit is a multifaceted solution addressing critical needs within the state’s early learning system. It’s a testament to the understanding that investing in early childhood education and supporting the dedicated professionals who provide care is an investment in the future of Colorado’s children, families, and economy.
Visit the Colorado Department of Early Childhood Care Worker Tax Credit page for more information on how to claim this credit.
Visit our FFN page for more information about how we are supporting our FFN community.