How to use this guide
Plan your 2026 Colorado review
Start with the federal Section 45F eligibility path, then treat any state program as a separate analysis. The calculator shows the two amounts independently and only adds them as arithmetic for planning. It does not decide whether a cost qualifies under both systems.
Federal Section 45F baseline
For amounts paid or incurred after December 31, 2025, the IRS describes a 40% credit for qualified child care expenditures, 50% for an eligible small business, and 10% for qualified resource-and-referral expenditures. The 2026 annual limit is $500,000, or $600,000 for an eligible small business.
The 50% rate uses the modified five-year gross-receipts test. A qualified facility must satisfy applicable state and local requirements, including licensing, and the statutory employee-access and nondiscrimination conditions still apply.
Colorado program status
10% of eligible tangible personal property investment for employee child care facilities, or 50% of qualifying child care contributions capped at $100,000
Colorado provides both an employer child care facility investment tax credit (10%) and a child care contribution tax credit (50% up to $100,000). Contribution credit is capped at $100,000 per tax year and facility credit requires a licensed employee child care facility and qualifying tangible personal property
Treatment shown in the calculator: Nonrefundable, with unused credits eligible for carryforward up to 3 years for facility investments or up to 5 years for contributions
What to verify before relying on an estimate
- The written arrangement, invoices, and payment records identify the specific child care or referral service.
- The provider or facility is eligible under the federal path being considered, including applicable licensing requirements.
- The expenditure does not exceed fair market value and is separated from nonqualified employer support.
- The state source confirms the current program, application or allocation process, taxpayer eligibility, and applicable cap.
- A qualified tax advisor reviews tax liability, deduction or basis effects, carryforward or refund treatment, and the final filing position.
Primary sources for this guide
Colorado guide FAQs
Does the calculator guarantee a Colorado or federal credit?
No. It applies published planning assumptions. Eligibility, program allocation, tax-liability use, filing treatment, and whether the same cost can be used in both analyses require separate review.
Why are federal and state numbers shown separately?
The programs have different definitions, eligibility conditions, caps, tax treatments, and procedures. Showing the amounts separately avoids suggesting that the results automatically combine.
What form is used for the federal Section 45F credit?
The IRS directs taxpayers to Form 8882. Consult the current form, instructions, and a qualified advisor for the filing year and taxpayer type.