Income 35: Child Care Contribution Credit  
Taxpayers that make a qualifying monetary contribution to promote child care in Colorado may claim an income tax 
credit of 50% of the total qualifying contribution. The credit a taxpayer can claim for qualifying contributions made 
during a tax year is limited to $100,000. In-kind contributions of services or property (non-monetary donations) do not 
qualify for the credit. 
TAXPAYERS ELIGIBLE FOR THE CREDIT  
Any  taxpayer  that  makes  a  qualifying  contribution  can  claim  the  child  care  contribution  credit.  Resident  and 
nonresident individuals, estates, trusts, and C corporations can all claim the credit for qualifying contributions they 
make,  either  directly  or  as  a  partner  or  a  shareholder  in  a  partnership  or  S  corporation  that  makes  a  qualifying 
contribution.  
QUALIFYING CONTRIBUTIONS 
Contributions must meet several criteria to qualify for the child care contribution credit. The contribution must be 
monetary; contributions of services or property (including shares of stock) do not qualify for the credit. The credit is 
allowed only for contributions that promote child care in Colorado. Additionally, the contribution must be made for 
an eligible child care purpose  and to a licensed child care facility, an approved facility school, or a registered  or 
grandfathered child care program. Finally, the credit is not allowed for contributions which are specifically excepted. 
See “Contributions that do not qualify for the credit” below for additional information. 
Monetary contributions 
Monetary  contributions  eligible  for  the  credit  are  contributions  of  money  made  in  cash,  by  check,  or  in  some 
equivalent form. Qualifying charitable distributions (QCD) made in accordance with federal law and IRS regulations 
from an individual retirement account (IRA) to a charitable organization are considered monetary contributions. See 
IRS Publication 590-B for additional information regarding QCDs.  
Eligible child care purpose 
Contributions  must  be  made  for  an  eligible  child  care  purpose  to  qualify  for  the  credit.  Except  in  the  case  of 
grandfathered programs, discussed below, the credit is only allowed for contributions made to promote child care for 
children age 12 or younger. Contributions for eligible child care purposes are:  
  donating money for the establishment or operation of any of the following: 
   o           a licensed child care facility that uses the donation to provide child care, 
   o           an approved facility school that uses the donation to provide child care, 
   o           a registered child care program that provides child care services similar to those provided by licensed 
               child care centers (see Dept. Rule 1 CCR 201-2, 39-22-121(5)(a)(ix) for additional information), or 
   o           a grandfathered child care program or facility; 
  pooling moneys of several businesses and donating such moneys for the establishment of a licensed child care 
   facility; 
  donating money to establish a registered grant or loan program for parents requiring financial assistance for 
   child care; 
  donating money to a registered program for the training of child care providers; or 
  donating  money  for  the  establishment  of  an  information  dissemination  program  that  assists  parents  with 
   information and referral services for child care. 
Licensed child care facilities and approved facility schools 
Licensed child care facilities to which qualifying contributions can be made include the following facilities that are 
licensed by the Colorado Department of Human Services:  
  child care centers, 
  child placement agencies, 
  family child care homes, 
  foster care homes, 
  homeless youth shelters, 
  residential child care facilities, 
  secure residential treatment centers, 
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Qualifying contributions can also be made to any facility school approved by the Facility Schools Board that is also 
affiliated with a licensed or certified hospital in Colorado and is also a nonprofit organization. 
A  list  of  child  care  facilities  licensed  by  the  Department  of  Human  Services  can  be  found  online  at 
colorado.gov/cdhs/child-care-0.  
Registered child care programs 
Unlicensed child care facilities and approved facility schools must register with the Department of Revenue to receive 
qualifying  contributions.  The  Department  publishes  a  list  of  registered  unlicensed  facilities  on  its  website.  
The list of “Accepted Unlicensed Child Care Centers” is available at colorado.gov/tax/fyi-publications-income-tax, 
next to the link for FYI Income 35. A program can apply for registration by completing and submitting the Unlicensed 
Child  Care  Organization  Registration  Application  (Form  DR  1318),  specifying  the  eligible  programs  for  which  the 
contributions will be utilized, and including documentation regarding those specific programs.  
Grandfathered programs and facilities 
Programs and facilities that received qualifying contributions prior to January 1, 2004 may qualify for exception from 
certain rules applicable to the credit. Amendments to the law made in 2004 affected the types of contributions that 
qualified for the credit. Prior to these amendments, credits were allowed for contributions made to programs and 
facilities without respect to licensure or registration and for contributions used to provide care for children up to the 
age of 18. Programs and facilities that received credit-eligible contributions prior to January 1, 2004, that would not 
qualify thereafter due to the 2004 statutory changes, could apply for continued eligibility by completing Child Care 
Contribution Tax Credit Grandfathered Organization Application (Form DR 1319). See Department Rule 1 CCR 201-2, 
39-22-121(7) for additional information about grandfathered programs and facilities. 
Contributions that do not qualify for the credit 
The  law  establishes  several  conditions  that  disqualify  certain  contributions  for  the  credit.  Contributions  will  not 
qualify for the credit if any of the following apply:  
       The contribution is made to a child care facility in which the taxpayer or a person related to the taxpayer has 
        a  financial  interest.  See  Department  Rule  1  CCR  201-2,  39-22-121(13)(a)  for  additional  information  about 
        related taxpayers.  
       The  contribution  is  made  to  a  for-profit  business  and  is  not  directly  invested  in  the  acquisition  or 
        improvement of facilities, equipment, or services, including the improvement of staff salaries, staff training, 
        or the quality of child care.  
       The contribution is not directly related to promoting child care in Colorado.  
       The contribution is made in a tax year commencing after December 31, 2024.  
       The  donor  receives  consideration  from  the  donee  organization  in  exchange  for  the  contribution.  See 
        Department Rule 1 CCR 201-2, 39-22-121(9)(e) for contributions made by companies for which the company’s 
        employees receive benefits. 
Investment funds 
Contributions made to investment funds that yield future payments to eligible providers and organization qualify for 
the credit only if 100% of the interest and principal the fund yields are utilized in a manner that qualifies for the 
credit. 
CALCULATION OF THE CREDIT 
The credit is equal to 50% of the taxpayer’s qualifying contribution made during the tax year except that the credit a 
taxpayer can claim for any tax year cannot exceed $100,000. The $100,000 limitation applies jointly to two taxpayers 
filing  a  joint  income  tax  return  together.  Additionally,  the  credit  is  nonrefundable.  Consequently,  the  amount  of 
credit a taxpayer uses for a given tax year (in combination with all other nonrefundable credits the taxpayer claims) 
cannot exceed the taxpayer’s income tax liability for that year. If a taxpayer’s credit exceeds the total tax due, the 
taxpayer can carry forward the excess credit to the following tax year. Taxpayers can carry forward excess credits for 
up to five tax years, but must use the excess credits in the earliest tax year possible. 
Limitations for tax years 2011-2014 
Various  limitations  regarding  the  amount  of  credit  a  taxpayer  could  use  applied  to  tax  years  2011-2014.  See 
Department Rule 1 CCR 201-2, 39-22-121(2) and (8) for information about these limitations. 

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Contributions used for both qualified and nonqualified purposes 
If a contribution is used for both qualified and nonqualified purposes, the credit is allowed only for the part of the 
contribution used for qualified purposes. The organization receiving the contribution must allocate the contribution 
between  qualified  and  nonqualified  purposes  and  report  the  allocation  on  the  Child  Care  Contribution  Tax  Credit 
Certification Form  DR  1317  the  organization  provides  to  the  donor.  See  Department  Rule  1  CCR  201-2,  39-22-
121(10)(b) for guidance regarding the allocation of contributions for qualified and nonqualified purposes. Examples of 
such contributions requiring allocation include:  
   contributions  made  to  a  licensed  child  care  center  that  provides  care  for  children  both  12  and  under 
    (qualified) and 13 and over (nonqualified);  
   contributions made to a church that uses part of the donation to fund its child care center (qualified) and 
    part to fund other charitable functions (nonqualified);  
   contributions to a community center construction project that includes both a child care center (qualified) as 
    well as other facilities (nonqualified).  
Contributions made to organizations engaged in both qualified and nonqualified activities, but earmarked exclusively for 
qualified purposes qualify entirely for the credit. The organization must have accounting procedures in place to verify 
that  those  donations  are  indeed  utilized  entirely  for  eligible  child  care  purposes  and  no  funds  are  utilized  for 
nonqualified purposes. A separate fund cannot be arbitrarily set up to accept donations for the child care facility while 
funds from other sources (such as federal or state funds, charitable organizations, nonresident donors) are used to pay 
other expenses that would not qualify for the credit. See Department Rule 1 CCR 201-2, 39-22-121(10)(c) for additional 
information. 
HOW TO CLAIM THE CREDIT 
Taxpayers  must  file  an  annual  income  tax  return  along  with  the  associated  credit  schedule  in  order  to  claim  the 
credit.  Taxpayer  must  submit  with  their  return  a  copy  of  the  completed  Child  Care  Contribution  Tax  Credit 
Certification  (Form  DR  1317)  obtained  from  the  donee  organization  certifying  the  contribution.  For  electronically 
filed returns, a scanned copy of Form DR 1317 can be submitted either via e-file or by using the E-Filer Attachment 
function of Revenue Online.  
ADDITIONAL RESOURCES 
   Colorado statutes and regulations 
    O         § 26-6-102, C.R.S. - Definitions for child care licensing 
    O         § 22-2-401, et seq., C.R.S. - Facility schools 
    O         1 CCR 304-1 - Facility Schools Board 
    o         § 39-22-121, C.R.S. - Child care contribution credit 
    O         1 CCR 201-2, Regulation 39-22-121 - Child care contribution credit 
    O         House Bill 04-1119 - Grandfathered facilities and programs 
   Colorado forms, publications, and guidance 
    o         Form DR 1317 – Child Care Contribution Tax Credit Certification 
    o         Form DR 1318 – Unlicensed Child Care Organization Registration Application 
    o         Form DR 1319 – Child Care Contribution Tax Credit Grandfathered Organization Application 
    o         FYI Income 7 - Investment credits for child care 
    o         FYI Income 33 - Child care expenses tax credit 
    O         PLR 16-012 - Contributions made to a grant program 
 
FYIs represent a good faith effort to provide general information concerning a variety of Colorado tax topics in simple and straightforward 
language. By their nature, however, FYIs cannot and do not address all taxpayer situations nor do they provide a comprehensive overview of 
Colorado’s tax laws. For this reason, FYIs are not binding on the Colorado Department of Revenue, nor do they replace, alter, or supersede 
Colorado law and regulations.  
A taxpayer seeking additional guidance regarding the tax consequences of a particular transaction or factual scenario can request a Private Letter 
Ruling (PLR) or General Information Letter (GIL). Requests for PLRs and GILs must comply with certain requirements, which are currently set forth 
at 1 Code of Colorado Regulations 201-1, Regulation 24-35-103.5. PLRs are binding upon the Department only with respect to the specific taxpayer 
that requested the PLR. GILs are for informational purposes only and are not binding on the Department. 
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