Colorado Launches New Tax Credit for Long-Term Care Workers: What You Need to Know

01/02/2026|John R. Dundon II, EA|Colorado Department of Revenue, Colorado Department of Revenue|Colorado Income Tax

Colorado Launches New Tax Credit for Long-Term Care Workers: What You Need to Know

Colorado is taking a major step to support its long-term care workforce through a new Qualified Care Worker Credit—a refundable state income tax credit aimed at direct care workers.
This initiative, part of House Bill 24-1312, recognizes the vital role these professionals play in the lives of older adults and individuals with disabilities, and it provides much-needed financial relief to those who qualify.

What Is the Qualified Care Worker Credit?

The Qualified Care Worker Credit for direct (long-term) care workers is a refundable state income tax credit of up to $1,200 per year, available for tax years 2025 through 2028.
This means that eligible workers can receive the credit even if they owe no state income tax, making it a potentially significant boost to take-home pay.
This credit is the second part of a broader two-part initiative, the first of which supports child care workers.

Who Qualifies?

To claim the credit, workers must meet several eligibility criteria:

Be a Colorado resident (non-residents are not eligible; part-year residents may receive a prorated amount).
Be employed during the tax year by a qualifying long-term care employer in Colorado.
Provide hands-on personal care and services to participants receiving long-term care.
Work at least 720 hours during the calendar year in a qualifying position.
Have Adjusted Gross Income (AGI) of:
- $75,000 or less for single filers
- $100,000 or less for joint filers

Qualifying Job Roles

Eligible roles include:

Home health aides
Personal care aides
Companions (in a long-term care setting)

Note: While “direct care worker” often includes Certified Nursing Assistants (CNAs), CNAs are explicitly excluded from this credit under Colorado law.

Qualifying Care Settings

The care must be delivered in:

Home- and community-based services, as defined by the Colorado Department of Healthcare Policy and Financing (CDHCPF)
Nursing facilities
Certified home care agencies

Care provided in hospitals or other non-long-term settings does not qualify.

How to Claim the Credit

Eligible direct care workers can claim the credit by following these four key steps:

Work at least 720 hours in a qualifying direct care role during the tax year.
Employer reports hours to the Colorado Department of Revenue.
File your state tax return, including:
- Form DR1217 – 2025 Qualified Care Worker Tax Credit
- Form DR0104CR – Individual Income Tax Credit Schedule
If eligible, the refund will be issued.

Tip: If you work for multiple employers, your combined hours can count toward the 720-hour minimum. Ensure each employer submits the required reports.

Common Mistakes to Avoid

The Department of Revenue anticipates a few common issues:

Claiming the credit without qualifying job duties (e.g., administrative roles or non-long-term settings)
Falling short of the 720-hour work requirement
Employer failing to report work hours, which may result in a denied claim

Additional Resources

Form DR1217 instructions – Guides you through the documentation needed
Colorado Department of Revenue website – Offers updates and employer reporting tools
Colorado Revised Statutes § 39-22-566 – Full legal text of the Qualified Care Worker Credit
House Bill 24-1312 – Original legislation authorizing the credit

Why This Matters

Long-term care workers are the backbone of eldercare and disability services in Colorado. This refundable credit is more than a tax break—it’s a recognition of the essential, hands-on support these workers provide every day. By easing financial burdens, Colorado hopes to attract and retain high-quality professionals in long-term care, ultimately improving care outcomes for those who rely on these services.

If you or someone you know works in long-term care, make sure they’re aware of this opportunity. With up to $4,800 in total credits available over four years, it’s worth checking your eligibility and planning ahead for the 2025 tax filing season.

To qualify for the Qualified Care Worker Credit in Colorado, a worker must perform hands-on, direct care duties in a long-term care setting. While the state has not published an exhaustive list of every qualifying task, the legislation and guidance (e.g., DR1217 instructions) outline the types of duties and job roles that are considered eligible.

Qualifying Duties for the Credit

To be eligible, the worker must provide personal, hands-on care and support services to individuals receiving long-term care. These duties typically include:

Assisting with activities of daily living (ADLs):
- Bathing
- Dressing
- Grooming
- Eating
- Toileting
- Transferring (e.g., moving from bed to wheelchair)
Monitoring health conditions
- Checking vital signs
- Observing/reporting changes in health or behavior
Administering or reminding about medication (as permitted by law or training)
Assisting with mobility:
- Helping clients walk, move safely, or use mobility aids
Providing companionship and emotional support
Helping with light housekeeping tasks directly related to the client’s care:
- Cleaning the client’s room
- Laundry
- Preparing meals
Communicating with the care team (e.g., nurses or family members) about a client’s condition

Non-Qualifying Duties (Examples)

The following roles and duties do not qualify for the credit:

Administrative or clerical work
Management or supervisory roles not involving direct care
Certified Nursing Assistants (CNAs) — explicitly excluded from eligibility
Care provided in non-qualifying settings such as:
- Hospitals
- Clinics
- Independent living facilities (unless certified as long-term care providers)