Recently released demographic analyses show that two laws regulating the distribution of tax refunds will primarily benefit Colorado residents at opposite ends of the income scale.

The two bills, passed as Senate Bill 228 and House Bill 1311, both targeted tax revenues that were expected to exceed the cap set by the Taxpayer’s Bill of Rights (TABOR). The Senate bill cuts state income and sales tax rates during periods of high revenues, with larger cuts associated with larger surpluses. The House bill creates a new tax credit for low-income families that is higher for families with younger children and lower incomes.

Overall, the Senate bill is expected to “widen economic inequalities” as wealthier households receive higher dollar amounts. The House bill is likely to reduce inequalities, particularly along racial and ethnic lines, by awarding larger shares of the refunds to low-income families, according to analyses by the bipartisan legislative staff.

Rep. Chris deGruy Kennedy, a Lakewood Democrat and sponsor of both bills, said neither outcome was a surprise. Targeted tax credits tend to help low-income families, who are disproportionately families of color, while across-the-board income tax cuts tend to benefit those with the highest incomes. At a bill-signing ceremony in late May, officials estimated the new tax credit would cut child poverty in Colorado nearly in half.

“It was a balancing act between competing priorities,” deGruy Kennedy said, pointing to the benefits for children below or at the poverty line.

The two bills were passed as a package last session because lawmakers were counting on billions in projected tax revenues above the TABOR cap that would need to be returned to taxpayers somehow. State economists still expect a TABOR surplus this year, but a much smaller amount than Colorado has seen in recent years. Instead of the $700-plus refunds taxpayers have received in recent years, they should expect refunds in the $115 range.

DeGruy Kennedy noted that the trade-off between tax cuts and more help for low-income families will mean that middle-income households without children will suffer the most. They will both lose the larger TABOR surplus checks and will not benefit as much from the income tax rate cut.

For the current tax year, the state income tax rate will be cut from 4.4% to 4.25%, representing a total cut of about $468 million across the state. Given the smaller overall surplus from the TABOR tax refund and the individual benefits of the tax cuts, analysts in the legislature expect the roughly 2.4 million single and joint filers earning less than $107,000 a year to have less money in their pockets, between about $40 and $300, depending on their circumstances.

The most significant benefits will be expected for the approximately 457,000 taxpayers with an income of $242,000: Those filing a joint tax return and at the lower end of this income bracket will receive a net increase of around $170, while single taxpayers at the upper end of the income bracket will receive around $2,100 more.

The change to TABOR refunds for families, called the Family Affordability Tax Credit, gives single filers at the lowest end of the income scale $3,200 per child under age 6 and $2,400 per child age 6 to 16. The refund amount per child decreases for every $5,000 of income above $15,000 for single filers and $25,000 for filers filing jointly, until the family reaches an income of $85,000 for single filers and $95,000 for filers filing jointly.