If you live in Colorado and you have a disability, I want to talk to you about the new Disability Assistance Credit that is available to you this year. You can get up to $1,200 from this credit, but there’s a lot you need to understand about it before you file.
This is a transcript of our video. You can watch the full video on our YouTube channel: Low Income Relief.
What Is the Disability Assistance Credit?
We know that a House bill created the Disability Assistance Credit to provide some extra financial assistance that was authorized for the 2025 tax year, which means it’s now claimable when you file your taxes this season.
That refundable credit ranges from $400 to $1,200 based on your income and filing status. The amount is supposed to adjust annually for inflation, so it could go up over time.
Who Qualifies?
In order to qualify for the Disability Assistance Credit, you need to be disabled. That means you must be unable to engage in substantially gainful activity due to your disability.
You need to have qualified for full disability benefits for the full calendar year of 2025. You also need to have lived in Colorado for the full 2025 year. And you must be an independent filer, meaning you are not someone else’s dependent.
If you meet those qualifications, you may be able to get this tax credit. Again, I am not a financial planner, accountant, or lawyer. I’m just reporting on the news as we find it here.
Income Limits
The income requirements for the Disability Assistance Credit this year are:
- $20,000 per year maximum for single filers
- $32,000 per year maximum for joint filers
That’s the most you can make and still qualify.
Now, how much can you get? That’s always the big question.
If you are a single filer earning up to $10,000, you can qualify for the maximum credit. Please note that it does say “up to” $10,000. For joint filers, that limit is up to $16,000 for the maximum.
After that, the credit tapers down as your income increases until you reach the maximum income limit.
Important Dates
This credit went into effect for the 2025 tax year, which means it’s now available when you file.
The regular tax deadline is April 15. If you file an extension, you can extend your filing deadline to October.
How to Apply
You will need to file your Colorado income tax return to receive this credit. There are four convenient ways you can do this:
- File online
- Use third-party tax software
- Use the simplified form or other applicable forms
- Visit a VITA or TCE tax preparation site
VITA stands for Volunteer Income Tax Assistance, and TCE stands for Tax Counseling for the Elderly. These are two different programs that offer free tax assistance to those who qualify. You may be required to make an appointment.
There are free tax preparation sites available, and you can access a list at the link shown on the screen in the video. We also have a list at Low Income Relief that can assist you.
You Must Choose Between Two Credits
Before you file for this credit, you need to understand that there is another credit you may be able to get, but you cannot get both. You have to choose one.
I’m talking about the older Property Tax, Heat, and Rent Rebate that’s been available for a while. We’ve talked about that many times on this channel. That program has different rules, different filing instructions, and different benefit amounts.
It’s important to look carefully at both credits before deciding which one is best for you this year. You can find more information on the Colorado Department of Revenue website at tax.col.gov.
From what we read, and again I’m not a lawyer or tax advisor, there are some situations where the Disability Assistance Credit may be the better choice.
The Colorado Tax website indicates that if you are in certain AGI ranges, you might find greater assistance in the DAC benefit compared to the PTC rebate. If you earn income in those ranges, you may receive better benefits by filing for the Disability Assistance Credit instead.
But again, that depends on your individual circumstances, so you’ll need to make that decision carefully.
What “Full Benefits” Means
Let’s answer a quick question about what “full benefits” means.
You must have qualified for full disability benefits from a bona fide public or private plan throughout the entire 2025 calendar year. Those benefits must be based solely on your disability status, not on other factors like age or income.
That means if you’re receiving SSI, unfortunately that will not qualify you for this credit because SSI is based on income.
However, SSDI, or Social Security Disability Insurance, would be more likely to qualify because it is not based on your income.
I know that’s going to be confusing for a lot of people, so please pay close attention to that distinction.
Final Thoughts
We do have some additional resources that may be able to assist you.
If this video has helped you save money or get a little extra back, please like the video and share it with others so they can get this assistance too.
I hope this has been helpful, and we’ll be back soon with more ways you can save money and get free stuff. I’ll see you there.
