Improving tax credit uptake through better outreach in Colorado
State of Colorado Department of Revenue
January 2025 - November 2025
Why This Matters For Families
Across the country, millions of families are living paycheck to paycheck, struggling to afford their basics on low to moderate incomes. To support these families, 31 states and the federal government have instituted the Earned Income Tax Credit (EITC), which can provide families with thousands of dollars after filing their federal and state taxes. Tax credits have become a critical anti-poverty program in the United States, providing an essential source of cash for many American workers and families.
The 2021 expansion of the Child Tax Credit (CTC) in the American Rescue Plan reduced child poverty in the United States by 40% that year. However, accessing credits like the CTC is notoriously difficult as they are claimed during annual tax filing. The bipartisan, highly successful EITC reaches only 80% of eligible households nationwide, with lower-income, less-educated households being most likely to leave money on the table compared to other populations. The IRS estimates that roughly 20% of EITC-eligible and CTC-eligible individuals do not receive the credit payments they are owed — the federal EITC alone averaged $2,500 per return in 2022.
Implementation Challenge
In 2024, Colorado passed HB24-1288, requiring the state to assist up to 100,000 residents in filing or amending tax returns to receive the cash they are owed from the state. This legislation presented a novel opportunity to pilot proactive, data-driven efforts to boost uptake of refundable tax credits like the EITC and CTC.
Last year, in partnership with the Colorado Governor’s Office and the Department of Revenue (DOR), the New Practice Lab supported the state in identifying households owed refunds through unclaimed credits or excess withholdings and in testing new ways to connect eligible residents with filing assistance to access the money they are due. This collaboration involved two workstreams - “Discovery” and “General Mailer,” aimed to maximize reach and assistance to Coloradans.
Discovery:
When CO DOR had higher data visibility and assurance from internal analysis regarding data quality and likely eligibility, a pre-populated tax return was mailed to an individual filer directly, to claim and receive a refund. For this pilot, the initial scope was limited to Tax Year 2021, to test and learn before expanding to subsequent years.
General Mailer: To reach intermittent and non-filers with minimal data visibility, an outreach mailer with a free tax preparation coupon from TaxHawk was mailed to assist with costs incurred with state tax filing. This general mailer was a continuation of New Practice Lab’s collaboration with CO DOR that began in 2024.
Our Approach
From January to October 2025, NPL, the CO Governor’s Office, and the Colorado DOR collaborated to pilot an intervention using the department’s existing “discovery process” — a system built on the state’s GenTax software — to identify residents who had overpaid taxes or not filed returns and were owed refunds or credits.
OBJECTIVE
Identify residents owed and eligible for tax credits from previous years
WHAT WE DID
Conducted a discovery audit to identify 20,000 Colorado residents owed refunds from Tax Years 2021, and directed them to prefilled tax forms to verify, confirm, and submit returns to receive refund checks. Early indicators are promising: the team is tracking completion and engagement data, and initial results suggest that the process is easy to navigate, quick to complete, and builds trust with residents.
OBJECTIVE
Reach non-filers and increase awareness of tax credits they may be eligible for
WHAT WE DID
Designed mailers sent to 77,000 potential non-filers that included TaxHawk coupon codes for free state tax filing, conducted usability testing for message effectiveness. The DOR team is processing returned mail and tracking metrics to measure the success of this outreach effort.
OBJECTIVE
Improve the filing experience for habitual non-filers
WHAT WE DID
Conducted user experience expert reviews to refine content within the mailer. Through usability studies and interviews with a small group of selected Colorado tax filers, we narrowed content that resonates with filers to simplify and improve the end-to-end filing experience.
What We Learned
Through the Discovery Process, the Colorado Department of Revenue (DOR) — particularly its analytics team — demonstrated that significant progress toward financial inclusion can be achieved by reimagining what’s possible within existing systems.
The DOR team successfully repurposed existing data, tools, and processes to identify residents owed money and make it easier for them to access unclaimed tax credits and refunds.
Through this work, the DOR’s analytics team identified a significant number of Colorado residents—hundreds of thousands with excess withholdings and tens of thousands with eligible but unclaimed state earned income tax credits—who are owed past refunds. These residents either overpaid through withholdings or qualified for refundable tax credits but did not claim them. These findings establish the foundation for returning millions of dollars to Colorado households and for institutionalizing proactive refund identification in future years.
Importantly, Colorado accomplished this without additional staff or resources, embedding the work into their existing operations in a way that can run annually and continue identifying households missing out on refunds year after year.
With NPL’s support, the DOR also began to introduce user-centered design practices into the tax administration process. Together, we conducted usability studies and developed plain-language communications to ensure residents could easily understand and act on notices about their potential refunds.
Additionally, we learned the importance of utilizing targeted social media outreach from senior officials announcing new interventions. We heard from filers that social media posts from Governor Polis helped build credibility when the mailers actually arrived
Perhaps most importantly, this work helped build a cross-functional foundation inside and across government. Policy, data, product, and design teams — spanning the DOR, the Governor’s Office, and other partners like Gary Community Ventures and TaxHawk — began working together in new ways, setting a precedent for interdisciplinary collaboration. This approach not only made the discovery process possible but also fostered a cultural shift toward more resident-centered tax administration, with shared ownership of the mission to help Coloradans access money they are owed.
You can read our full results in our summary report here.
