Developing outreach strategies for identifying and enrolling residents eligible for tax credits in Colorado
State of Colorado Department of Revenue
November 2024 - March 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 help these families, over 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 legislation requiring the state to assist up to 100,000 residents in filing or amending tax returns to receive the EITC and CTC they are owed. This legislation is exciting, and presents a novel opportunity to implement efforts boosting uptake of the EITC and CTC, particularly amongst non-filers. The implementation, however, is a wide-open space to operate in. In partnership with the Colorado Governor’s Office, the Department of Revenue, and Colorado Department of Public Health and Environment, the New Practice Lab is working to determine the specifics within the state law, including answering questions around how the state will identify potential non-filers, and what methods they will use to reach out to them. Furthermore, once these non-filers have been contacted, what can the state do to more easily facilitate tax filing for these Coloradans?
Our Approach
The New Practice Lab and the Colorado State Government worked together from November 2024 - March 2025 to develop an implementation plan for the state to help residents claim federal and state tax credits in Summer 2025. Our project had two phases, which built on the library of knowledge the Lab has established on aiding non-filers:
The first phase of the project was working with the state to craft communications (letters) going out in the 2025 filing season to non-filers alerting them that they may have tax credits they’re eligible for. Leveraging the Non-filer Landscape Research project, as well as user-research with Colorado residents, our team worked with Colorado to shape this year’s outreach. We are also supporting them in testing the impact of the outreach, measuring how many people filed within a month of receiving a letter, or after three, or six months. What communications worked best to get people to file?
The intent was to have three groups - one control that did not receive any communication, and two test outreach groups. We designed two outreach letters - both let individuals know that they may be eligible for tax refunds form the State. One directed recipients to an organization that provided support and resources for filing taxes (Get Ahead Colorado), the second provided a code for individuals to complete their state and federal taxes for free using an online tax software tool. Each of the three groups had approximately 23,500 people in it, with a total of 47,000 mailers sent out.
| Control | Tax help/Get Ahead Colorado | Free tax software/FreeTaxUSA | |
|---|---|---|---|
| # Recipients | ~23,500 | ~23,500 | ~23,500 |
Samples of the two letters designed for the mailer. Left: the mailer designed to direct individuals to GetAheadColorado.org. Right: the mailer designed to direct individuals to FreeTaxUS.com/CO
Unfortunately, an error occurred with the mailer printing (executed by the printing service that agencies are required to use). The letter directing people to the tax software was sent to both test groups and the actual code to enable free filing was not printed on the letter. Therefore, we are unable to test the original questions we set out to explore and expect significantly lower impact than hoped for. However, we may still be able to observe the effect of a notification letter on tax filing.
An initial analysis 2 weeks after the letters were sent indicated that 127 families filed federal and state taxes through the tax software. The State will run an analysis in August 2025 about the overall impact of the mailer. The Department of Revenue is also tabulating letters that were returned (because of incorrect addresses, which is expected) to understand any trends in returned mail (given the various address data sources we used). The printing service has provided a credit for the previous mailer, and so we hope to re-run a letter experiment in later 2025.
ORIGINAL OBJECTIVE
Understand best language approaches to take with non-filers to make them aware of tax credit opportunities for which they may be eligible and motivate them to file
WHAT WE DID
We designed two communications to Colorado residents raising awareness of tax filing and providing support for tax filing.
ORIGINAL OBJECTIVE
Develop strategies to identify residents likely eligible for tax credits who aren’t receiving them.
WHAT WE DID
We supported Colorado in analyzing data from the Department of Revenue to identify households with the highest likelihood of being eligible for tax credits and able to be reached - based on their income, previous years filing and credit access, most up to date address information, etc.
ORIGINAL OBJECTIVE
Improve the process of filing for habitual non-filers
WHAT WE DID
We identified two high potential tax filing resources - access to free tax software and referral to tax filing help - to connect Colorado families to in the outreach letters, and set up an A/B test to measure the impact for each group.
In the second phase of the project beginning in May, the Lab will leverage DOR internal data to understand what data and processes can be used to identify individuals owed tax credits and potentially pre-populate a tax form, making the process of filing state returns as simple for the end-user as possible.
What We Learned
Leveraging Department of Revenue (DOR) data to identify families potentially eligible for tax credits but not receiving them is possible, but requires making a number of assumptions that can feel risky for DORs — such as assuming a single W2 is someone’s full income profile and relying on one or two year-old address for a population that can be quite mobile.
Even so, outreach is possible and can be valuable. States can determine how their confidence in the outreach population and tax filing information informs the outreach tools they use to increase filing, from a generic letter encouraging filing with no personalized information on the one hand, to a fully pre-populated return or even directly mailing a refund check on the other.
Some of the most impactful early work with state governments involves shifting how Departments of Revenue view tax filing for low income individuals — not as a compliance obligation that brings in revenue, but about getting it right from a more holistic perspective. DORs can make sure people pay or get what they’re owed, demonstrating that the government can work for the people it serves. As tax credits increasingly become one of the most effective tools to deliver benefits to vulnerable families, this shift in mindset opens the door to new strategies for helping families thrive.
Next Steps
We are continuing to support Colorado to meet the legislative mandate to reach individuals who have missed out on the EITC or CTC through fall 2025.
This project has also built on the New Practice Lab’s learnings about how to identify and assist inconsistent filers nationally, informing our future efforts to support families in accessing critical benefits and services they are eligible for.
