A proposal that seeks to exempt toddler and baby products from the state sales tax narrowly passed its committee first hurdle on Monday.

House Bill 1027 proposes to exempt toddler and baby products, such as cribs, swings, clothes, and strollers, from the state sales tax of 2.9%. It would also create two two-week tax holidays for back to school products, including backpacks, school supplies, and computers, under a certain amount.

Supporters said the measure would provide relief to parents, while opponents expressed skepticism it would materially offer relief.     

A fiscal note said parents could save $980 each year from the tax exemption, which would decrease state revenue by $8 million annually. Meanwhile, the tax holiday would apply to, among other things, clothing and school bags for up to $100 per item and computers and accessories for up to $1,500 per item. The tax holiday would reduce state revenue by $9 million in 2025.          

Rep. Ty Winter, R- Trinidad, the bill’s sponsor, likened the bill to the 2022 law that created tax exemptions for essential hygiene products, such as incontinence diapers and period products. Winter said that, while traveling his district over the summer, he heard from multiple families struggling to afford products for their young children. 

“Right now is a hard time to raise kids in Colorado with inflation and everything else we’re facing,” he said. “I think this is a really good bill that transcends party lines. It’s something that’s going to help families, but it’s also in the spirit of a tax cut as well.”

Dr. Colleen Casper of the Colorado Nurses Association supported the bill and underscored the crucial role early childhood plays in human development. 

“Families’ ability to provide for their children is absolutely crucial to the early stages of child development,” she said. “HB 1027 offers a small but important financial break for parents to afford essential care and developmental products in recognition of the important resources required for healthy child development.”

Caroline Nutter of the Colorado Fiscal Institute opposed the measure, arguing it is inefficient.

“Removing 2.9 percent of the cost of these products is simply not enough to make them affordable for those who cannot afford them now,” she said. 

Nutter also said the bill lacks specificity. While there was an amendment made for the state auditor to measure the effectiveness of the tax breaks, there is no provision for a study to determine the appropriate income levels for eligibility.

As it stands, the exemption would be available to all parents. 

“Millionaire parents who can easily afford these products and their sales taxes get the same tax exemption as struggling parents,” Nutter said.

Insofar as the tax holiday, Nutter said statistics indicates big-brand stores often increase their prices during such periods, negating the bill’s intended benefits. 

The House Finance Committee approved the amended version of the bill, 6-5. It is next headed to to the Appropriations Committee.