The Senate on Monday gave initial and final approval to some of the most significant policy proposals still sitting on the General Assembly’s calendar in its waning days.

Among them is House Bill 1311, which would provide an income tax credit for families with children under 16 years of age and adjusted gross incomes of $75,000 for single filers and up to $85,000 for joint filers.

Surplus from the Taxpayer’s Bill of Rights remains to be the primary funding source for the measure, with $327 million expected to be paid out in 2023-24, $684 million in 2024-25 and $739 million in 2025-26.

The Senate gave HB 1311 preliminary approval Monday, and it is up for its final vote Tuesday, after which it will head back to the House for review of amendments.

A bill setting up a new TABOR refund mechanism and providing an income tax rate cut also won unanimous and final approval on Monday, but its timeline is considerably tighter.

Senate Bill 228 won unanimous votes from the Senate Finance and Senate Appropriations committees late last week. The bill is now in the House.

The bipartisan measure brought together Republican lawmakers who have long advocated for income tax rate reductions and their Democratic colleagues who want the governor’s support for bills that use the TABOR surplus to pay for workforce and child poverty issues.

TABOR refunds are paid out in several ways, depending on how much is available. The first refund mechanism is a homestead property tax exemption available to seniors and disabled veterans who have owned their homes for a decade or more. The second is a temporary income tax rate reduction, although it’s never been applied since it was under a 2005 law to reduce the income tax rate to 4.5%.

The state’s current income tax rate, the result of reductions approved by voters, is 4.4%.

The third is a six-tiered sales tax refund based on income and applied to income tax returns.

The bill says that when there’s a TABOR surplus — when revenue exceeds the amount the state is allowed to spend — the state will reactivate the income tax rate reduction between 2025 and 2035, reducing it to 4.25%.

That’s projected to happen for the 2025 tax filing.

After the 2025 tax year, if the remaining amount of the TABOR surplus is more than what’s paid out for the homestead exemptions, another income tax rate reduction would be applied, tied to the amount of revenue available, ranging from 0.04% to 0.15%.

The measure repeals July 1, 2035.

Meanwhile, a wholly new refund mechanism would be applied to the sales tax refund and will be in effect from July 1, 2024, through July 1, 2034. If the state holds at least $1.5 billion in its TABOR surplus, as certified each September, and the surplus exceeds both the amount paid out in the homestead exemption and the temporary income tax rate reduction, the state sales tax would be reduced from 2.9% to 2.77% beginning with the following January and for the entire year.

The fiscal analysis for SB 228 says it will tap the TABOR surplus to the tune of $466.7 million in 2024-25 and about $1.4 billion in 2025-26.