COLORADO TEMPORARILY REDUCES TAX RATE

The state of Colorado has enacted legislation to temporarily reduce the state income tax rate for these applicable taxpayers: individuals, estates, trusts, and corporations – regardless of whether a corporation is foreign or domestic.  The tax rate will be reduced from 4.40% to 4.25% for the 2024 tax year.

What About Future Years?

Regarding the following tax years from 2025-2034, any future income tax rate reduction will de dependent on the TABOR surplus remaining after the 2024-2025 fiscal year and lead through the fiscal year of 2033-2034.  This will be calculated after local governments are reimbursed to exempt homestead property taxes.

What is TABOR?

The Taxpayer’s Bill of Rights (TABOR), an amendment in the Colorado State Constitution since 1992.  TABOR regulates the amount of revenue the state of Colorado can utilize.  This permits temporary tax rate deductions in works to refund state revenues that have exceeded legal spending limits.

What Tax Rate Deductions Can Taxpayers Expect From 2025-2034?

As noted above, tax rate reduction (at the state level) is dependent on remaining funds, from TABOR, per fiscal year.  According to Wolters Kluwer, the following reductions may apply:

TABOR Surplus Amount	Projected Tax Rate
$300 million or less	4.4 percent
$300M – $500M	4.36 percent
$500M – $600M	4.33 percent
$600M – $700M	4.31 percent
$700M – $800M	4.29 percent
$800M – $1B	4.28 percent
$1B – $1.5B	4.27 percent
Over $1.5B	4.25 percent

Tax rate reductions are not guaranteed and are determined on an annual basis.  Reach out to your trusted CPA to be notified of any rate reductions on your tax returns.  ATLAS CPAs & Advisors will help you stay up to date and ensure you are taking advantage of any applicable reductions on your tax return.