Colorado voters Approve Amendment 87 to change income tax calculation

Colorado voters Approve Amendment 87 to change income tax calculation

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Colorado Voters Approve Income Tax Overhaul

Colorado voters have approved Amendment 87, a measure that fundamentally alters how the state calculates income taxes. CBS News reported the passage of the initiative, which moves the state away from its requirement under the Taxpayer Bill of Rights (TABOR) that all net income be taxed at the same rate. By authorizing different tax rates based on income levels, the state has changed its fiscal policy standard.

The transition to a graduated income tax structure arrives with starkly different projections regarding its impact on the state’s economy. Proponents of the measure argue that it creates a fairer tax code by aligning rates with a taxpayer’s financial means, providing necessary funding for public services as the state faces budget shortfalls. Conversely, opponents claim Amendment 87 would be the biggest tax increase in state history, pointing to a state budget that has grown 72% over the last 10 years as taxes have climbed by nearly $20 billion.

Who Pays More and Who Sees Relief

The fiscal reality of Amendment 87 creates a distinct divide between high-earning taxpayers and the broader population. According to data from the Colorado Department of Revenue, 3% of individual taxpayers and 5% of businesses fall into the income category that will face higher rates. Those earning more than $500,000 annually will shoulder the increase, while state analysts estimate that individuals earning below $550,000 will see an annual tax cut ranging from $175 to $325.

The new tax brackets are structured as follows:

Colorado department of revenue tpi ma sample
Income Level New Tax Rate
$25,000 or less 3.7%
$25,001 to $100,000 4.2%
$100,001 to $500,000 4.4%
$500,001 to $750,000 7.4%
$750,001 to $1 million 7.9%
Above $1 million 8.4%

For those in the top income tiers, the financial impact is significant. Taxpayers earning above $550,000 are expected to see annual increases between $1,175 and $55,925. For the highest earners, the new 8.4% rate is nearly double the current rate.

Economic Stakes and Revenue Allocation

While supporters emphasize the potential for increased revenue, opponents raise concerns about the long-term economic climate. The revenue generated by these changes is strictly earmarked. This earmarking is designed to address budget shortfalls. Nonpartisan fiscal analysts indicate the measure would increase taxes by up to $2.7 billion the first full year. As the state prepares to adjust its tax collection systems, the long-term effects on business retention and state budget stability remain the primary points of contention between policymakers and economic observers.

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