Denver, Colorado: Amendment 87 Passes, Ending the Flat Income Tax

Colorado voters have ended nearly four decades of flat income tax in the state. Amendment 87, which replaces the single rate with a graduated system of six brackets, led 51 percent to 49 percent in returns posted on the Secretary of State website as of 10:30 a.m. on Friday, November 6, according to the Fort Collins Coloradoan. Supporters declared victory a day earlier, and opponents conceded on Friday morning, the Coloradoan reported, citing the Colorado Sun.

The group behind the measure, Protect Colorado's Future, announced the presumed victory at a news conference at La Raza Park, north of downtown Denver, on Thursday afternoon. Colorado Public Radio reported that campaign leaders said about 90 percent of ballots had been counted late Thursday afternoon and the measure held a lead of more than 36,000 votes. At 12:30 p.m. on Thursday, the yes side led by 27,452 votes, just over one percentage point.

What changes for taxpayers

Colorado has taxed income at the same rate for nearly four decades. Under Amendment 87, the new system lowers taxes on the first $100,000 of taxable income for individuals and businesses, and raises rates on higher income. The measure needed only a simple majority to pass. State fiscal analysts set out six brackets in their review of the measure, starting at 3.70 percent on income up to $25,000 and rising to 8.40 percent on income above $1 million, with the dividing line for a higher bill falling near $500,000 a year for many households and businesses.

The new system is projected to bring in about $2 billion a year. That money can only be used for healthcare, K-12 public education and childcare. Supporters said the revenue would more than plug a projected budget hole. Earlier this week, Governor Jared Polis released his final budget and proposed $600 million in cuts to projected Medicaid spending, Colorado Public Radio reported.

Representative Lorena Garcia, a Democrat from Adams County and a member of the House Finance Committee, told Colorado Public Radio she thought lawmakers could start restoring some cuts in the session that begins in January. She said the state would be able to help close the childcare wait list and give more funding to schools.

A split among Democrats, and business opposition

The measure split Democrats. Incoming governor Phil Weiser and outgoing Governor Jared Polis both opposed it, as did former U.S. Senator Ken Salazar. Polis told Colorado Public Radio he was fine with what the measure does to individual taxes, but said doubling the rate for small and medium sized businesses would lead to unemployment and drive companies from Colorado.

The Colorado Chamber of Commerce, which opposed the proposal, put out a statement on Friday morning in response to the assumed passage. President and CEO Loren Furman said the chamber was incredibly disappointed that Amendment 87 had passed, and said the tax increases would force businesses to make hard decisions about wages, hiring and future investments.

A competing measure, Proposition 136, which would have capped the state income tax rate at 4.4 percent, appears on track to fail, Colorado Public Radio reported.

What happens next

The state Department of Revenue told Colorado Public Radio its taxation division will change income tax and withholding forms and update its processing systems, with most changes taking effect next spring in preparation for the 2027 tax year, to be filed in 2028. Taxpayers who make estimated payments should ask their tax advisers how the new rates affect them, the department said.