Colorado taxpayers are set to receive an $800 refund on their state income taxes due to revenue exceeding the cap established by the Taxpayer’s Bill of Rights (TABOR), a constitutional amendment implemented in 1992.
(Photo: USA Today)
$3.7 Billion Tax Rebate Integrated into Filings, Favors Lower-Income Earners
This rebate, totaling nearly $3.7 billion in over-collected revenue, will be incorporated into taxpayers’ filings rather than distributed as checks, differing from the process in 2022. Legislative adjustments during a special session in November aimed to provide property tax and housing cost relief, influencing the $800-per-taxpayer figure.
Traditionally, TABOR rebates vary based on income, with higher-income households receiving larger shares. However, recent legislation introduced flat TABOR refunds for everyone. Notably, equal refunds will favor Coloradans reporting incomes below $104,000, particularly benefiting an estimated 62% of filers.
Analysis by nonpartisan legislative staff indicates that these flat refunds will disproportionately benefit women, people with disabilities, Hispanic and Latino Coloradans, Black Coloradans, and individuals of other racial backgrounds, residing in lower-income households.
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Tax Refunds and Increased Tax Credits
In addition to the refunds, lawmakers during the special session increased the Earned Income Tax Credit for low-income households. The state utilized about $182.5 million from TABOR refunds to fund this credit. State economists predict ongoing TABOR refunds for the next fiscal years, albeit not at historic levels. Forecasts indicate surpluses of approximately $1.8 billion in the current fiscal year, $2 billion in 2025-26, with variations between estimates from legislative economists and the governor’s office.
While the state’s economic outlook is currently positive, economists emphasize potential challenges, such as international uncertainty, persistent inflation, and high-interest rates, which may impact future growth. Despite uncertainties, Bryce Cooke, deputy director for the Colorado Office of State Planning and Budgeting, suggests the state is currently experiencing an “upside scenario” compared to a year ago.
However, ongoing global economic fragility and susceptibility to external shocks remain concerns, as highlighted by Greg Sobetski, chief economist for the Legislative Council Staff.
