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Colorado Governor introduces SB24-228, reducing income and sales tax rates to stop automatic yearly refunds for Taxpayer's Bill of Rights (TABOR) filing jointly, reducing refunds to high budget surplus years.

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1600 Stimulus Payment Claim: In Colorado, a new bill might change how people get their Taxpayer’s Bill of Rights (TABOR) refunds, which can currently be up to $1,600 for those filing jointly.

Governor Jared Polis and other lawmakers have introduced SB24-228, which plans to adjust the state’s financial policies by reducing income and sales tax rates instead of giving automatic yearly refunds.

Under the new legislation, automatic TABOR refunds would stop, and these refunds would only be given in years when Colorado’s budget surplus is very high.

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Specifically, if the surplus goes over $1.5 billion, the income tax rate would drop by 0.15%, linking tax cuts to the state’s revenue.

Governor Jared Polis explained, “The income tax rate will be reduced from 4.4% to 4.25% for the 2024 tax year, as long as our economy stays strong, making Colorado more competitive.”

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Currently, TABOR refunds are sent to Colorado residents who have lived in the state for more than a year, filed their taxes on time, and don’t have unpaid state taxes or significant jail time from the previous fiscal year.

This system was created to return extra revenue to taxpayers, keeping government growth in check with voter-approved revenue limits.

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However, if SB24-228 passes, from 2025 to 2035, any cuts to income tax rates would depend on revenue exceeding these TABOR limits after accounting for certain exemptions, like those for senior homeowners.

Also, when the surplus reaches $1.5 billion, not only could income taxes go down, but sales and use tax rates could also decrease by 0.13%.

This change is part of a larger plan to use state surpluses to help residents during ongoing economic challenges like inflation staying above 3%t.

It aligns with a trend in several states looking at how to best use federal pandemic relief funds and extra tax revenues to provide financial support to their citizens.

Eduvast Desk