Coloradan taxpayers can each expect an extra $800 back when they file their state income tax returns early next year, state officials said Wednesday.
The refund is based on revenue collected above the cap set by the Taxpayer’s Bill of Rights, or TABOR, the state constitutional amendment passed by voters in 1992 to limit the growth of government. Unlike in 2022, when taxpayers received a check in the mail, people will collect the money through their tax filings in the form of higher refunds or reduced tax bills.
Overall, the state is refunding nearly $3.7 billion in over-collected revenue. The $800 per taxpayer is slightly lower than prior projections as a result of legislation passed during the General Assembly’s special session in November, when lawmakers also voted to give out flat TABOR refunds to everyone. The session was called to provide relief on property taxes and housing costs.
Typically, the state sets varying TABOR rebate amounts based on income, with higher-income households receiving higher shares because they paid more taxes.
Equal refunds will be higher for Coloradans who report incomes of less than $104,000 — an estimated 62% of filers — than those they’d receive under the six-tier system. They will net about $250 more for households with less than $51,000 in income and about $75 more for those reporting $51,000 to $104,000 in income.
An analysis by nonpartisan legislative staff found the flat refunds would disproportionately benefit women, people with a disability, Hispanic and Latino Coloradans, Black Coloradans and people of another race or who are multiracial, since those groups are more likely to live in lower-income households.
During the special session, lawmakers also increased the Earned Income Tax Credit that low-income households receive. The state matches up to 50% of the federal tax credit, the amount of which depends on a person’s income. Legislators diverted about $182.5 million from TABOR refunds to pay for that.
State economists for the legislative branch and the governor’s office predict TABOR refunds will continue for the next several fiscal years, though not at such historic amounts.
The legislative economists forecast a surplus of about $1.8 billion in the current fiscal year, which ends June 30, and in the 2024-25 fiscal year. The 2025-26 fiscal year is forecast to have a $2 billion surplus.
Economists for the governor’s office expect lower surpluses — about $1.65 billion, $1.3 billion and $1.4 billion, respectively.
Surpluses are determined by the TABOR revenue cap, which is set using a formula based on population growth plus inflation.
Overall, state economists said Colorado’s economy and the national outlook as a whole were on firmer footing than just a few months ago, but that uncertainty always exists.
“Compared to where we were a year ago, I’d argue we’re living in an upside scenario,” said Bryce Cooke, deputy director for the Colorado Office of State Planning and Budgeting.
But state economists warned that ongoing international uncertainty, persistent inflation and high interest rates could dampen future growth.
“The global economy is pretty fragile right now,” Greg Sobetski, chief economist for the Legislative Council Staff, told the legislature’s Joint Budget Committee Wednesday. “The U.S. economy is strong relative to what’s going on around the world at the moment, (though) the U.S. economy remains susceptible to shocks that originate from elsewhere.”
