Colorado voters have approved Amendment 87, which raises income taxes on households and corporations earning more than about $500,000 to generate roughly $2 billion a year for social services. The vote returns Colorado to a graduated income tax for the first time since 1986.
The amendment led with 51.4% of the vote to 48.6% on Friday morning. Voters also rejected Proposition 136, a conservative countermeasure that would have capped the state income tax at 4.4%, and passed Proposition NN, which lets the state spend more on education, by more than 11 percentage points.
The new system replaces the current 4.4% flat rate with six brackets: 3.7% on income up to $25,000, 4.2% up to $100,000, 4.4% up to $500,000, 7.4% up to $750,000, 7.9% up to $1 million and 8.4% above that.
A household with $75,000 in taxable income will pay $275 less a year. A family making $550,000 will pay $1,175 more, and someone earning $10 million will owe an additional $376,000. The same rates apply to business profits.
The new rates cover tax years beginning on or after Jan. 1, 2027. The revenue is directed to health care, public schools and child care, none of it will be refunded to taxpayers, and lawmakers will have broad say over how it is distributed.
The money could reverse a grim state budget outlook. The legislature's Joint Budget Committee returns next week to draft a spending plan that will not need the additional $1.6 billion in cuts state fiscal analysts had feared.
A costly fight
Business groups and conservatives fought the measure, arguing it would push up consumer prices and squeeze businesses during a hard economic stretch. Colorado Chamber of Commerce President and CEO Loren Furman said Friday that the measure would penalize small business owners for their success.
These tax increases will force businesses to make difficult decisions about wages, hiring and future investments.
Loren Furman, president and CEO, Colorado Chamber of Commerce
Some leading Democrats also opposed it. Gov. Jared Polis said it would harm the economy, and Attorney General Phil Weiser, his successor, said it did not tell voters clearly enough how the money would be spent.
Opponents far outspent supporters. Don't Price Us Out raised more than $4 million, including $1.7 million from the American Prosperity Coalition; Keep Colorado Affordable raised about $3 million; and Brighter Colorado raised about $6.1 million. The Protect Colorado's Future Coalition, the main committee backing the amendment, raised about $2.7 million.
Some opposition ads falsely claimed the measure would raise taxes on Social Security and veterans' benefits. It will not.
Fiscal conservatives argued the state had no need for more revenue. Andrew Wilford of the National Taxpayers Union Foundation said Colorado has a spending problem, noting that inflation-adjusted per capita spending rose 31% over two decades.
What supporters want next
Chris deGruy Kennedy, co-chair of the Amendment 87 campaign and president of the Bell Policy Center, called the result the most significant change to Colorado fiscal policy in at least 20 years. He wants lawmakers to form interim committees to plan major investments, including a possible statewide child care program with tuition scaled to family income.
We went big on purpose because we believed a big solution was necessary.
Chris deGruy Kennedy, co-chair of the Amendment 87 campaign
Lisa Weil, executive director of Great Education Colorado, said schools have long been forced to choose between raising teacher pay and reducing class sizes because they could not afford both.
