A new legislative proposal in Colorado, Senate Bill 24-228 (SB24-228), could change how residents receive their Taxpayer’s Bill of Rights (TABOR) refunds. This bill, introduced by Governor Jared Polis and other lawmakers, seeks to reshape how the state handles surplus tax revenues, directly impacting taxpayers.
What Are TABOR Refunds?
Currently, under the TABOR law, Colorado is required to return excess tax revenue to its residents. This often comes as refunds, up to $1,600 for joint filers. The purpose of this law is to limit government spending and ensure any money collected above voter-approved limits is returned to the public.
To be eligible, Colorado residents must have lived in the state for at least a year and filed taxes on time. However, those with unpaid state tax debts or those who served significant jail time might not qualify for these refunds.
What Changes Are Proposed Under SB24-228?
The major change in SB24-228 is how refunds would be issued. Instead of automatic annual refunds, the bill suggests that refunds be distributed only when the state’s budget surplus exceeds $1.5 billion.
If this threshold is met, a 0.15% reduction in the state’s income tax rate would be applied. This means the income tax rate could drop from 4.4% to 4.25% starting in the 2024 tax year.
This change would tie tax reductions to surplus revenue, offering financial relief when the state’s economy is strong.
Potential Impact on Income and Sales Tax
SB24-228 doesn’t stop at income tax. The bill also proposes a 0.13% reduction in sales and use tax rates if the surplus surpasses $1.5 billion. This aims to offer broader financial relief to residents by lowering both income and sales tax rates, addressing economic challenges like inflation.
The Broader Financial Strategy
The shift in policy under SB24-228 is part of a trend where states rethink how to use surplus tax revenues. Rather than issuing refunds, supporters of the bill believe lowering tax rates is a more efficient way to utilize the surplus.
This approach could make Colorado more competitive, drawing in new businesses and residents. Governor Polis believes these proposed cuts will boost the state’s appeal while adhering to TABOR principles.
What Could This Mean for the Future?
If passed, SB24-228 would bring significant changes to how Colorado manages surplus revenue from 2025 to 2035. Residents may not receive direct refunds as they did before, but the state would offer consistent tax relief through lower tax rates.
The bill’s progression should be monitored by all Colorado taxpayers, as it will influence their future finances.
Senate Bill 24-228 is a significant proposal that could alter how Colorado handles its surplus revenues. While it aims to offer long-term tax relief, it may impact the direct refunds taxpayers currently enjoy.
As the debate over this bill continues, it’s essential for Colorado residents to stay informed about how these changes might affect their financial future.
1. What is the current TABOR refund process in Colorado?
The state returns excess revenue to taxpayers, offering refunds up to $1,600 for joint filers. The refund system limits government spending and ensures excess money is returned to the public.
2. Who is eligible for TABOR refunds?
Colorado residents who have lived in the state for at least a year and filed their taxes on time are typically eligible. Those with unpaid state tax debts or those who have served significant jail time may be disqualified.
3. What changes would SB24-228 bring to TABOR refunds?
Under SB24-228, refunds would only be given if the state’s budget surplus exceeds $1.5 billion. Instead of automatic refunds, a 0.15% reduction in the income tax rate would apply.
4. Will SB24-228 affect sales tax?
Yes, the bill proposes a 0.13% reduction in sales and use tax rates if the state’s surplus surpasses $1.5 billion, offering residents relief in both income and sales taxes.
5. How will SB24-228 impact Colorado’s future economy?
Supporters believe it will make Colorado more competitive by lowering tax rates, attracting new businesses and residents, while also adhering to TABOR principles.
