Why it matters
The plan cuts the state income tax bill for about 97% of taxpayers, raises it only above $500,000 in taxable income, and still allows up to $2.7 billion in the first full year, while leaving tax refunds under the taxpayer rule unchanged.
Flat income tax rate gives way to six brackets
Amendment 87 would replace Colorado's flat 4.4% state income tax with six brackets ranging from 3.7% to 8.4%, starting in tax year 2027, if voters approve the measure on Tuesday.
For families in Fremont, Custer and Chaffee counties, the change is a move from one rate for everyone to rates that vary across six brackets. The Tri County Regional News report on the vote says Tuesday's graduated income tax vote would cut most local families' state income taxes.
The proposed range runs 0.7 point below the current flat rate at the bottom and four points above it at the top. The new brackets would start in tax year 2027, leaving the current 4.4% rate in place until the change takes effect.
Only top earners face a higher income tax bill
Only taxpayers with taxable income above $500,000 would pay more under Amendment 87, and the state Blue Book estimates about 97% of Colorado taxpayers would pay less.
That split puts the higher bill on taxpayers whose taxable income is above $500,000, while the Blue Book estimate points the other way for everyone else. About 97% of Colorado taxpayers would pay less, according to that estimate.
The amount at stake for the state is larger than the first estimate. The ballot question allows up to $2.7 billion in the first full year, while the Blue Book estimates about $1.97 billion in budget year 2027-28, growing later.
Tax refunds stay unchanged as top leaders oppose plan
Amendment 87 does not change refunds under the Taxpayer's Bill of Rights, the state rule that limits how much tax money Colorado can keep and sends the rest back as refunds, according to the Blue Book.
That distinction matters because Proposition NN is a separate measure, not part of Amendment 87. Readers tracking the $817 million cut in refunds under a November ballot plan should keep the two questions separate, because this income tax plan leaves refunds unchanged, according to the Blue Book.
Opposition reaches across party lines. The sitting Democratic governor, the Democratic nominee to succeed him and the Republican nominee all oppose Amendment 87, though for different reasons.
Legal text ties property values to an inflation cap
The legal text defines inflation as the annual percentage change in the Consumer Price Index for Denver-Aurora-Lakewood from the United States Bureau of Labor Statistics, or its successor index, limited to 3%.
Under the legal text, a property's actual value cannot be increased annually by more than inflation, limited to 3%. Lawmakers may decide by bill each year to allow an increase of up to 4% instead if inflation rises above 5%, a step the text ties to giving school districts, fire districts and other local districts more revenue in years of historically high inflation.
The text also ties value to a sale. A sale means a transfer of more than 50% ownership of real property, and a property's actual value equals the amount of its most recent sale unless the property is substantially improved.
When a property is substantially improved, the text calls for a new appraisal using the cost approach, the market approach and the income approach, but not the property's highest and best use. Voters make the call Tuesday, with the new income tax brackets set to start in tax year 2027.
Sources
Amendment 87 and Inflation: What It Means for Colorado Families
