Oct 17, 2022 - Politics

1-minute voter guide: Proposition 121 in Colorado

Illustration of a pair of scissors cutting a one hundred dollar bill

Illustration: Annelise Capossela/Axios

Colorado's income tax would drop again if voters approve Proposition 121 in November's election — lowering the rate to 4.4%

Be smart: The current personal and income tax rate is 4.55%.

Why it matters: If OK'd, Proposition 115 would be the second statewide state income tax reduction two elections, and a 5% decline since 2020.

  • Income tax is the leading source of discretionary spending in the $12 billion annual state general fund, most of which goes toward health care, education and corrections.

Flash back: Just a year ago, Colorado voters approved Proposition 116 to decrease the income tax from 4.63% to 4.55%.

By the numbers: This new ballot measure, initiated by fiscal conservatives who want to reduce the size of government, is estimated to reduce state tax revenue by $637.5 million in the current budget year and $412.6 million in the 2023-24 fiscal year, analysts predict.

  • The average tax cut is $119 for individuals, but varies by income. Those making $50,000 -$69,000 would save $63 a year, but those making $500,000-$1 million would hold onto $725 annually.

What they're saying: Right now, the state's tax revenue exceeds the limits in the Taxpayer's Bill of Rights, so income tax cuts and refunds are being issued. And any cuts, for now, wouldn't reduce the amount state lawmakers can spend in the budget process.

The other side: Tax refunds are not a given in future years, particularly with a recession possibly on the horizon.

  • Opponents also note that 75% of Colorado residents will receive a $63 benefit or less, while wealthier individuals will save more.
avatar

Get more local stories in your inbox with Axios Denver.

More Denver stories