1600 Stimulus Payment: A proposed bill in Colorado would alter how citizens receive their refunds under the Taxpayer’s Bill of Rights (TABOR), which is currently capped at $1,600 for joint filers. Governor Jared Polis and other legislators introduced SB24-228, a bill that aims to alter the state’s financial policies by doing away with automatic yearly refunds and lowering the rates of income and sales taxes.
The new law would stop automatically disbursing TABOR refunds and limit the frequency of such payments to years in which Colorado has an exceptionally large budget surplus.
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In particular, the income tax rate would drop by 0.15% if the surplus exceeded $1.5 billion, thereby linking tax reductions to the state’s revenue collection.
“The income tax rate will be reduced from 4.4 to 4.25% [for tax year 2024], as long as our economy remains strong, and that will make Colorado more competitive,” Polis stated, according to Marca.
Returning excess revenue to taxpayers
As long as they haven’t had any significant jail time or unpaid state taxes from the previous fiscal year, Coloradans who have lived in the state for more than a year and have filed their taxes on time are currently eligible for TABOR refunds.
To ensure that voter-approved revenue limits limit government growth, this system was created to return excess revenue to taxpayers.
But if SB24-228 is approved, income tax rate reductions from 2025 to 2035 will only be possible if revenue surpasses these TABOR thresholds after taking into consideration specific exemptions, such as those for senior homeowners.
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If the surplus exceeds the $1.5 billion mark, income taxes and sales and use tax rates may both decrease by 0.13%.
This change is part of a larger plan to use state surpluses to help citizens deal with persistent economic issues, like inflation rates that stay above 3%.
It is a reflection of a movement in several states investigating the most effective ways to use surplus tax revenues and federal pandemic relief funds to assist their citizens financially.
