Colorado state tax policy is undergoing some significant changes. But, nearly 24 hours after polls closed for the 2026 mid-term election, it remains too early to say whether the most significant proposed change is going into effect.
Voters on Tuesday approved a measure raising the Taxpayer’s Bill of Rights cap on state revenues by some $4.6 billion, and they also approved a tax hike in 32 Front Range municipalities and metropolitan districts to fund the Front Range Passenger Rail. But as of 5 p.m. Wednesday, the vote on Amendment 87 remained too close to call, with “yes” votes for the ballot initiative outpacing “no” votes by about 25,000 with some 321,000 ballots remaining to be counted.
Amendment 87 seeks to scrap the state’s flat 4.4% income-tax rate for businesses and individuals and replace it with a graduated system in which companies and people who earn more money pay substantially higher tax rates. While the proposal reduces tax rates for those making $100,000 or less and keeps them static for those earning $100,001 to $500,000, it raises the rates for earnings for those making more than $500,000, up to a top rate of 8.4% for earnings of $1 million or more.
In the leadup to Tuesday’s election, proponents noted that 97% of Colorado residents and 95% of businesses would get a tax break under the proposal, which seeks to raise more than $2 billion more annually for K-12 education, health care and childcare. Business leaders, meanwhile, argued that Colorado’s flat tax rate was one of its last remaining advantages in pursuing business expansions and relocations and that company leaders would choose to slow growth or expand elsewhere if Amendment 87 passed.
Businesses waiting on results with baited breath
Doug Friednash, cochairman of Brownstein Hyatt Farber Schreck’s national government relations practice who served as chief of staff for former Gov. John Hickenlooper, said Wednesday that business leaders are watching the results very nervously. With the state growing its regulations significantly since 2019 and its business environment having fallen to the middle of the national pack in the past year, he is concerned that some employers will give up and move out of state if Amendment 87 passes.
“Good jobs and good wages don’t fall off of trees,” Friednash said. “You can’t kill our job growth. You can’t discourage job growth here … It seems to be a very good thing for Utah.”
Amendment 87 proponents disagree, arguing particularly that the increase in revenue will go to things that employers want to see in site selection, including high-quality schools and availability of reasonably priced childcare. While the campaign arm for the measure, Protect Colorado’s Future, didn’t put out any statements about the vote-counting on Wednesday, supporters online remained cautiously optimistic that the initiative will pass.
The vote count was 1,153,585 (50.55%) for Amendment 87 and 1,128,675 (49.45%) against as of publication time Wednesday. Meanwhile, an update just after 5p.m. from the Colorado Secretary of State’s Office indicated it had tabulated 2,350,793 of the 2,671,424 ballots that had been returned by end of day Tuesday — a figure representing 88% of all ballots cast.
Other states capped tax rates or rejected tax hikes
Among the areas where numerous ballots remain uncounted were traditionally tax-averse El Paso County, which had yet to tabulate about 47,000 of the ballots that the Secretary of State’s Office had reported being retuned there. But Denver County, which has been much more favorable to tax hikes, also had about 55,000 ballots that remain to be counted, according to the same figures.
If Colorado approves the $2 billion tax hike, it will stand in contrast to tax votes taken in other states Tuesday. For example, California’s proposed wealth tax — a one-time 5% tax on residents and trusts with assets over $1 billion — was failing by about 11 points late Wednesday afternoon, according to Yahoo Finance. And North Carolina residents voted to cap income-tax rates at 3.5%, just above the 3.49% rate planned for 2027.
Colorado voters also had the opportunity to cap income-tax rates at their current 4.4% level. However, Proposition 136, which proposed that cap, was failing by a margin of 52.5% against to 47.5% for the initiative.
Train tax, TABOR cap hike approved
State voters did make two other substantial changes to tax policy on Tuesday.
By a 12-point margin, they approved Proposition NN, which raises the Taxpayer’s Bill of Rights revenue limits for state government by the amount allocated each year to K-12 education — about $4.6 billion for the next fiscal year. Analysts expect it will generate $450 million to $550 million annually for education-related expenses. But it also will allow legislators to raise fees that contribute to the general fund, as doing so under the previous TABOR cap would have limited revenue for government and boosted the TABOR refunds going to voters in the form of tax returns.
Voters in 31 municipalities and one metropolitan district also approved, by a similar 12-point margin, Ballot Issue 7A, which raises sales taxes in those areas by 0.33 cents to fund the Front Range Passenger Rail line from Fort Collins to Pueblo. The intercity train running along the Interstate 25 corridor is set to begin limited operations from Denver to Fort Collins with three trips a day in 2029, and the $295 million annually that 7A will raise will help to grow the line south with 10 trips a day by 2031.