Colorado · 2027 and beyond
Colorado changes already enacted for 2027
A short page on purpose. It lists only what is already law for Colorado tax year 2027 and later, explains what the November 3 ballot could change, and says why the list will grow before that return is filed.
Tax year 2027 is the return filed in early 2028. Some of what will be on it is already written into law with a start or stop date, and those items are listed here. Everything else is a proposal, a forecast or a rumor. Colorado’s General Assembly meets from January to May every year and changes the income tax almost every session, so this list will be longer by the time the 2027 return exists.
Already law for 2027
A new family credit, funded by taxing software. HB26-1223. Starting January 1, 2027, downloadable software and software subscriptions become subject to sales tax, and the revenue funds a new refundable credit for the same families who qualify for the family affordability credit. The amount is set each year to match the money raised; early estimates are around $260 per child under 6 and $195 per child 6 to 16, first claimed on 2027 returns.
The EV credit comes back up. HB26-1289 removes the revenue trigger and sets the credit at $2,000 for 2027 and $1,000 for 2028, with the extra $2,500 for vehicles under $40,000 MSRP and no credit above $50,000 MSRP. A buyer who can wait from 2026 to January 2027 gains $1,250.
A bigger wildfire mitigation credit, 2027 through 2030. Up to $2,000, refundable, with the income limit raised to $300,000. Delayed one year from the original proposal.
A scholarship tax credit, from 2027. The federal law created a new tax credit of up to $1,700, dollar for dollar, for gifts to approved scholarship organizations, beginning in 2027. States have to opt in, and Colorado has.
The portable senior property tax exemption ends after 2026. The temporary version for people 65 and older who moved and could carry the exemption to a new home was written to expire after 2026. The ordinary exemption, half of the first $200,000 of a home’s value after ten years of ownership, continues.
The military retirement subtraction runs through 2028. Military retirees under 55 keep the $15,000 subtraction for 2027 and 2028 unless it is extended.
EITC age limit removed in 2028. Workers over the federal age cap will qualify for the Colorado EITC starting tax year 2028.
The overtime addback and the $300,000 rule continue. Neither HB25-1296, which adds the federal overtime deduction back to Colorado income, nor Proposition MM, which cut the deduction allowance above $300,000 of AGI to $1,000 and $2,000, carries an end date (verify). Both apply to 2027 as they do to 2026, unless the pending TABOR lawsuit on the overtime addback succeeds.
TABOR “over-refund” recovery. HB26-1419. Because the 2024–25 refunds were calculated before the federal law reduced state revenue, the state will recover the overpayment by reducing future refund obligations, up to half per year starting in 2026–27. Expect a legal challenge, and expect any 2027 TABOR refund to be smaller than the surplus alone would suggest.
Business changes in 2027. An addback of gains deferred into non-Colorado opportunity funds; an elective “water’s edge” combined return for corporations; enterprise zone credit limits.
| Item | 2026 | 2027 | Status |
|---|---|---|---|
| Income tax rate | 4.40% | 4.40% unless Amendment 87 passes | Ballot, Nov 3 |
| EV credit | $750 | $2,000 | Law |
| Software-funded family credit | — | about $260 / $195 per child | Law; amount set yearly |
| Wildfire mitigation credit | up to $1,000 | up to $2,000, refundable | Law |
| Federal scholarship credit | — | up to $1,700 | Law; Colorado opted in |
| Portable senior property exemption | Available | Ends | Law |
| Overtime addback; $300,000 allowance $1,000/$2,000 | In force | In force | Law; lawsuit pending on overtime |
| TABOR refund | None | Forecast: some, reduced by HB26-1419 | Forecast, not law |
| Family affordability credit | Off | Depends on the surplus | Forecast, not law |
The federal clock
Because Colorado starts from federal taxable income, federal expirations land here too. The deductions for tips, car loan interest and the $6,000 senior deduction end after 2028, and each currently reduces Colorado tax. When they go, Colorado income goes up with no action by the state. The 2026 federal brackets, standard deduction and child credit are permanent and continue to flow through.
On the November 3, 2026 ballot
None of this is law. Two of these measures contradict each other, and the Blue Book says it is not clear how a conflict would be resolved if both pass.
Amendment 87: a graduated income tax. Would replace the 4.40% flat tax with six brackets from 3.7% to 8.4%, starting tax year 2027, and remove TABOR’s single-rate requirement. Most filers with taxable income under $500,000 would see a cut of up to a few hundred dollars; income above $500,000 would be taxed at higher rates, and above $1 million at 8.4%. Roughly $2 billion a year for schools, health care and early childhood. It does not change the subtractions or credits.
Proposition 136: cap the rate at 4.4%. A statutory cap on the individual and corporate rate. By itself it changes nothing; it exists to block Amendment 87. If both pass, the measure with more votes is expected to prevail, but that is not settled.
Proposition NN: keep more revenue for K–12. Would raise the TABOR cap so the state keeps roughly $500 million more in the first year for schools. The trade-off is smaller or no TABOR refunds in surplus years.
The outcome of each (verify after November 3) will be posted on the updates page the week after the election, with what it means for 2027 withholding and estimated payments.
Worked example: what Amendment 87 would mean, roughly
Illustrative only. The exact bracket boundaries are in the Blue Book; the figures below use the measure’s stated outcomes rather than a line-by-line computation.
| Colorado taxable income | Flat 4.40% | Under Amendment 87 | Change |
|---|---|---|---|
| $60,000 (a typical household) | $2,640 | somewhat less | a cut of up to a few hundred dollars |
| $400,000 | $17,600 | about the same or slightly less | near zero |
| $1,500,000 | $66,000 | materially more; the top $500,000 at 8.4% | an increase in the tens of thousands |
Withholding tables and estimated payments would change for everyone in January 2027 if it passes, since Colorado’s withholding is built around the single rate.
What did not pass in 2026
Bills to decouple Colorado from the federal bonus depreciation and R&D expensing rules (killed after a veto threat), to cap CEO pay deductions, and to sunset the overtime addback after 2026 (SB26-056). None are law.
How to check
The Colorado Department of Revenue publishes the current rules, forms, and a running list of legislative changes at tax.colorado.gov. The income tax booklet and the DR 0104AD instructions for each year are the authoritative versions of the subtractions and credits, and they are updated after each session. A preparer who works with Colorado returns year-round will have the session’s changes before the forms do; ask what changed before next year’s return is started, not after.
Behind the scenes
Each summer a preparer reads the Department of Revenue’s list of enacted bills and the revenue forecast together, because the two decide different things. The bills say which credits and subtractions exist; the forecast says which of the revenue-triggered ones will actually be on next year’s return. Then every client file with a Colorado credit on it is flagged for recheck in January, before the first return is filed, so last year’s numbers do not quietly roll forward.
What to bring your preparer, for 2027 planning
- Nothing yet for the 2027 return itself; it does not exist until the 2027 session ends
- If you are considering an EV: whether the purchase can wait until January 2027
- If you give to scholarship organizations: which ones, so the new federal credit can be checked once the approved list is published
- If you moved and carried the senior property exemption: the county’s paperwork, since the portable version ends
- After November 3: a note to revisit withholding and estimated payments if Amendment 87 passed
Questions people ask
If Amendment 87 passes, does my 2026 return change?
No. It starts with tax year 2027. The return filed in early 2027 uses the 4.40% flat rate.
Will there be a TABOR refund on the 2027 return?
The September 2026 forecast expects a surplus for 2026–27, which would mean a refund, but HB26-1419 lets the state recover earlier over-refunds from it, and Proposition NN would reduce it further. Nothing is certain until the Controller certifies the year in September 2027.
Should I wait until 2027 to buy an EV?
For the Colorado credit, yes: $2,000 instead of $750, and $4,500 instead of $3,250 for a vehicle under $40,000 MSRP. There is no federal credit either year.
Is the family affordability credit coming back?
Only if the surplus trigger fires, which depends on the forecast. The new software-funded credit is separate and smaller, and does not depend on a surplus.
Check back after November 3, and again in May
The election decides the rate; the legislative session that opens in January decides nearly everything else about the 2027 return. The updates page will carry both.