Colorado Voters Will Decide Tax Rate Cap in November 2026
The upcoming ballot initiative seeks to limit the state income tax at its current 4.4% rate.
Updated on Oct. 7, 2026 in Taxes
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Colorado voters will decide on Proposition 136 in November 2026, which would implement a 4.4% cap on both individual and corporate state income taxes. This measure serves as a counter-proposal to competing initiatives that would shift the state away from its current flat tax structure.
Why it matters
The outcome will determine whether Colorado maintains its flat tax system or moves toward a graduated model, which could alter the tax burden for higher-income households. This debate follows recent trends where the state has refunded $1.7 billion in excess revenue to taxpayers during the 2023-2024 fiscal year.
Colorado currently maintains a 4.4% flat income tax rate for all residents. With a median annual income of $86,056 in La Plata County, a family at that level currently pays approximately $3,786 in state income tax.
The players
Colorado Voters
The electorate responsible for approving or rejecting tax policy changes.
The details
Proposition 136 is designed to prevent lawmakers from raising the state income tax rate above the current 4.4% level. This ballot measure reacts to Amendment 87, which proposes higher taxes for those earning over $500,000 annually, and ballot initiative 195, which would transition Colorado to a graduated system. These proposals face limitations set by the Taxpayer Bill of Rights, which requires voter approval for tax increases and restricts state revenue to growth dictated by inflation and population.
Timeline
1992: The Taxpayer Bill of Rights was passed, limiting tax rate increases.
2023-2024 fiscal year: Colorado returned $1.7 billion in excess revenue to taxpayers.
November 2026: Colorado voters will cast ballots on Proposition 136.
Money Landscape
This proposal sits within the broader, decades-long debate in Colorado regarding the state's flat tax structure versus a return to graduated income tax systems. It marks a push to codify current rates against the framework set by the 1992 Taxpayer Bill of Rights.
Residents should review how their current income tax obligations align with both the existing 4.4% flat rate and the potential impact of proposed graduated tax initiatives. Consult with a qualified tax professional to evaluate how these long-term policy shifts could affect your personal tax strategy.
The takeaway
Colorado is at a crossroads between maintaining its flat tax system and potentially adopting a graduated structure for higher earners. Keep an eye on upcoming policy debates regarding these ballot initiatives as you plan your long-term tax obligations.
Further reading
For more background on state fiscal policy, visit Colorado Taxes.
Source note: This article includes information reported by Durango Herald.
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Do you support capping state income tax rates at a flat percentage for all earners?
