Colorado Voters to Decide on New Graduated Income Tax
The proposed Amendment 87 could shift tax rates for households earning more or less than $500,000 starting in 2027.
Updated on Oct. 24, 2026 in Taxes
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Colorado voters will decide on November 3, 2026, whether to replace the state's 4.4% flat income tax with a new graduated system under Amendment 87. This measure would lower taxes for those earning under $500,000 while increasing rates for higher earners.
Why it matters
The proposal aims to address recent $1 billion budget shortfalls by generating an estimated $2 billion annually for education, childcare, and healthcare. Lawmakers and residents are weighing this against arguments that higher tax rates could push businesses and residents to leave the state.
Amendment 87 would establish six tax brackets ranging from 3.7% to 8.4%, impacting approximately 100,000 taxpayers who earn more than $500,000. This follows Massachusetts' 2022 move to a 9% tax rate on earnings over $1 million, which generated $3 billion in revenue last fiscal year.
The players
Colorado Voters
Residents of the state who will cast ballots on November 3 to determine the future of the income tax system.
The details
If approved, the measure would shift Colorado's tax structure from a flat 4.4% rate to a graduated system for tax years beginning January 1, 2027. Brackets would be calculated based on federal taxable income under Section 63 of the Internal Revenue Code. The plan specifically targets individual and business earners above the $500,000 threshold for tax hikes to fund public services.
Timeline
Colorado voters will vote on Amendment 87 on November 3, 2026.
New tax brackets would apply for tax years beginning on or after January 1, 2027.
Money Landscape
The proposal marks a shift toward graduated taxation, mirroring the approach adopted by Massachusetts in 2022. This comes as Colorado seeks to resolve persistent budget shortfalls that have exceeded $1 billion over the last two years.
Households earning less than $500,000 would see tax decreases, while those earning above that threshold face a tiered rate increase. Taxpayers should consult with a qualified tax professional to evaluate how potential changes to federal taxable income calculations under this proposal could affect their specific financial planning.
The takeaway
The proposed tax shift aims to generate $2 billion for public services by restructuring brackets for high earners. Residents should monitor the official ballot language and consider reviewing their projected federal taxable income in anticipation of potential tax law changes taking effect in 2027.
What happens next
Voters will head to the polls on November 3, 2026, to decide the outcome of Amendment 87.
Further reading
For more background on state income tax policies, visit our Taxes section.
Source note: This article includes information reported by The Prowers Journal.
Live Poll
Will increasing taxes on high earners benefit public services more than it risks economic flight?
