Friday, September 29

The Crestone Eagle is a nonprofit monthly newspaper serving Crestone and the San Luis Valley

Significant tax savings for Colorado residents may be seen

The state of Colorado anticipates it will take in 11.4% more revenue this fiscal year (ending June 30) than anticipated, resulting in tax savings for many Colorado taxpayers. TABOR does not allow the State budget to grow unrestrained. In times of good economic health with increased revenues, the State government is required to refund to citizens.

Those savings would be split into three categories: a sales tax refund, a temporary cut to the State’s flat income tax rate (from 4.55% to 4.5%) through 2023, and reimbursements to local governments.

State economists attribute the increased revenue to better-than-expected income tax revenue and federal stimulus money.

“The actual economic results so far this year are well above expectations. As long as this year finishes out strong, there is some terrific news on the horizon,” Gov. Jared Polis said. “While some Coloradans are still facing challenges created by the global pandemic, today’s figures show that the Colorado comeback is well underway. I look forward to formally announcing the expected tax cut and tax refunds this fall.”

TABOR prevents the legislature from raising taxes without voter approval. Some changes, though, are allowed without going to a vote.

Proponents of the tax changes say that Democrats and some Republicans in the legislature voted in some of the biggest adjustments of the tax code in Colorado history.

If signed into law, SB21-293 would drive down property assessment rates in 2022 and 2023 taxation years.  

The categories of property affected are:

• Single-family residences would be taxed on 6.9% of the assessed property value, down from the current 7.15%.

• Multi-family residential properties would be taxed on 6.8%, down from 7.15%.

• Agricultural property’s tax rate would drop to 26.4%, down from the current 29%.

• Property used to produce renewable energy would be taxed at the same as the agricultural property, also down from 29%.

After two years, the legislature could decide to continue with the lower assessment rates, or raise them back to the current levels.

Property owners could also defer an increase of more than 4% on their property tax bill, up to $10,000, on their primary residence. This would start in the 2023 tax year. The deferred balance would become a lien on the property collectible when the property is sold.

Colorado already allows seniors, active-duty military personnel and disabled veterans to defer all of their property tax payments, as long as they meet certain criteria.

HB21-1164 would allow school districts to restore mill levy rates to levels previously approved by voters.  In previous years, guidance from the Colorado Department of Education caused some districts to deflate their mill levies—guidance that since has been determined erroneous. 

Out of 179 school districts in Colorado, 127 would be affected by this legislation, should it be signed into law. The bill is expected to increase property tax revenues by $91.7 million in the 2021-22 fiscal year. That number increases to $145.5 million in the 2022-23 fiscal year.

Other tax changes affect wealthy Coloradans, tax loopholes for foreign tax havens, how insurance companies are taxed, and elimination of tax breaks for certain industries on business personal property tax.

As an added bonus, transportation fees, though not taxes, will increase costs on per gallon prices for gasoline and diesel; an added 27 cents on deliveries, including those from Amazon, FedEx and GrubHub; and a fee imposed per trip on Uber and Lyft.

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