History of TABOR
The Taxpayer's Bill of Rights (TABOR) Amendment was approved by voters in 1992. This amendment to the Constitution of the State of Colorado limits the amount of revenue governments in the state can retain and spend, and it requires excess revenue to be refunded to taxpayers. TABOR also requires voter approval for any new taxes or higher tax rates. The state TABOR revenue limit is equal to the prior fiscal year's limit plus the rate of inflation and population growth in Colorado, or the current fiscal year's revenue, whichever is less. For more information about TABOR, visit the Legislative Council TABOR web page.
Ways the TABOR Surplus Can Be Refunded
When state revenue is above the TABOR limit, the surplus must be refunded to taxpayers in the following ways. For more information, see the Legislative Council Staff memorandum on the History of TABOR Refund Mechanisms.
- Local Government Property Tax Exemption Reimbursement
Senate Bill 17-267 mandates that the State of Colorado reimburse local governments for any property tax exemptions claimed by local seniors and disabled veterans. When there is surplus revenue above the TABOR limit, the Colorado Department of the Treasury must first use the surplus funds for this reimbursement. For more information, visit the TABOR Information for Local Governments web page.
- Temporary Income Tax Rate Reduction
If the TABOR surplus exceeds the cost of reimbursing local government property tax exemptions, and there is enough surplus to fund a temporary income tax rate reduction, then the State of Colorado temporarily reduces its income tax rate to 4.50%. The temporary income tax rate reduction applies to every individual, estate, trust, and corporation, as specified in Sections 39-22-104(1.7) and 39-22-301(1)(d)(I)(I) of the Colorado Revised Statutes.
- Sales Tax Refund
The third refund mechanism can be triggered in two circumstances:
- When there is excess revenue after reimbursing local governments for property tax exemptions, but not enough to fund a temporary income tax rate reduction
- When there is excess revenue after funding both the local government property tax exemption reimbursements and the temporary income tax rate reduction
Despite being called a sales tax refund, it appears on individual income tax forms as a means of returning sales tax revenue paid by individuals.
- If the amount to be refunded is more than $15 per taxpayer, the refund has six different levels based on a taxpayer's adjusted gross income.
- If the amount to be refunded is $15 or less per taxpayer, an equal refund is allowed to each taxpayer regardless of income.
- Taxpayers who file joint returns receive twice the refund amount as taxpayers who file single returns.
How the 2021 TABOR Surplus Will Be Refunded
The 2021 TABOR surplus was large enough to fund all three refund mechanisms, including the following two which are administered by the Department of Revenue:
- All taxpayers who file a 2021 income tax return will automatically receive the income tax rate reduction, from 4.55% to 4.50%.
- Individual taxpayers may also receive a sales tax refund if they file a 2021 income tax return by October 18, 2022. For the six refund levels based on a taxpayer’s adjusted gross income, see the 2021 form DR 0104.
How Prior TABOR Surpluses Were Refunded
The table below shows how TABOR surpluses were refunded in recent tax years. For more information about the 2019 tax year, see the FAQ section below.
|TABOR Surplus Year||Property Tax Reimbursement||Income Tax Rate Reduction||Sale Tax Refund|
Frequently Asked Questions
Property tax exemptions are administered by your local government. Contact your local County Assessor’s Office for more information about senior and disabled veteran property tax exemptions. The Colorado Department of Local Affairs maintains a list with contact information for each County Assessor's Office in Colorado.
A TABOR income tax rate reduction results in either a larger refund, if the taxpayer over-withheld, or a smaller bill, if the taxpayer did not withhold enough or make enough estimated tax payments that year. The refund amount is different for each taxpayer, based on their unique income tax situation.
The 2019 TABOR refund was distributed in two parts. The first part of the refund went toward reimbursing local governments for their senior and disabled veteran property tax exemptions.
The second part of the TABOR refund was a temporary income tax rate reduction, which lowered the state income tax rate to 4.50%. Taxpayers automatically received this reduction when they filed their 2019 income tax returns.
For more information, see the "Ways a TABOR Surplus Can Be Refunded" section above.