TABOR Refund

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.

Prior to tax year 2022, the Colorado income tax rate could be temporarily reduced to 4.50% if there was enough TABOR surplus. However, starting with tax year 2022, voters permanently reduced the income tax rate to 4.40%, as specified in Sections 39-22-104(1.7)(c) and 39-22-301(1)(d)(I)(K) of the Colorado Revised Statutes.

This refund mechanism can be triggered in two circumstances: 

1. When there is excess revenue after reimbursing local governments for property tax exemptions, but not enough to fund a temporary income tax rate reduction; or
2. 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, the refund is generally claimed on the Colorado Individual Income Tax Return (DR 0104) as a way to return sales tax revenue paid by full-year resident 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 a joint return receive twice the refund amount as a taxpayer who files a single return.

Individuals who died during the tax year but meet the filing requirements, including on an estate or joint return, are allowed a sales tax refund.

Individuals who were either incarcerated or committed to the Department of Human Services for 180 days or more during the state fiscal year (July-June) that ended during the tax year are not allowed a sales tax refund.