1600 Stimulus Payment Claim: A proposed measure in Colorado would alter how citizens obtain their refunds under the Taxpayer’s measure of Rights (TABOR), which are presently capped at $1,600 for joint filers.
SB24-228 is a bill introduced by Governor Jared Polis and other legislators that seeks to change the state’s financial policies by eliminating automatic yearly refunds and lowering the rates of income and sales taxes.
The new law would stop automatically disbursing TABOR refunds and limit the frequency of such payments to years in which Colorado has an extraordinarily large budget surplus.
In particular, the income tax rate would drop by 0.15 percent if the surplus exceeded $1.5 billion, so linking tax reductions to the state’s revenue collection.
“The rate of income tax will drop from 4.4 tob4.25% [for tax year 2024], provided that the economy stays robust, which will increase Colorado’s competitiveness” Polis stated.
Giving back surplus income to the taxpayers
As long as they haven’t had any major jail time or unpaid state taxes from the previous fiscal year, Coloradans who have lived in the state for more than a year and have submitted their taxes on time are currently eligible for TABOR refunds.
In order to ensure that voter-approved revenue caps limit government growth, this mechanism was created to refund excess revenue back to taxpayers.
But if SB24-228 is approved, income tax rate reductions from 2025 to 2035 will only be possible if revenue surpasses these TABOR thresholds after taking into consideration specific exemptions, such as those for elderly homeowners.
Furthermore, when the surplus reaches $1.5 billion, lower sales and use tax rates as well as lower income taxes may be implemented. The rate reduction might be as much as 0.13 percent.
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This change is a part of a larger plan to use state surpluses to help citizens deal with persistent economic issues, such inflation rates that stay above three percent.
It is a reflection of a movement in several states investigating the most effective ways to use surplus tax income and federal pandemic relief funding to assist their population financially.
