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Colorado's Income Tax Ballot Measures: A Neutral Guide for Tax Professionals
On November 3, 2026, Colorado voters will decide two competing measures that could reshape the state income tax starting with the 2027 tax year: Amendment 87, a graduated income tax, and Proposition 136, a 4.4% rate cap.
Colorado has taxed individual and corporate income at a single flat rate since 1987. The current rate is 4.4%. These two measures point in opposite directions, and if both pass, the result may not be settled on election night.
Clients will ask what these measures mean for them. This post lays out what each measure does, how the official analysis says a conflict would be resolved, and how to plan for each outcome. It takes no position on either measure.
What each measure does
Amendment 87 would replace the flat tax with six brackets for both individuals and businesses, lowering tax on taxable income below $500,000 and raising it above. Proposition 136 would write the current 4.4% rate into statute as a ceiling and changes no one's tax today.
| Amendment 87 | Proposition 136 | |
|---|---|---|
| Type | Constitutional amendment and statute | Statute |
| Vote needed (per Blue Book) | Majority | Majority |
| Effective | Tax years starting in 2027 | Tax years starting January 1, 2027 |
| Rates | Six brackets from 3.7% to 8.4% | Individual and corporate rates capped at 4.4% |
| Applies to | Individuals and businesses | Individuals and corporations |
| Revenue effect | About $2 billion more in the first full year, exempt from the TABOR limit | None, per Legislative Council Staff |
| Use of new revenue | K-12 education, health care, early childhood | Not applicable |
Amendment 87 brackets
| Taxable income | Current rate | Amendment 87 rate |
|---|---|---|
| $25,000 or less | 4.4% | 3.7% |
| $25,001 to $100,000 | 4.4% | 4.2% |
| $100,001 to $500,000 | 4.4% | 4.4% |
| $500,001 to $750,000 | 4.4% | 7.4% |
| $750,001 to $1,000,000 | 4.4% | 7.9% |
| More than $1,000,000 | 4.4% | 8.4% |
Each rate applies only to the income within its bracket. The Blue Book's examples: a taxpayer with $125,000 of taxable income would owe $325 less, the maximum reduction. One with $2 million would owe $55,925 more. The break-even point is $510,834 of Colorado taxable income.
Two details matter for planning. The brackets are not indexed for inflation, so more income would fall into higher brackets over time. And the brackets apply to business income too, which affects C corporations and owners of pass-through entities with large Colorado income.
Proposition 136
Proposition 136 caps both rates at 4.4% of federal taxable income. Because it is a statute, the legislature could later amend or repeal the cap, though any rate increase would still need voter approval under TABOR.
If both pass
The official Blue Book says the outcome is unclear and that the legislature or a court would need to resolve the conflict. Generally, the measure with more votes controls where measures conflict. Some analysts note that Amendment 87's removal of the constitutional flat-rate requirement could take effect even if Proposition 136 gets more votes.
Sources: Amendment 87 Blue Book analysis, Proposition 136 ballot analysis, Ballotpedia.
Other tax measures to watch
Two other items on the ballot touch clients' tax picture.
Road funding (Initiative 175). This constitutional amendment would require state motor vehicle and fuel tax revenue, plus most sales tax on vehicle parts, to go to roads and the State Patrol. It needs 55% to pass. The legislature responded with HB26-1430, which takes effect only if the initiative passes. It would cut the gasoline excise tax from 22 to 14 cents per gallon and special fuel from 20.5 to 13 cents, reduce certain registration fees and road safety surcharges by 38%, and lower the road usage fee. Fuel distributors and fleet-heavy clients would feel these changes most.
Colorado Connector local sales tax. Voters in 31 Front Range municipalities will decide on a 0.333% sales tax increase to fund passenger rail. Retail clients in those cities should be ready for possible rate changes.
Sources: Legislative Council Staff 2026 summary, Ballotpedia on Initiative 175, Colorado Newsline.
Planning for each outcome
Most clients need no action before the election, but high-income individuals and businesses with more than $500,000 of Colorado taxable income should model both scenarios now.
| Outcome | What changes in 2027 | Who to talk to |
|---|---|---|
| Amendment 87 passes alone | Graduated rates up to 8.4% on individuals and businesses | Clients above about $500,000 of Colorado taxable income |
| Proposition 136 passes alone | Nothing immediately; 4.4% becomes a statutory ceiling | No action needed |
| Both pass | Uncertain until the legislature or a court resolves the conflict | High-income clients, with planning held flexible |
| Neither passes | Flat 4.4% rate continues | No action needed |
If Amendment 87 passes, these are the conversations to have before year-end:
- Income timing. Clients with flexibility may weigh accelerating income into 2026, still taxed at 4.4%, and deferring deductions into 2027.
- Large transactions. Business sales or other major gains planned for 2027 or later deserve a fresh look.
- Entity choice and apportionment. Brackets apply to both individual and corporate income, so pass-through versus C corporation comparisons and multistate apportionment may shift.
- Residency. Expect questions from high earners about domicile, and about how Colorado would treat part-year residents.
- Estimated payments. 2027 estimates will need to reflect the new rates.
Whatever the outcome, the facts above are drawn from the nonpartisan Blue Book, which also presents arguments for and against each measure. It's a good resource to share with clients who ask how to vote.
Join one of our Tax Year in Review seminars, around the state or virtually, in December.