On November 3, 2026, Colorado voters will decide on two competing measures that could reshape 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

Amendment 87 would replace the flat tax with six brackets for both individuals and businesses, lowering the tax rate on taxable income below $500,000 and raising that rate for any  above.

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 would write the current 4.4% rate into statute as a ceiling and changes no one's tax today. 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.

A side-by-side comparison has been provided below: 

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 the outcome of the conflict. Some analysts note that Amendment 87's removal of the constitutional flat-rate requirement could take effect even if Proposition 136 receives more votes.

Sources: Amendment 87 Blue Book analysis, Proposition 136 ballot analysis, Ballotpedia.

Other tax measures to watch

Two other items on the ballot could change the 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 preemptively 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

While no actions may be necessary before the election, practioners can begin modeling both scenarios now for individuals and businesses with more than $500,000 of Colorado taxable income to estimate the impact.

If Amendment 87 passes, these are considerations to make before year-end:

• Income and deduction timing. Weighing the impact of anticipated income timing between 2026, still taxed at 4.4%, and 2027, which could be at a higher rate.  If flexible, deferring planned deductions into 2027 could help offset any increase.
• 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 COCPA will be prepared to help members navigate implementation, including through its Tax Year in Review seminars.  Our COCPA Tax CONNECT Community is always available for seeking peer-to-peer insights on specific questions or scenarios. 

Disclaimer: This article is intended for informational and educational purposes only, sharing insights from our member community to promote awareness and discussion. It does not constitute tax, legal, or regulatory advice or official guidance and may not address all relevant facts, tax issues, or applicable authorities. Readers should independently review applicable statutes, regulations, rules, and official guidance before taking action. This content should not be relied upon as a basis for tax or legal decisions.