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Colorado's Amendment 87 would lift the top state income tax rate from 4.4% to 8.4%
Colorado voters decide in November whether to swap a 39-year flat 4.4% income tax for six brackets topping out at 8.4% above $1 million. Only those earning over $500,000 would pay more, and how much depends partly on a rival measure on the same ballot.
The Investor · Invest desk
Drafted by a language model from the sources cited here and checked against its claim ledger before publication. How we use AISend a correction
What happened
- Proposition 136, put on the ballot by the conservative nonprofit Advance Colorado, would keep the current flat rate in place.
- Colorado legal experts disagree on how the two measures would combine if both pass, and the question would likely be settled in court.
- Democratic Gov. Jared Polis opposes Amendment 87, calling it "bad policy that would destroy our economy."
- Supporters say the revenue would prop up healthcare, education and childcare as Colorado faces greater Medicaid and public school spending needs.
- Colorado adopted its flat tax in 1987 and was the first state to replace a graduated income tax with a flat one.
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Why it matters
- decision Clients who control when a bonus or sale lands can price the vote at four extra cents per dollar above $1 million and model it before November.
- constraint If both measures pass, an adviser cannot tell whether a top earner faces 4.4% or 8.4% until a court rules, so income moved early may save nothing.
- exposure The added revenue depends on top earners and employers staying in Colorado, and Advance Colorado expects some of them to leave.
The Governing report spells out two of the six brackets: 3.7% on income up to $25,000 and 8.4% on earnings over $1 million [2]. Those two are enough to price both ends of the schedule. On the first $25,000 the rate falls 0.7 points, worth $175 a year [16]. At the top, the marginal rate rises from 4.4% to 8.4%, about 1.9 times the current figure [17]. A $1 million slice of income landing on a client already past the first million would owe Colorado $84,000. Today it owes $44,000 [15].
Chris deGruy Kennedy, co-chair of the coalition behind Amendment 87, described who pays. "The top 3 percent of Coloradans who are making more than $500,000 per year can afford to pay more without suffering under this economic situation," he said [7]. On his figure, the coalition left about 97% of Coloradans out of any increase [18]. The report notes the measure still reaches more taxpayers than California's proposed millionaire's tax [8].
For a client above $1 million, the ballot has three outcomes. If Amendment 87 passes alone, 8.4% applies to the top slice [2]. If it fails, the flat 4.4% stays [1]. If it passes alongside Proposition 136, Polis has raised the possibility that voters would get Amendment 87's cuts below $500,000 together with Proposition 136's 4.4% rate for the highest earners, an outcome the report says would reduce state revenue [20].
I think the useful work before the vote is on timing, or rather on the part of a client's income that can actually be moved, such as a bonus date or a sale closing. The $40,000 difference on a $1 million slice [15] can be run against each of the three outcomes now. A change of residence is a larger and less reversible bet. The migration evidence in the report cuts both ways: Massachusetts did not appear to lose a majority of its wealthy residents after passing what the report calls a wealth tax in 2022, though some data suggest high-earner out-migration rose slightly the year after [10].
Kristi Burton Brown, executive vice president of Advance Colorado, says the state could solve its problems by spending more judiciously [13]. "I do not think that you have to raise more taxes," she said [11].
The case against moving income early is the third outcome. A court that adopts the Polis reading after both measures pass would leave the top rate at 4.4% [20] [19], and any income pulled forward would have been taxed sooner for no saving. The report does not say when the new rates would take effect. Should they reach income earned before the vote, there is no window to move income into, and the timing case fails.
What to watch
- The official Amendment 87 ballot text, for the four middle bracket thresholds and the date the new rates would first apply.
- Whether Amendment 87 and Proposition 136 both pass in November, and the first court challenge over how they combine if they do.
- Colorado data on high earners leaving after the vote, set against the slight post-2022 rise reported in Massachusetts.