After years of mounting property tax bills, Coloradans will finally get some relief.
Colorado Gov. Jared Polis recently signed a property tax bill into law that's estimated to save homeowners and local businesses more than $1 billion each year. The bipartisan measure will stop major property tax increases by instituting a statewide cap on annual property tax revenues and lowering assessment rates.
Advocates say the new tax law will also preserve education funding at current levels and protect resources supporting libraries, healthcare, fire safety, and other community services.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In response, conservative political groups Advance Colorado and Colorado Concern rescinded two ballot measures, Initiatives 108 and 50, which would have lowered the assessment rates used to calculate property taxes and imposed a 4% annual statewide cap on property tax revenues.
Here’s what Colorado’s new property tax law means for you.
Colorado property tax deal
Colorado’s new property tax package came at the price of two conservative-led ballot measures.
As part of the bipartisan deal with state lawmakers, Colorado won’t see Initiatives 108 and 50 on the ballot on Election Day. The statewide proposals, which would have reduced the assessment rates for home and business owners and set an annual cap on statewide property tax revenues, were officially rescinded by supporters.
The advocates for the initiatives, Advance Colorado and Colorado Concern also agreed not to propose similar actions for at least six years in exchange for their support of Polis’ new property tax law.
A detailed dive into Initiatives 108 and 50, showed that the proposals aimed to do the following:
- Initiative 108, or the property tax revenue cap proposal, called for cutting residential property assessment rates from 6.7% to 5.7% and non-residential property assessment rates from 29% to 24%.
- The state would have reimbursed local governments for revenue loss and maintained education funding levels.
- Initiative 50, the property tax revenue cap proposal, was designed to institute a 4% annual cap on total statewide Colorado tax revenues.
- Additionally, a statewide vote would have been required for local districts to raise property tax revenue above the 4% threshold.
Supporters of both measures argued that lawmakers had failed to take the “state’s property tax inflation crisis seriously,” and that these initiatives would have created a “better path forward” as rising property taxes went unchecked over the past few years.
Property tax rate in Colorado
Initiatives 108 and 50 came from growing frustration over rising property taxes following the repeal of the Gallagher Amendment during the 2020 Election. The amendment set strict limits on property taxes paid by homeowners for decades and required the state to reduce residential taxes annually.
As a result, Colorado's property taxes spiked substantially in a matter of years.
This year alone, property tax revenue increased by 2.4 billion dollars. According to Common Sense Institute, a non-partisan research organization, that figure represented an annual increase of 19% and was the largest since 1975. Property tax revenues surged by $5.4 billion (55%) since 2019.
Overall, revenue from property taxes in Colorado more than doubled over the past nine years, from $7.18 billion nearly a decade ago to about $15.3 billion in 2024.
How does that translate to dollar terms for your wallet?
After adjusting for inflation, property tax revenue per each Coloradan increased by $304 from $2,262 to $2,566 this year. Over the past five years, that figure increased by $440.
That means that 70% of the population and inflation-adjusted property tax revenue increase since 2019 only happened over the past year.
Some supporters of initiatives 108 and 50 say Gov. Polis' new property tax law ends surprise tax increases.
“Today, Colorado taxpayers are the winners,” Advance Colorado’s president Michael Fields said in a statement. “Our goal over the past two years has been to solve the state’s property tax crisis through a significant and permanent property tax cut and an enforceable cap to prevent future tax spikes.”
Colorado property tax reform: What it means for your wallet
Homeowners struggling with climbing property taxes will now catch a break.
According to Polis’s budget office, Coloradans will save hundreds of dollars on their property taxes each year due to the passage of HB24B-1001.
Under the new property tax law, a homeowner in Denver with a median-priced home of $709,920 could see an average savings on their tax bill of $233.47 in tax year 2025 and $259.91 in 2026.
Meanwhile, someone in El Paso County, where the median home price is $514,820, could see an average savings of $143.30 next year and up to $160.82 in about two years from now. That means homeowners will save about 5.6% to 6.3%, respectively.
“We answered the calls of hardworking Coloradans who urged us to reduce the property tax rate,” Polis said in a statement. “This tax cut builds on our efforts to lower the cost of housing in our state, ensuring life in Colorado is more liveable and affordable for everyone.”
Colorado’s new property tax reform, which used SB233 as a baseline, will prevent major tax hikes in the future while safeguarding funds for schools. Some key provisions include:
- Capping annual growth in statewide property tax revenue for local governments at 5.5%.
- Exempting revenue going to school districts, in addition to an exemption for revenues allocated to pay off voter-approved bonds.
- Gradually lowering the nonresidential assessment rate from 29% to 25% by 2026.
- Setting a permanent 6.95% assessment rate on residential properties, calculated only after residents deduct 10% of home value, up to $70,000 adjusted for inflation.
The tax relief measure was celebrated by supporters like the Colorado Education Association, which sent hundreds of letters backing the initiative to prevent the potential impact of ballot Initiatives 108 and 50.
According to an analysis, the ballot proposals would have created a $3 billion deficit in state and local budgets as soon as 2025. Those most impacted would have been local schools.
Colorado property tax: Bottom line
Property taxes can wage a seemingly unfair war on your wallet, and state initiatives to reduce that burden can come from advocates like you.
While Coloradans are slated to get a tax break on property taxes next year, homeowners can reduce their property taxes in other ways. For instance, you can reduce your taxes by limiting home improvements as property taxes are based on the assessed value of your home.
You can also explore tax deductions for homeowners to seek other tax breaks to recoup some of your costs.
Related Content:
-
Smart Strategies for Paying Your Child an AllowanceBy giving your kids money to spend and save, you’ll help them sharpen their financial skills at an early age.
-
The Mulligan Rule of Retirement — Seven Mistakes You Can FixUse the Mulligan Rule to undo these seven costly retirement errors. While you can’t go back in time, some retirement choices allow for a “correction shot.”
-
Ten Retirement Tax Plan Moves to Make Before December 31Retirement Taxes Proactively reviewing your health coverage, RMDs, and IRAs can lower retirement taxes in 2025 and 2026. Here’s how.
-
The Original Property Tax Hack: Avoiding The ‘Window Tax’Property Taxes Here’s how homeowners can challenge their home assessment and potentially reduce their property taxes — with a little lesson from history.
-
Social Security Tax Limit Rises Again: Who Pays More in 2026?Payroll Taxes The Social Security Administration has announced significant changes affecting millions as we approach a new year.
-
Three Critical Tax Changes Could Boost Your Paycheck in 2026Tax Tips The IRS predicts these tax breaks may change take-home pay in 2026. Will you get over $1,000 in tax savings?
-
Trump’s 2025 Tax Bill: What’s Changing and How It Affects Your TaxesTax Law From standard deduction amounts to tax brackets and Medicaid cuts, here’s what individual filers need to know about tax changes in Trump's so called "big beautiful bill."
-
RMDs, Roth, and SS: Test Your Knowledge of Retirement Tax RulesQuiz Don't let the IRS catch you off guard. Take our quiz to reveal common retirement tax rules that could save (or cost) you thousands.
-
What’s the New 2026 Estate Tax Exemption Amount?Estate Tax The IRS just increased the exemption as we enter into a promising tax year for estates and inheritances.
-
IRS Updates 2026 Tax Deduction for People Age 65 and OlderTax Changes Adjustments to the extra standard deduction can impact the tax bills of millions of older adults. Here are some new amounts to know for 2026.
