New Property Tax Reform in Colorado Could Save You Hundreds Each Year

(Image credit: Getty Images)

published 12 September 2024

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.

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In response, conservative political groups Advance Colorado and Colorado Concern rescinded two ballot measures, Initiatives 108 and 50, which would have lowered the assessment rates used to calculate property taxes and imposed a 4% annual statewide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assessment rates for home and business owners and set an annual cap on statewide property tax revenues, were officially rescinded by supporters.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.

Gabriella Cruz-Martínez is a seasoned finance journalist with 8 years of experience covering consumer debt, economic policy, and tax. Before joining Kiplinger as a tax writer, her in-depth reporting and analysis were featured in Yahoo Finance. She contributed to national dialogues on fiscal responsibility, market trends and economic reforms involving family tax credits, housing accessibility, banking regulations, student loan debt, and inflation.

Gabriella’s work has also appeared in Money Magazine, The Hyde Park Herald, and the Journal Gazette & Times-Courier. As a reporter and journalist, she enjoys writing stories that empower people from diverse backgrounds about their finances no matter their stage in life.