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Historical Colorado tax policy information

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The historical Colorado tax policy information below is presented as it was written on Ballotpedia in 2015. For more current information regarding tax policy, click here.

Tax policy in Colorado
Budget Policy Logo on Ballotpedia.png
Tax rates in 2015
Personal income tax:
4.63%
State sales tax:
2.9%
Corporate income tax:
4.63%
Tax revenues in 2014
Total tax collections:[1]
$11.755 billion
Tax collections per capita:[1]
$2,195
Rank:[1]
39
Public Policy Logo-one line.png
Total state expenditures • State debt • Colorado state budget and finances

Colorado generates the bulk of its tax revenue by levying a personal income tax and a sales tax. The state derives its constitutional authority to tax from Article X of the state constitution.[2][3]

Tax policy can vary from state to state. States levy taxes to help fund the variety of services provided by state governments. Tax collections comprise approximately 40 percent of the states' total revenues. The rest comes from non-tax sources, such as intergovernmental aid (e.g., federal funds), lottery revenues and fees. The primary types of taxes levied by state governments include personal income tax, general sales tax, excise (or special sales) taxes and corporate income tax.[4]

HIGHLIGHTS
  • In 2014, according to the Federation of Tax Administrators, Colorado collected $11.755 billion in tax revenues. The state's tax revenues per capita were $2,195, ranking 39th highest in the United States.[5]

    • Tax rates

    Personal income tax

    See also: Personal income tax

    Colorado utilizes a flat personal income tax rate of 4.63 percent in determining an individual's personal income tax liability.[6][7][8]

    The table below summarizes personal income tax rates for Colorado and neighboring states in 2015. Numerical rankings are tabulated by excluding states with no personal income tax (as well as New Hampshire and Tennessee, which charge income tax only on dividends and interest) and are based on the highest possible tax rate for which an individual might be liable. Because some states are excluded from the rankings and a few share common uppermost rates, there are 34 numerical rankings, with 1 indicating the highest uppermost rate and 34 indicating the lowest.[7]

    Personal income tax rates, 2015
    State Tax rates Number of brackets Brackets Ranking
    Lowest Highest Lowest Highest
    Colorado 4.63% 4.63% 1 Flat rate 27
    Idaho 1.6% 7.4% 7 $1,429 $10,718 11
    Montana 1% 6.9% 7 $2,800 $17,100 13
    Utah 5% 5% 1 Flat rate 25
    Wyoming No state income tax
    Note: For complete notes and annotations, please see the source below.
    Source: Tax Policy Center, "Individual State Income Tax Rates 2000-2015," accessed September 29, 2015

    Personal exemptions

    States that collect a personal income tax allow individuals to claim personal exemptions on income taxes each year. The personal exemption indicates that only a person's income above a certain level is subject to taxation. [9]

    Exemptions work by reducing the amount of an individual's taxable income. Both state and federal taxes allow exemptions. The state exemptions for Colorado and its neighboring states as reported by the Tax Policy Center are reported in the chart below.[10]

    In Colorado, state personal exemptions for single filers were equal to $4,000, which was tied (with Idaho) for highest among its neighbors that allowed for personal income tax exemptions. Exemptions for those filing as a married couple were equal to $8,000 in 2015. Colorado regulations also allow filers to receive exemptions for dependents. These exemptions were equal to about $4,000 in 2015.[11]

    Personal exemptions, 2015
    State Single Married Dependents
    Colorado $4,000 $8,000 $4,000
    Idaho (a) $4,000 $8,000 $4,000
    Montana (a) $2,280 $4,560 $2,280 (n)
    Utah (t)
    Washington No state income tax
    Note: For complete notes and annotations, please see the source below.
    Source: Tax Policy Center, "Individual State Income Tax Rates 2000-2015," accessed September 29, 2015

    Capital gains tax

    See also: Capital gains tax

    A capital gains tax is a tax levied on the profit gleaned from the sale of a capital asset. Examples of capital assets include stocks, businesses, land parcels, homes, personal items and more. Capital gains are taxable at both the federal and state levels. While the federal government taxes capital gains at a lower rate than regular personal income, states usually tax capital gains at the same rates as regular income. In Colorado, the uppermost capital gains tax rate was 4.6 percent. The combined uppermost federal and state tax rates totaled 27.8 percent, ranking 33rd highest in the nation.[12][13][14]

    The table below summarizes uppermost capital gains tax rates for Colorado and neighboring states in 2015.

    Uppermost capital gains tax rates by state, 2015
    State State uppermost rate Combined uppermost rate Ranking
    Colorado 4.60% 27.80% 33
    Idaho 7.40% 29.40% 10
    Montana 6.90% 27.90% 29
    Utah 5% 28% 26
    Wyoming 0% 25% 42
    U.S. AVERAGE 28.70%
    Note: For complete notes and annotations, please see the source below.
    Source: Tax Foundation, "The High Burden of State and Federal Capital Gains Tax Rates," accessed September 29, 2015

    Sales tax

    See also: Sales tax

    Almost all states employ a statewide sales tax, which ranges from 2.9 percent in Colorado to 7.5 percent in California. Additionally, many states allow the levying of local sales taxes, which are then added to the state's tax.

    Colorado's state sales tax was 2.9 percent in 2015. The average local tax was about 4.54 percent, meaning that the average combined sales tax was about 7.44 percent. This was the 15th highest combined sales tax in the country in 2015, and was highest among its neighboring states. The table below displays the state tax rates, average local tax rates, and average combined tax rates for Colorado and its neighboring states.

    Combined sales tax rates, 2015
    State State sales tax Average local sales tax (a) Combined Ranking
    Colorado 2.90% 4.54% 7.44% 15
    Idaho 6.00% 0.01% 6.01% 36
    Montana (d) None None None 47
    Utah (b) 5.95% 0.73% 6.68% 28
    Wyoming 4.00% 1.47% 5.47% 43
    "(a) City, county, and municipal rates vary. These rates are weighted by population to compute an average local tax rate.

    (b) Three states levy mandatory, statewide, local add-on sales taxes: California (1%), Utah (1.25%), Virginia (1%). We include these in their state sales taxes.
    (d) Due to data limitations, this table does not include sales taxes in local resort areas in Montana."
    Source: The Tax Foundation, "State and local sales tax rates, 2015," accessed November 5, 2015

    The sales tax rate in Colorado for tax year 2015 was 2.9 percent. The table below summarizes sales tax rates for Colorado and neighboring states in 2015. The table also notes the state's policy with respect to types of items commonly exempted from sales tax (i.e., food, prescription drugs and nonprescription drugs).[15]

    Sales tax rates, 2015
    State Sales tax rate Exemption status
    Food Prescription drugs Nonprescription drugs
    Colorado 2.9% Exempt Exempt Taxable
    Idaho 6% Taxable Exempt Taxable
    Montana No state sales tax N/A N/A N/A
    Utah 5.95% 1.75% Exempt Taxable
    Wyoming 4% Exempt Exempt Taxable
    Source: Tax Policy Center, "Sales Tax Rates 2000-2015," accessed September 30, 2015

    Excise taxes

    See also: Excise taxes

    Excise taxes, also known as selective sales or differential commodity taxes, are levied for the sales of specific goods or services. Excise taxes are considered indirect taxes because they are not charged directly to individuals. In most cases, the excise tax is paid by the producer or seller of an item. The cost of the tax is then included in the sale price of the item and passed on to the consumer. The tables below provide excise tax rates for motor fuel, alcohol and cigarettes in Colorado and neighboring states. In Colorado, excise tax revenues comprised 16.6 percent of total tax collections in 2013.[16][17][18][19]

    Fuel excise tax rates, 2015 (in cents per gallon)
    State Gasoline Diesel Gasohol
    Excise tax Other taxes Total tax Excise tax Other taxes Total tax Excise tax Other taxes Total tax
    Colorado 22¢ 0¢ 22¢ 20.5¢ 0¢ 20.5¢ 20¢ 0¢ 20¢
    Idaho 25¢ 1¢ 26¢ 25¢ 1¢ 26¢ 25¢ 1¢ 26¢
    Montana 27¢ 0¢ 27¢ 27.75¢ 0¢ 27.75¢ 27¢ 0¢ 27¢
    Utah 24.5¢ 0¢ 24.5¢ 24.5¢ 0¢ 24.5¢ 24.5¢ 0¢ 24.5¢
    Wyoming 23.5¢ 1¢ 24.5¢ 23¢ 1¢ 24¢ 23¢ 1¢ 24¢
    Note: For full annotations, see the source below.
    Source: Tax Policy Center, "State Motor Fuel Tax Rates 2000-2011, 2013-2015," accessed September 30, 2015
    Alcohol excise tax rates, 2015 (in dollars per gallon)
    State Liquor Wine Beer
    Tax rate Does general sales tax apply? Tax rate Does general sales tax apply? Tax rate Does general sales tax apply?
    Colorado $2.28 Yes $0.28 Yes $0.08 Yes
    Idaho See footnote1 Yes $0.45 Yes $0.15 Yes
    Montana See footnote1 N/A $1.06 N/A $0.14 N/A
    Utah See footnote1 Yes See footnote4 Yes $0.41 Yes
    Wyoming See footnote1 Yes See footnote5 Yes $0.02 Yes
    1"In 17 states, the government directly controls the sales of distilled spirits. Revenue in these states is generated from various taxes, fees, price mark-ups, and net liquor profits."
    2"General sales tax applies to on-premise sales only."
    3"Rhode Island tax rate scheduled to decrease to $3.75 on July 1, 2015."
    4"Washington privatized liquor sales effective June 1, 2012."
    5"All wine sales are through state stores. Revenue in these states is generated from various taxes, fes, price mark-ups, and net profits."
    Note: For full annotations, see the source below.
    Source: Tax Policy Center, "Alcohol Rates, 2000-2010, 2013-2015," accessed September 30, 2015
    State cigarette taxes, 2015 (in cents per pack)
    State Tax rate National ranking
    Colorado 84¢ 34
    Idaho 57¢ 42
    Montana 170¢ 19
    Utah 170¢ 19
    Wyoming 60¢ 40
    Note: For full annotations, see the source below.
    Source: Tax Policy Center, "State Cigarette Taxes, 2015," accessed September 30, 2015

    Corporate income tax

    See also: Corporate income tax

    Corporate income tax is the tax levied by a state on a company's profits. In tax year 2015, Colorado levied a 4.63 percent corporate income tax. The table below lists the corporate income tax rates for Colorado and neighboring states in 2015.[20][21]

    Corporate income tax rates, 2015
    State Tax rate Brackets Number of brackets
    Lowest Highest
    Colorado 4.63% Flat rate 1
    Idaho 7.4% Flat rate 1
    Montana 6.75% Flat rate 1
    Utah 5% Flat rate 1
    Wyoming No corporate income tax
    Note: For complete notes and annotations, please see the source below.
    Source: Tax Foundation, "State Corporate Income Tax Rates and Brackets for 2015," accessed October 7, 2015

    Business tax climate

    In October 2014, the Tax Foundation released a report evaluating business tax systems in the states for fiscal year 2015. The report's authors graded the states by analyzing more than 100 variables in five general tax areas: corporate taxes, personal income taxes, sales taxes, unemployment insurance taxes and property taxes. States were scored on a scale of zero to 10, with a score of zero indicating the worst business tax structure and a score of 10 indicating the best. States were then ranked on a scale of one to 50, with a ranking of one indicating the state with the best business tax climate and a score of 50 indicating the state with the worst.[22]

    In fiscal year 2015, Colorado's business tax climate was ranked 20th in the nation. The table below provides scores and rankings for Colorado and neighboring states. To access the full report, click here.[22]

    Business tax climate rankings, fiscal year 2015
    State 2014 2015 Change from 2014 to 2015
    Rank Score Rank Score Rank Score
    Colorado 20 5.21 20 5.27 0 0.06
    Idaho 18 5.31 19 5.27 -1 -0.04
    Montana 6 6.25 6 6.21 0 -0.04
    Utah 9 5.98 9 5.91 0 -0.07
    Wyoming 1 7.57 1 7.58 0 0.01
    Note: For complete notes and annotations, please see the source below.
    Source: Tax Foundation, "2015 State Business Tax Climate Index," October 28, 2014

    Property tax

    See also: Property tax

    Most often, property tax applies to real estate, although some states levy property taxes on other types of personal property, such as automobiles. Generally speaking, an individual's property tax liability is determined by the tax rate and the tax base, which is "determined by both the assessed value of the property and ... the share of the assessed value that is subject to tax." To learn more about property taxes, including tabulation methods, see this page.[23][24][25]

    Property taxes comprise the lion's share of local government revenues. In 2010, property taxes accounted for 75 percent of the tax revenues collected by local government entities (such as cities, counties, school districts, etc.). States, on the other hand, generate very little revenue from property taxes. Property tax rates can vary substantially from locality to locality within a state.[23][24]

    The table below provides the mean amount of property taxes paid, as well as property tax as a mean percentage of home value, for Colorado and neighboring states for 2012. In terms of mean property taxes paid, Colorado ranked second highest when compared to neighboring states.[23]

    Mean property taxes paid per state, 2012
    State Mean property taxes paid Property tax as a percent of home value
    Colorado $1,581 0.66%
    Idaho $1,273 0.84%
    Montana $1,932 0.92%
    Utah $1,514 0.73%
    Wyoming $1,141 0.63%
    Source: Tax Policy Center, "Residential Property Taxes in the United States," November 18, 2013

    The table below lists per capita state and local property tax collections for Colorado and neighboring states for fiscal year 2012. According to the Tax Foundation, which compiled the data below, Colorado ranked 23rd in the country in terms of property tax collections per capita.[26]

    State and local property tax collections per capita, 2012
    State Collections per capita Ranking
    Colorado $1,349 23
    Idaho $876 41
    Montana $1,377 19
    Utah $945 39
    Wyoming $2,308 6
    Source: Tax Foundation, "Facts and Figures 2015: How Does Your State Compare?" accessed October 5, 2015

    Estate and inheritance taxes

    See also: Estate and inheritance taxes

    Colorado does not levy any estate or inheritance taxes, although residents are subject to the federal estate tax.[27]

    Tax revenues

    Tax collections by source as a percentage of total tax collections in 2013.
    See also: Colorado state budget and finances

    The table below summarizes general fund revenue sources for Colorado and neighboring states in 2013. All figures are rendered in millions of dollars (for example, $1,500 translates to $1,500,000,000). Per capita figures have not been abbreviated.[28]

    General fund revenue sources, 2013
    State Sales tax Personal income tax Corporate income tax Other taxes and fees Grand total Per capita revenues
    Colorado $2,186 $5,642 $640 $124 $8,592 $1,630.87
    Idaho $1,152 $1,313 $194 $140 $2,799 $1,736.21
    Montana $62 $1,048 $177 $791 $2,078 $2,046.96
    Utah $1,633 $2,652 $313 $495 $5,093 $1,755.68
    Wyoming $499 $0 $0 $549 $1,048 $1,798.65
    Source: National Association of State Budget Officers, "State Expenditure Report: Examining Fiscal 2011-2013 State Spending," accessed September 24, 2014

    The table below lists tax collections by source as a percentage of total collections for Colorado and neighboring states in 2013.[3]

    Tax collections by source as a percentage of total tax collections, 2013
    State Property tax Sales tax Select sales (excise) taxes Personal income tax Corporate income tax Other taxes
    Colorado 0% 21.5% 16.6% 49.2% 5.8% 7%
    Idaho 0% 37% 12.5% 36.1% 5.6% 8.7%
    Montana 9.9% 0% 21.1% 39.5% 6.5% 22.9%
    Utah 0% 29.8% 13.5% 45.1% 5.2% 6.4%
    Wyoming 15.2% 32.1% 5.7% 0% 0% 47%
    Source: Tax Policy Center, "State Tax Collection Shares by Type 2000-2013," June 20, 2014

    See also

    Footnotes

    1. ↑ 1.0 1.1 1.2 Federation of Tax Administrators, "2014 State Tax Revenue," accessed October 26, 2015
    2. ↑ Constitution of the State of Colorado, "Article X," accessed October 17, 2014
    3. ↑ 3.0 3.1 Tax Policy Center, "State Tax Collection Shares by Type 2000-2013," June 20, 2014
    4. ↑ Brunori, D. (2011). State Tax Policy: A Political Perspective. Washington, D.C.: The Urban Institute Press
    5. ↑ Federation of Tax Administrators, "2014 State Tax Revenue," accessed October 26, 2015
    6. ↑ Investing Answers, "Tax Bracket," accessed September 24, 2014
    7. ↑ 7.0 7.1 Tax Policy Center, "Individual State Income Tax Rates 2000-2015," accessed September 29, 2015
    8. ↑ Tax Foundation, "State Personal Income Tax Rates and Brackets 2014 Update," March 21, 2014
    9. ↑ Tax Policy Center, "What is the personal exemption?" accessed December 14, 2015
    10. ↑ Internal Revenue Service, "3. Personal Exemptions and Dependents," accessed December 14, 2015
    11. ↑ Tax Policy Center, "What is the personal exemption?" accessed December 14, 2015
    12. ↑ Internal Revenue Service, "Topic 409 - Capital Gains and Losses," August 19, 2014
    13. ↑ Tax Foundation, "The High Burden of State and Federal Capital Gains Tax Rates," February 11, 2014
    14. ↑ Tax Policy Center, "Capital Gains and Dividends: How are capital gains taxed?" June 22, 2011
    15. ↑ Tax Policy Center, "Sales Tax Rates 2000-2015," accessed October 2, 2015
    16. ↑ Tax Policy Center, "Excise taxes," accessed October 20, 2014
    17. ↑ Investopedia, "Excise Tax," accessed October 20, 2014
    18. ↑ Tax Foundation, "Excise Taxes," accessed October 20, 2014
    19. ↑ Internal Revenue Service, "Excise Tax," accessed October 20, 2014
    20. ↑ Investopedia, "Corporate Tax," accessed September 24, 2014
    21. ↑ Tax Foundation, "State Corporate Income Tax Rates and Brackets for 2015," accessed October 7, 2015
    22. ↑ 22.0 22.1 Tax Foundation, "2015 State Business Tax Climate Index," October 28, 2014
    23. ↑ 23.0 23.1 23.2 Tax Policy Center, "Residential Property Taxes in the United States," November 18, 2013
    24. ↑ 24.0 24.1 Bankrate, "Property taxes explained," February 3, 2000
    25. ↑ Investopedia, "Property Tax," accessed September 26, 2014
    26. ↑ Tax Foundation, "Facts and Figures 2015: How Does Your State Compare?" accessed October 5, 2015
    27. ↑ Tax Foundation, "State Estate and Inheritance Taxes in 2014," May 28, 2014
    28. ↑ National Association of State Budget Officers, "State Expenditure Report: Examining Fiscal 2011-2013 State Spending," accessed September 24, 2014
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