Colorado taxpayers must be reimbursed by the government, through a constitutional restriction on the amount of state revenue that can increase each year.
Taxpayers in states who have filed single returns will receive a sales tax refund of around $ 69 on average, while those who file jointly can expect an average refund of $ 166, according to the estimates. Governor’s Office of State Planning and Budget.
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Colorado’s rapid economic recovery from the 2020 pandemic-induced downturn will also trigger a temporary reduction in income tax, from 4.55% to 4.5%, Governor Jared Polis said in a statement. press release sent by email.
“These tax cuts and refunds are a strong sign that Colorado’s economy is rebounding,” said Polis, a Democrat who recently made headlines for saying that the state “should be zero”.
“I am delighted that the Coloradans are getting another income tax cut and refund that the Coloradans can use to recover from the pandemic, a party or races,” Polis continued.
The temporary tax cut and refund announced this week results from an annual income limit required under the Taxpayer’s Bill of Rights, or TABOR, a constitutional amendment that voters approved in 1992. Under TABOR, the state can only keep and spend an amount equal to the previous year’s income or the TABOR spending limit, whichever is lower.
The annual income limit – often referred to as the “TABOR cap” or “C referendum cap” – also makes adjustments for population growth and inflation in the state, and takes into account any tax increases approved by voters. .
According to a September 1 report by State Comptroller Robert Jaros, the state received 8.2% more revenue submitted to TABOR in the 2020-2021 fiscal year, which ended on June 30, which ‘during the 2019-2020 financial year.
The income growth rate allowed under TABOR was only 3.1%, taking into account population growth of 1.2% and an inflation rate of 1.9%. That means the state owes taxpayers about $ 454 million from the previous year, according to the comptroller’s report, which is based on preliminary calculations that could be adjusted later.
The last time voters received a TABOR refund, which took the form of a tax cut, was in 2019, when the state’s economic growth triggered a temporary drop in the state’s income tax. income from 4.63% to 4.5%.
In November 2020, voters in Colorado passed a voting measure that reduced the state’s income tax rate from 4.63% to 4.55%.
The tax refund planned for 2021 is the largest in 20 years.