Who will get a bigger TABOR refund in Colorado in 2024?

Some Coloradans may receive an additional refund this year due to changes to the state’s Taxpayer Bill of Rights (TABOR). In Colorado, TABOR refunds can be up to $800. The new adjustments mean that those with higher incomes will receive lower refunds than usual, and those with lower incomes will receive higher than usual refunds.

TABOR Refunds in Colorado: Who Gets More?

Voters approved the Taxpayer Bill of Rights (TABOR) in 1992 to limit government revenue growth. The amount of your TABOR refund will depend on the amount of state revenue collected above the limit established by TABOR.

Last year, total refunds amounted to nearly $3 billion, with checks of $750 for single filers and $1,500 for joint filers. This year, the state is estimated to send about $3.7 billion in TABOR refunds from Colorado.

Specifically, individual taxpayers can receive $847, while joint filers can receive a TABOR refund of $1,694 from Colorado. This year’s refunds are slightly different from previous projections due to new legislation approved during a special session of the General Assembly in November.

In a special session, lawmakers approved sending flat TABOR refunds to everyone. Historically, TABOR refunds were based on the taxpayer’s income level. But the new law standardizes the payments. This means that taxpayers with higher incomes may receive a lower-than-normal refund, while taxpayers with lower incomes may receive a larger refund.

In particular, refunds will be higher for taxpayers who earn less than $104,000 (about 62% of filers). Households earning less than $51,000 would receive an additional $250, while households earning between $51,000 and $104,000 would receive an additional $75.

We believe the new formula for calculating TABOR refunds will provide greater benefits to women, people with disabilities, Hispanics, Latinos, Blacks, and other races because they are more likely to have lower incomes.

Tax treatment of TABOR refunds

There was previously some confusion about the tax treatment of TABOR refunds after the IRS asked Coloradans to delay filing their 2024 taxes until a decision was made. This is the first time that the IRS has questioned the taxability of TABOR since its creation nearly 30 years ago.

It is now clear that no taxes are due on TABOR refunds in Colorado. The decision on tax processing of TABOR refunds came after a meeting between Governor Jared Polis and IRS Commissioner Daniel Werfel.

Additionally, Senator Michael Bennet recently confirmed that there will be no changes to the tax treatment of TABOR tax returns and that taxpayers do not need to do anything differently.

Separately, adjustments made last year also changed how taxpayers receive their TABOR refunds. In 2022, taxpayers received their refund checks in the mail. Taxpayers will now receive a refund when they file their taxes, either in the form of a higher refund or a reduced tax bill.