Counting the Hidden Costs of Colorado’s Tax Code

TABOR might promise a government on a diet and fatter refund checks, but Colorado’s wallet feels the pinch. It’s one of the tightest tax laws in the country, quietly deciding what our state can and can’t afford. If this makes you scratch your head or mutter, “Wait, that’s fishy…” you’re in good company.

April 17, 2026

Did you know that since TABOR passed in 1992…

…states across the country have updated and modernized their tax systems, while Colorado has been stuck with the same flat tax?

While Colorado’s tax structure has been frozen in place for more than 30 years, most states have continued to refine how they tax income.

Today:

• 8 states don’t have a state income tax
• 15 states use a flat income tax, including Colorado
• 27 states plus Washington, D.C., use a graduated income tax

That means more than half of the country uses a system where tax rates rise with income, and many of those states have expanded or evolved those systems over time.

And there’s no one-size-fits-all approach:

• Some states have as few as two tax brackets, whereas others have as many as 12
• Top rates range from about 2.5% to 13.3%
• States regularly adjust their systems to reflect economic conditions and budget needs

In other words, most states treat their tax codes as living systems that can evolve. Colorado doesn’t have that option.

For 50 years, Colorado had a graduated income tax. But after shifting to a flat tax in 1987, TABOR locked that structure into the state constitution in 1992.

Since then, lawmakers haven’t been able to adjust the structure of the income tax. Any meaningful change requires a statewide vote. The state has been unable to respond flexibly to economic shifts or growing inequality. 

While taxpayers in other states file under systems that have been updated and refined over time, Coloradans are still filing under a structure that hasn’t fundamentally changed in decades. And over those same decades, the gap between the highest earners and everyone else has only grown, because when the tax system can’t change, inequality doesn’t stay still.

Take Action

Did you know there’s a statewide effort already underway to update Colorado’s outdated flat tax system? Protect Colorado’s Future is a growing coalition of parents, educators, health advocates, community leaders, and policy organizations working together to build a fairer tax code that actually funds the things families rely on — schools, child care, health care, safety, and economic opportunity. If you’re ready to move from receipts to results, learn more and get involved at ProtectColoradosFuture.com.