From reducing Coloradans’ property tax increases to delaying a new gas fee, the Colorado legislature passed several bills this year that will directly affect your wallet.
The legislation was aimed at trying to ease rising consumer-cost pressures. While there are a lot of political machinations around the savings, we’re just going to break down what the changes mean for you. (If you want to read about the machinations, you can do so here.)
Here are the measures we at The Colorado Sun think you need to know about:
Property taxes won’t go up as much in 2023, 2024
It’s no secret that property values in Colorado are soaring. And that means property tax bills are increasing, too.
The Colorado legislature passed Senate Bill 238 this year to try to ease the tab by reducing the property tax burden on residential and commercial property owners by $700 million over the 2023 and 2024 tax years. The measure was signed into law Monday by Gov. Jared Polis.
Here’s how the relief will work:
- The residential assessment rate used to calculate how much a residential homeowner owes in property taxes in 2023 is reduced to 6.765% from 7.15%. Additionally, the first $15,000 in taxable value of a residential property is waived as long as doing so doesn’t cause the assessed property value to fall below $1,000.
- For commercial properties, the assessment rate in 2023 is reduced to 27.9% from 29%. Additionally, the first $30,000 in taxable value of a commercial property is waived as long as doing so doesn’t cause the assessed property value to fall below $1,000.
Are you confused about how this will affect your property tax bill? That’s OK. We’re here to help.
Assessment rates are important because they are used to calculate how much someone owes in taxes. The rate is multiplied by a home’s assessed value, which is determined by a county assessor. What a property owner pays is then determined by the mill levy rate. A mill is a $1 payment on every $1,000 of assessed value.
The 2023 reduction will mean that a residential property owner who owns a home with an assessed value of $300,000 in an area with a mill levy of 100 will pay $1,963 versus $2,145.
In 2024, the rates will go up slightly. For single-family residential property owners, the assessment rate will be approximately 6.95%, down from 7.15%. For multifamily residential property, the rate will be 6.8%.
(Why approximately, you ask? The single-family residential property assessment rate will be set in 2024 at a level to be determined by the state property tax administrator to ensure that the state hits its $700 million property tax relief target for the 2023 and 2024 property tax years.)
For those who own commercial property used for agriculture and to produce renewable energy, the 2024 assessment rate will be 26.4%, down from 29%.
The 2024 rates match a reduction approved for the 2021 and 2022 tax years under a measure passed by the legislature in 2021.
Finally, the legislature extended a change allowing senior citizens to defer all of the increases in their property taxes until they sell their homes while allowing everyone else to defer any increases over 4%.
Another measure passed this year, House Bill 1416, that Polis also signed into law Monday requires county assessors to include an estimate of the property taxes each property owner owes when mailing out notices of property valuation changes. The notices also must include an alert to property owners about the June 8 deadline to file an assessment appeal.
Big TABOR refund checks are coming
Individual Colorado taxpayers will be mailed a check of at least $500 while joint filers will get at least $1,000. People who filed their tax returns on time will get the checks in late August or early September, while those with extensions will get their checks sometime later.
Where is this money coming from? An estimated $2 billion in tax revenue collected by the state this fiscal year, which ends June 30, in excess of the Taxpayer’s Bill of Rights cap on government growth and spending, which is calculated based on inflation and population growth.
The money had to be refunded regardless, but Senate Bill 233, passed by the legislature this year, moved up the timeline and aimed to make the refunds more equitable by increasing the amount of money lower-income earners would get while decreasing the amount higher-income earners would receive.
Colorado taxpayers could get even larger refund checks if tax revenue in May and June is above what’s projected by nonpartisan legislative staff and economists in the governor’s office.
Additionally, Coloradans will also get an income tax rate cut to 4.5% from 4.55% because of the TABOR excess.
Gas fees won’t start until April 2023
Colorado motorists were set to be charged a new, 2-cent-per-gallon fee on gas starting in July under a bill passed by the legislature in 2021 intended to raise money for transportation projects. But lawmakers this year passed House Bill 1351, which was signed into law Monday by Polis, delaying the start of the fee until April 2023.
The legislature is spending about $45 million from its general fund to backfill the lost revenue.
“It’s official!” Polis said after signing the bill into law. “No new fees on gas!”
Fact check: There will be new fees on gas, just not until April 1, 2023. And those fees, by the way, are permanent and will rise to 8 cents per gallon starting on July 1 and could go up in subsequent years based on inflation.
Business tax and fee breaks
Polis signed three bills into law Monday that will reduce businesses’ costs.
Senate Bill 6 will let small businesses with less than $100,000 in taxable sales per sales tax filing period — which is typically each month — keep 5.3% of the sales tax they owe the state, up from 4%. The relief lasts one year and is forecast to total about $5 million.
Senate Bill 124 lets S corporations and partnerships — known as pass-through businesses — retroactively pay their state income taxes dating back to 2018 through their businesses rather than through their owners.
The bill lets the owners avoid a temporary federal $10,000 cap on federal income tax deductions for individual income taxpayers. That cap doesn’t exist, however, for C corporations, meaning that Senate Bill 124 will let those businesses take a larger deduction.
House Bill 1001 temporarily reduces business filing fees in Colorado owed to the Secretary of State’s Office to $1 from a range of $10 to $50. The fees are typically charged for annual business registration renewal, new trade name registrations and renewals and updates to business information.
The legislature is spending $16.7 million from its general fund to replace the lost revenue.
The cost of getting, renewing a driver’s license will remain flat — for now
Renewing your driver’s license in the near future? You’ll save about $2 under House Bill 1004, which Polis signed into law and allocates nearly $4 million to the Division of Motor Vehicles to prevent a fee increase.
The current cost to get or renew a driver’s license is $30.87, and the DMV was expected to increase the fee in the coming years to cover its rising costs.
Like the gas fee, however, don’t expect the break to last forever. The relief is only set to last two years.