Here's the lowdown
Amendment 87 would replace Colorado's 4.4% flat income tax with six brackets starting in 2027, topping out at 8.4% on taxable income above $1 million.
State analysts estimate taxpayers below $510,834 of Colorado taxable income would pay less, while those above that line would pay more.
The measure is projected to add about $1.97 billion in the 2027-28 budget year, with the money restricted to education, health care, and early childhood programs.
Colorado voters are being asked to rewrite one of the simplest tax systems in the country. The math gets spicy fast.
Today, every individual and business pays 4.4%. Amendment 87 would replace that flat rate with six brackets ranging from 3.7% to 8.4%.
Colorado Amendment 87 promises lower rates for most taxpayers and higher rates for people and businesses above $500,000. Because the brackets are marginal, the higher rate would apply only to income inside each band. Crossing $500,000 would not suddenly tax every dollar at 7.4%.
The first $500,000 gets the same treatment for everyone
Under the official state analysis, the first $25,000 of taxable income would be taxed at 3.7%. Income from $25,001 through $100,000 would face a 4.2% rate. The next $400,000 would stay at today's 4.4% rate.
Above $500,000, the rates climb to 7.4%, then 7.9%, then 8.4% on taxable income over $1 million.
Someone with $550,000 of taxable income would owe an estimated $1,175 more than under current law. At $875,000, the increase would be $11,550. At $2 million, it would reach $55,925.
Businesses get the same brackets. That is a big deal for pass-through owners and corporations that enjoy today's flat rate.
The tax cut has a ceiling
People below the new high-income brackets would get a cut, but it tops out at $325 per taxpayer. Someone with $125,000 of taxable income would owe an estimated $5,175 instead of $5,500. A taxpayer at $300,000 would receive the same $325 reduction because income from $100,001 through $500,000 stays at 4.4%.
State analysts place the crossover at $510,834 of Colorado taxable income. Taxpayers below that level would generally pay less. Taxpayers above it would generally pay more.
That crossover is not federal adjusted gross income. Advisers need the Colorado taxable-income calculation before telling a client which side of the line they land on.
The brackets would quietly move more income upward
Here is the weird part: the thresholds would not rise with inflation. Someone can slide into a higher bracket even if their buying power barely changes.
Opponents call that bracket creep. Supporters counter that 97% of taxpayers would get a cut. Both can be true: most filers save a little today, while future income above fixed thresholds faces a steeper rate.
Nearly $2 billion would sit outside the TABOR limit
Colorado expects the new rates to add $958.4 million in the 2026-27 budget year, which captures half of the first tax year. The estimate rises to $1.972 billion in 2027-28.
Money would flow into a new Colorado Future's Account for K-12 education, health care, and early childhood programs. An audited annual report would show what was collected and spent.
Revenue would sit outside the TABOR spending cap. Existing refund formulas would not change.
One more catch: Proposition 136 would cap the rate at 4.4%. If both pass, its cap collides with Colorado Amendment 87. The measure with more votes may control, but lawmakers or a court could have to settle it.
For CPAs, that uncertainty makes planning awkward. Model the 4.4% flat tax and Colorado Amendment 87 now. Clients near $500,000 need to see how taxable income, business structure, timing, and residency change the answer before a campaign headline becomes a filing problem.
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