Colorado Amendment 87 Faces $2.7 Billion Tax Hike Challenge

Aspen —Will Amendment 87 keep Colorado’s economy competitive, or will it drive businesses and high earners out of state?

The measure, which appears on the November ballot, fundamentally alters the state’s fiscal identity. For decades, Colorado has operated under a flat income tax structure, applying a uniform 4.4% rate to all taxable income. Amendment 87 dismantles this model. It replaces the single rate with a graduated system featuring multiple tax brackets. While the lower brackets offer modest relief — dropping to 3.7% for incomes under $25,000 and 4.2% for those between $25,000 and $100,000 — the amendment’s most dramatic feature is its treatment of high earners.

To hear the proponents tell it, the change is necessary to fund critical services. But the math holds up differently when you look at the top end. The amendment raises the state tax rate on income over $500,000 significantly. Specifically, it imposes a 7.4% rate on taxable income from $500,001 to $750,000, a 7.9% rate on income from $750,001 to $1,000,000, and an 8.4% rate on income exceeding $1,000,000. This shift moves Colorado from having roughly the 30th highest top marginal tax rate in the nation to joining the top tier. In 2026, an 8.4% top rate would place Colorado behind only California, Hawaii, New York, New Jersey, the District of Columbia, Oregon, Minnesota, and Vermont.

That positioning matters for business leaders. Opponents worry that such steep increases will erode the state’s competitive edge. The Colorado Chamber of Commerce highlighted this concern in a recent press release, noting that tax competitiveness in Colorado has already been slipping, with the state losing companies to other jurisdictions. The chamber argued that as Colorado works to reverse these trends and attract new investment, significant changes to the tax structure would present a competitive disadvantage. For folks in the valley, where tech and tourism drive local employment, that competitive edge is a tangible part of daily life.

The total cost of this shift is substantial. According to the text of the amendment, it represents a $2.7 billion annual tax hike on Colorado residents and businesses. That is a massive injection of revenue, but it comes with the risk of changing who chooses to live and work here.

The question is whether the community values the guaranteed revenue enough to accept the potential loss of mobility. As the debate continues, the era of the simple flat tax is ending. Whether the new structure serves the state’s long-term interests is something neighbors will decide in the voting booth.