In November 2026, Colorado voters approved Amendment 89, replacing the state's flat 4.4% income tax with a graduated rate structure for 2027 and beyond. Nothing changes for your 2026 income, which will still be taxed at the flat 4.4% rate.
Colorado Income Tax Brackets for 2027
Up to $25,000: 3.7%
$25,001 to $100,000: 4.2%
$100,001 to $500,000: 4.4% (same as 2026)
$500,001 to $750,000: 7.4%
$750,001 to $1,000,000: 7.9%
Above $1,000,000: 8.4%
All else being equal, taxpayers with taxable income between $100,000 and $500,000 will pay $325 LESS state income tax in 2027 than in 2026. However, that savings disappears very quickly as taxable income climbs above $500,000. For example, taxpayers with $550,000 in taxable income will pay $1,175 MORE.
Note that, unlike Federal income tax brackets, Colorado will have a single set of brackets for all taxpayers, regardless of filing status. Therefore, dual-income couples are likely to pay less in Colorado state tax by filing MFS instead of MFJ, although the offsetting "penalty" of filing MFS at the federal level will likely negate those savings for most taxpayers. Colorado, like most states, requires your state filing status to match your Federal filing status, so couples should re-evaluate their optimal filing status for tax year 2027.
No action is needed today. Employer withholding should automatically adjust beginning in January, so it's worth taking an extra look at those first paystubs of 2027 to see how this change is impacting your take-home pay.
Information is current as of the publication date. Tax laws change, so verify before taking actions based on this content. This post is intended as general information, not specific tax advice, and does not create a client relationship with BeaneCounters.
