09/02/2026
Colorado Initiative 195 what it actually does...
Colorado would replace the 4.4% flat income tax with brackets from 3.7% up to 8.4% on income over $1 million.
Same rates hit people and C-corps.
Extra money (~$2B a year) goes to K-12, health care, and child care and is kept instead of being TABOR-refunded.
ProsMost households under $500k get a small cut ($100–$325/year for a typical middle-income filer).
Most small businesses under that line pay a bit less
Dedicated cash for schools, health care, and child care.
Only the last dollars above $500k get the higher rate, not your whole income.
Cons / negative impact:
Top rate of 8.4% would be among the highest in the region, next to states with no income tax.
High-profit firms and successful pass-through owners (S-corps, LLCs, professional practices) get hit hard.
Analyses warn of business outmigration:
~14 firms and ~$200M in corporate profits leaving per year, plus high earners taking income with them.
Middle-class “cut” is tiny next to housing, insurance, and child-care costs.
Brackets are not indexed to inflation... more people get pulled into higher rates over time.
State after-tax income falls on net. That’s how you raise $2 billion.
Revenue gets more boom-bust (capital gains and bonuses swing).
Competing measure to cap the rate at 4.4% could collide with this if both pass.
The trade-off in one line:
a small check for most people, a steep tax on a mobile sliver of income, and a bet that Denver spends $2B better than those households and firms would.
Look up the official fiscal note before you vote NOT just the campaign ads!
