Gov. Jared Polis, on Monday night, signed into law a bill that focuses on offering tax relief to homeowners. The bill that offers property tax relief from Colorado was sponsored by Democrats and the vote in both chambers was along party lines. The new law will deliver about $430 million in tax relief to homeowners.
Property tax relief from Colorado: what is it?
Last week, Gov. Polis called a special legislative session to approve property tax relief. After four days of discussion and debate, lawmakers approved the property tax relief from Colorado, and on Monday night, Gov. Polis signed the legislation into law.
“I’m proud to provide immediate property tax relief in partnership with the legislature for all Coloradans and help those who need it the most,” Gov. Polis said in a tweet. “Thanks to these actions, more hardworking people can stay in the communities they love or grew up in.”
The new legislation raises the exemption for homeowners from $15,000 to $55,000. Also, the new legislation reduces the statewide assessment rate, which is used to determine the final tax, to 6.7% from 6.765%.
Thanks to the new change and lower property tax rates, a person whose home value is a half-million dollars could save a couple hundred dollars. On the other hand, a homeowner with a house worth $5 million could save a couple thousand dollars.
However, the savings will likely compensate partly for next year’s tax bill increases due to higher property values. The changes will apply to the current tax year, for which the taxes will be paid next year.
Other benefits for low-income families
In addition to the property tax relief from Colorado, lawmakers also changed how the state will pay TABOR (Taxpayer Bill of Rights) refunds next year. Usually, the state pays TABOR refunds in tiers, with those with higher income receiving comparatively higher refunds as they paid more in taxes.
Starting next year, however, the state will pay a ‘flat’ refund, i.e., dividing the TABOR refunds equally among tax filers. The state adopted this system once before.
The refund is estimated to be around $800 next year. It would result in a gain of over $200 for those in the lowest income tier, but a loss of about $1,000 for those in the highest tier.
Another change that the lawmakers approved is expanding the state’s Earned Income Tax Credit (EITC). This change would mean low-income families would be getting $183 million more in EITC.
In all, those in the lowest income tier (more than 1.3 million tax filers) would witness about $474 million in new tax benefits. However, about $300 million of those benefits would come from higher TABOR refunds, while the rest will come from the expansion of the earned income credit.
“It takes from the rich and gives to the poor,” Rep. Gabe Evans said.
