The upcoming state tax refund in Colorado is expected to be the last big one for a while, according to forecasts by legislative economists. The refunds under Colorado’s Taxpayer’s Bill of Rights (TABOR) are predicted to decrease in the coming years due to economic softening, tighter budget forecasts, and recent changes to state law. Projections show that individual filers can expect refunds ranging from $181 to $571 this tax season, but they are expected to drop significantly in the following years.
The decrease in TABOR refunds is a result of anticipated drops in general fund revenue and the implementation of new tax credits, such as the Family Affordability Tax Credit and an increase to the Earned Income Tax Credit. These targeted credits are aimed at lower-income Coloradans and are expected to cut child poverty in half. Lawmakers also passed a cut to the state income tax, which benefits higher-income taxpayers, during flush budget years, but lower forecasted revenues may prevent this cut from happening in the future.
While state revenue is strong enough to require tax refunds, the TABOR cap and higher-than-anticipated costs, particularly with the state’s Medicaid program, will also put lawmakers in a tight spot as they craft next year’s budget. Despite the challenges, lawmakers are optimistic about Colorado’s strong overall economy and the state’s ability to handle unexpected expenses due to its 15% reserve. The overall economic outlook remains positive, with little chance of a recession predicted.
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