Colorado families hit from every angle as taxes and fees outpace income growth

By Shaina Cole | Contributing Writer, Rocky Mountain Voice

The latest analysis from the Common Sense Institute shows Denver-area households feeling a real financial squeeze, and it’s not just higher prices driving it. The report finds that since 2016, the typical household’s tax and fee load has jumped 48 percent while pre-tax income has grown only 27 percent.

Inflation Has Hit Essentials Hardest

CSI’s findings line up with what national inflation data has shown over the past few years. Prices climbed fastest from 2021 through 2023. According to the Consumer Price Index, the cumulative increase during that stretch was around 15.7 percent – compared with about 7.8 percent from 2016 to 2020. Families noticed it most in the basics. 

Grocery prices jumped as well. In 2022 alone, food people prepared at home climbed more than 13 percent — something the U.S. Bureau of Labor Statistics hasn’t recorded since the late 1970s. 

Wages Are Rising, but Purchasing Power Is Falling

Wages have gone up in Colorado, but the raises haven’t been enough to match what people are paying out. CSI notes that while pre-tax income has risen 27 percent since 2016, households were hit at the same time with a nearly 30 percent increase in prices and a 48 percent increase in taxes and fees. That combination leaves families with less real income at the end of each month.

These pressures are showing up in household finances. The national savings rate, which for years hovered around seven or eight percent, dropped to roughly three or four percent during 2022 and early 2023, according to Federal Reserve figures. 

New Taxes and Fees Are Quietly Raising the Cost of Living

CSI argues that inflation alone cannot explain the budget pressure facing Denver families. Policy changes over the past several years have significantly expanded the range of taxes, premiums, and fees that residents must pay, often through mechanisms that fall outside typical tax-rate debates.

One major change was the creation of the state’s paid family and medical leave program through Proposition 118. Beginning January 1, 2023, Colorado workers began paying a new 0.9 percent payroll premium, split between employees and employers. The deduction represents a new reduction in take-home pay at the same time household budgets were already strained.

Colorado’s 2021 transportation law, SB21-260, changed how the state raises money for roads and transit. Instead of raising taxes, lawmakers created a series of new fees – to bypass TABOR requirements regarding new taxes. Drivers now pay extra on every gallon of gas and diesel. Nearly every package showing up at someone’s doorstep — whether from Amazon, FedEx, or a grocery delivery service — comes with a small statewide fee attached. Riders using Uber or Lyft pay more as well. None of these charges required voter approval under TABOR because they’re labeled as fees, but they still show up in everyday transactions.

Property Taxes Are Rising Faster Than Wages or Inflation

Housing costs are not only increasing in the private market; they are rising through public assessments as well. The repeal of the Gallagher Amendment in 2020 allowed property valuations to grow without the previous caps that had kept residential rates in check. CSI’s property tax analysis shows residential tax bills rising between 20 and 50 percent in many Denver-area counties during the latest reassessment cycle. 

Source: Common Sense Institute, Denver Metro Household Budget Pressure report

County assessors in Douglas, Boulder, Arapahoe, and Jefferson counties issued similar warnings, with many homeowners reporting substantial jumps in their projected tax bills for 2024. Renters have also been affected, as landlords frequently pass these costs through in the form of higher rents.

Local Sales Taxes and Municipal Fees Add to the Pressure

Cities across the Denver metro area have made their own adjustments at the same time the state added new fees. Some raised local sales-tax rates or added extra charges for certain services or special districts. Littleton is one example. Voters there approved an increase in 2021 that moved the city’s sales-tax rate from 3.0 percent to 3.75 percent, according to its finance department records. On their own, changes like this may not seem dramatic. But when state, county, and city increases land at once, the combined effect can make everyday life noticeably more expensive.

A Narrowing Financial Path for Colorado Families

When essential goods remain expensive at the same time public costs increase, households have little cushion left for emergencies, long-term planning, or upward mobility. CSI warns that unless Colorado reverses some of the policies contributing to the squeeze, the state risks resembling high-cost coastal markets that have seen families priced out and leaving in significant numbers. Colorado has already experienced periods of net out-migration in recent years, a sign that many families are reconsidering whether they can afford to stay.

CSI’s conclusion is clear: even as incomes grow, they cannot keep pace with the combined weight of inflation and accelerating taxes and fees. For many Denver-area residents, the sense of having less left at the end of each month is not merely anecdotal. It is the measurable result of economic forces and public policy moving in the same direction, applying financial pressure from both sides at once.