By Shaina Cole | Contributing Writer, Rocky Mountain Voice
Colorado voters may face a choice in November between two measures that couldn’t disagree more about the state income tax. One would replace the flat rate with a graduated system and raise close to $2 billion a year. The other would make it illegal to raise the rate at all.
Neither one is a new idea. And the differences between them go deeper than the rate.
What each one does
Colorado’s income tax has been flat since 1987, meaning everyone pays the same percentage regardless of what they earn. The rate is currently 4.40 percent.
Initiative 195, backed by a coalition led by the Bell Policy Center, would replace that with six brackets.
The Legislative Council Staff, which produces nonpartisan fiscal analyses of ballot measures, lays them out in its fiscal note. Taxable income sees 3.7 percent on the first $25,000, 4.2 percent on the next $75,000, 4.4 percent from there to $500,000, then 7.4 percent, 7.9 percent, and 8.4 percent on income above $500,000, $750,000, and $1,000,000.
Initiative 232, backed by Advance Colorado, does the opposite. It would add one line to Colorado statute. Starting January 1, 2027, neither the individual nor corporate income tax rate may exceed 4.40 percent. Cuts remain allowed. Increases would not.
The two measures aren’t built the same way underneath. Initiative 195 makes one constitutional change. Almost everything else in both measures, including the parts that get the most attention, is ordinary statute.
The TABOR question
Initiative 195 runs five sections. Only one touches the state constitution.
Section 2 amends Article X, the Taxpayer’s Bill of Rights, striking the requirement that Colorado tax all income “at one rate” along with the language built around it. The Title Board confirmed the effect. The proposed initiative “only repeals, in whole or in part, a provision of the state constitution,” the Board found, which is why the measure needs only a simple majority to pass instead of the 55 percent threshold most constitutional changes require.
Once voters approve it, a future legislature cannot restore the single-rate mandate without going back to the ballot.
The other four sections are statutory, not constitutional. Three of them amend the Colorado Revised Statutes directly, including the graduated rate brackets and the TABOR exemption for the new revenue, the two pieces that get the most attention.
Under the Colorado Constitution, the state can only keep revenue above a yearly cap, set by TABOR, if voters say so first. When collections exceed that cap, the surplus gets refunded.
Initiative 195 would exempt its new revenue from that requirement and route it into the Colorado Future’s Account. In Colorado budget language, that’s “de-Brucing” the money.
Jake Fogleman of the Independence Institute flagged the mechanism months earlier, when the measure was still one of several draft filings. “The proposals explicitly exempt any new money raised under the graduated tax from TABOR’s revenue caps, which proponents estimate to be $2.3 billion. This would set a dangerous new precedent,” he wrote in an October 2025 piece.
The Legislative Council Staff confirms the exemption exists. The new revenue “is exempt from TABOR as a voter-approved revenue change.”
But the exemption sits in statute, not the constitution. Colorado doesn’t give citizen-initiated statutes special protection from the legislature.
Even the Bell Policy Center’s own voter guide notes that statutory measures “can be amended by future legislatures without going back to the ballot.” A future legislature could lower the rates or repeal the TABOR exemption through an ordinary bill. Raising them would still require going back to voters, because TABOR’s rate-increase rule survives untouched.
Initiative 232 makes no constitutional change at all. Its 4.4 percent cap sits in the same kind of ordinary statute as three of Initiative 195’s five sections, amendable by whichever legislature comes next either way.
The 97 percent, and who crosses the line
The Bell coalition’s main pitch, reported by Colorado Politics, is that 97 percent of Coloradans would pay less under Initiative 195.
For wage earners, the new rates cut taxes for anyone with taxable income below $100,000, and the marginal rate from $100,000 to $500,000 stays at 4.40 percent, the same as today.
Chris deGruy Kennedy, the Bell Policy Center’s president and CEO, has described the push as a response to Colorado’s budget shortfall. “It’s just clear that we need to be putting big ideas out there and be talking about real, potential solutions,” he told reporters last summer.
S-corp owners and many LLC owners, including contractors, medical practices, small manufacturers, and family businesses, face the same brackets as anyone else.
The dividing line is the $500,000 threshold, not where the income comes from. But their share of the business’s profit flows directly onto their personal tax return as pass-through income, counting toward the taxable income that determines where they land.
The LCS fiscal note uses this example: A taxpayer with taxable income of $600,000 would pay 3.7 percent on the first $25,000, 4.2 percent on the next $75,000, 4.4 percent on the next $400,000, and 7.4 percent on the last $100,000. A contractor clearing $600,000 in taxable income might own two trucks and employ six people.
Under Initiative 195, they’re in the same bracket the coalition’s messaging reserves for the wealthy.
Michael Fields, president of the Advance Colorado Institute and a proponent circulating petitions for Initiative 232, said Initiative 195 would backfire. “We’re going to chase revenue out of the state,” he told Colorado Politics in June. “If you go and double taxes for businesses or individuals that are higher income earners, they’re going to leave the state and go somewhere else and we’re seeing that in other states that have decided to do this recently.”
A rate voters built — twice
The current 4.40 percent rate didn’t arrive by default. Voters put it there.
Colorado’s flat tax started at 5 percent in 1987, dropped to 4.75 percent in 1999, and settled at 4.63 percent in 2000. Then voters started cutting it themselves. Proposition 116 trimmed it to 4.55 percent in 2020, passing with roughly 58 percent of the vote.
That same year, a coalition called Fair Tax Colorado was pursuing a graduated tax measure for the same ballot. They couldn’t gather enough signatures, citing a petition process complicated by the pandemic. Proposition 116 passed.
Two years later, Jon Caldara of the Independence Institute and state Sen. Jerry Sonnenberg brought Proposition 121 to the ballot, cutting the rate again to 4.40 percent. The same two men had filed Proposition 116. Fields publicly backed it. It passed in November 2022 with 65 percent of the vote, carrying 63 of Colorado’s 64 counties.
“In 1987, the legislature voted to make Colorado the first state to transition from a graduated tax system to one that relies on a flat income tax rate applied evenly across all income levels,” wrote Fogleman. Later in the same piece, he added, “Notably, no state that has transitioned to a flat tax has ever reversed course.”
The Bell coalition is trying to be the first.
If both pass
Advance Colorado submitted its signatures for Initiative 232 on July 15, turning in 190,000 of them against a requirement of just over 124,000 valid, according to Colorado Politics.
The Secretary of State has moved that petition into signature line review, with a September 2 deadline to complete it.
Initiative 195 crossed the 75 percent signature threshold on July 20. As of Monday morning, no petition filing had been logged for it, with the August 3 deadline still ahead.
If both qualify and both pass in November, state law has a tiebreaker.
Under Section 1-40-123 of the Colorado Revised Statutes, the measure with the higher vote total wins on any points where the two conflict. Non-conflicting provisions of the losing measure survive.
The income tax question goes to whichever one more voters approved.
Proposition 121, the last time Coloradans voted directly on this rate, carried every county but one. Sixty-five percent voted yes.
That number is in the public record.
Of everything in both measures, only a few lines in the state constitution are built to outlast whatever the next legislature decides to do.