Colorado

The Facts on Colorado's Tax Climate

Here are some basic facts on Colorado’s tax system and how it compares to other states:

Tax Freedom Day Arrives on April 8 in Colorado
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, Colorado taxpayers work until April 8, four days before national Tax Freedom Day, to pay their total tax bill, ranking the state 24th highest nationally. The Tax Freedom Days of neighboring states are: Arizona, April 2 (ranked 39th nationally); Utah, April 10 (ranked 19th nationally); Wyoming, April 11 (ranked 11th nationally); Nebraska, April 12 (ranked 15th nationally); Kansas, April 10 (ranked 20th nationally); Oklahoma, April 2 (ranked 41st nationally); and New Mexico, March 31st (ranked 45th nationally).
Full study of Tax Freedom Day, nationwide and in each state

Colorado's State and Local Tax Burden Below National Average
Colorado has dropped 18 places in the state/local tax burden ranking over the last 30 years. It levies every major tax, but the rate on each is among the lowest in the country. Spending discipline in the form of a TABOR (Taxpayer Bill of Rights) has helped the state keep tax rates low.

Colorado's 2009 state and local tax burden of 8.6% of income is below the national average of 9.8%. Colorado's tax burden has decreased overall from 10.3% (21st nationally) in 1977 to 8.6% (39th nationally) in 2009. Colorado taxpayers pay $4,011 per capita in state and local taxes.

Colorado's State-Local Tax Burden, 1977-present
Other States' State/Local Tax Burdens
Map of U.S. Showing all State's Burdens and Ranks
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2009

Colorado's 2012 Business Tax Climate Ranks 16th
Colorado ranks 16th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. The ranks of neighboring states are as follows: Arizona (27th), Utah (10th), Wyoming (1st), Nebraska (30th), Kansas (25th), Oklahoma (33rd) and New Mexico (38th).
50-State Comparison of Business Tax Climates (data only)
2012 State Business Tax Climate Index, Ninth Edition (full study)

Colorado's Individual Income Tax System

Colorado's personal income tax system consists of a flat tax of 4.63% on the entirety of an individual's taxable federal income. That top rate ranks 38th highest among states levying an individual income tax. In 2009 Colorado's state-level individual income tax collections were $884 per person, which ranked 19th highest nationally. Since most small businesses are either S Corporations or partnerships or sole proprietorships, they pay their business taxes at the rates for individuals. The state's low income tax rate makes the tax environment for small businesses in Colorado competitive compared to other states.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

Colorado's Corporate Income Tax System
Colorado's corporate tax structure consists of a flat rate of 4.63% on all corporate income. Among states levying corporate income taxes, Colorado's rate ranks 43rd highest nationally. In 2009, state-level corporate tax collections (excluding local taxes) were $66 per capita, which ranked 41st highest nationally among states that tax corporate income.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household50-State Table of State Corporate Income Tax Collections Per Capita

Colorado Sales and Excise Taxes
Colorado levies a 2.9% general sales or use tax on consumers, one of the  lowest rates among states levying a sales tax. In 2007 combined state and local general and selective sales tax collections were $1,374 per person, which ranked 25th highest nationally. Colorado's gasoline tax stands at 22 cents per gallon (31st highest), while its cigarette tax stands at $0.84 per pack of twenty (32nd highest). The sales tax was adopted in 1935, the gasoline tax in 1919 and the cigarette tax in 1964.
50-state table of sales, cigarette, gas, beer, wine, and spirits tax rates.
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita

Colorado Property Taxes: Middle of the Pack
Colorado's local governments collected $1,116.34 per capita in property taxes during fiscal year 2006, the latest year for which the Census Bureau has published state-by-state data. Colorado is one of the 13 states that collect no state-level property taxes. Its per capita property tax collections rank 23rd highest nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Colorado is a Donor State
Colorado taxpayers receive less federal funding per dollar of federal taxes paid compared to the average state. Per dollar of federal tax collected in 2005, Colorado citizens received approximately $0.81 in the way of federal spending. This ranks the state 41st nationally, the same ranking as in 1995 when Colorado received $.95 per dollar of taxes in federal spending. Neighboring states and the amount of federal spending they received per dollar of federal taxes paid were: Arizona ($1.19), Utah ($1.07), Wyoming ($1.11), Nebraska ($1.10), Kansas ($1.12), Oklahoma ($1.36), and New Mexico ($2.03).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

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