Great news for Colorado residents: tax refunds will be coming your way again in 2025, thanks to the state’s Taxpayer’s Bill of Rights (TABOR). TABOR limits how much revenue the state can collect, requiring any excess to be returned to taxpayers. Recently, the state revealed it has collected $1.4 billion more than allowed under TABOR, in addition to a previously under-refunded $289 million.
If you’re wondering how much you’ll receive and when these refunds will be distributed, here’s everything you need to know.
Refund Methods
In the past, Colorado has issued refunds in several different ways. For example, in 2022, refunds came via paper checks. While this was a special occurrence, the state has outlined three main methods for returning refunds in 2025:
- Direct Deposits to bank accounts
- Paper Checks
- Prepaid Debit Cards
Each method will ensure that eligible taxpayers receive their money as efficiently as possible.
Who Will Benefit?
Colorado’s tax refund system, particularly the refund of local government property tax exemptions, is designed to support vulnerable groups. These exemptions specifically benefit older adults, veterans with disabilities, and Gold Star spouses. These groups receive added financial relief, recognizing their service and contributions.
Temporary Income
One exciting feature of the 2025 refunds is a temporary reduction in the state income tax rate, dropping from 4.45% to 4.25%. This reduction is processed automatically through your income tax filing and can offer savings on top of the direct refunds.
Refund System
For 2025, Colorado has introduced a six-tier sales tax refund system, which is designed to distribute refunds based on adjusted gross income (AGI). This system ensures that the refunds are distributed equitably, giving more to those with lower incomes and scaling up for higher earners.
If the refund amount exceeds $15 per person, it will also be processed via the income tax filing system. This setup promotes fairness while making sure every taxpayer receives their rightful share.
How Much Can You Expect?
The amount of your refund will depend on your AGI and your filing status (whether you file as a single person or jointly). Here’s a breakdown of the expected refund amounts based on income levels:
| Adjusted Gross Income | Single Filers | Joint Filers |
|---|---|---|
| Up to $53,000 | $177 | $354 |
| $53,001 to $105,000 | $240 | $480 |
| $105,001 to $166,000 | $277 | $554 |
| $166,001 to $233,000 | $323 | $646 |
| $233,001 to $302,000 | $350 | $700 |
| Over $302,001 | $565 | $1,130 |
These refund amounts ensure that taxpayers at all income levels receive financial benefits, with higher refunds available to those in the upper-income brackets. However, even those in the lower tiers can expect meaningful tax relief, helping to offset rising costs in daily living.
What’s Next?
Refunds are expected to be distributed in 2025 for the 2023-24 fiscal year. While this round of refunds is substantial, future payments may be less certain due to potential budget tightening. State officials have signaled that these refunds could shrink beyond 2025 as state finances adjust to new fiscal realities.
Make sure to stay informed about updates from the state regarding your specific refund amount and method of payment. Whether it’s a direct deposit, paper check, or prepaid debit card, the state will keep you updated as we approach the 2025 distribution.
Colorado’s commitment to returning excess revenue under TABOR provides financial relief for its residents, especially as inflation and the cost of living continue to rise. With a mix of income tax reductions and sales tax refunds, the state is ensuring that both individuals and families benefit from this program.
FAQs
How much will I get from my TABOR refund?
Your refund depends on your adjusted gross income. Single filers can receive $177 to $565, while joint filers may receive $354 to $1,130.
When will TABOR refunds be distributed in 2025?
Refunds will be issued in 2025 for the 2023-24 fiscal year, though exact dates are yet to be confirmed.
What methods are available for receiving the TABOR refund?
Refunds will be sent via direct deposit, paper check, or prepaid debit card.
Will I benefit from the temporary income tax rate reduction?
Yes, the income tax rate will temporarily reduce from 4.45% to 4.25%, processed during your income tax filing.
Who qualifies for property tax exemptions in Colorado?
Older adults, veterans with disabilities, and Gold Star spouses are eligible for property tax exemptions.
