Denver Tax Planning: Colorado's Flat Tax and Outdoor Lifestyle Savings

Denver combines a thriving tech and outdoor recreation economy with one of the most taxpayer-friendly structures in the country. Colorado's flat 4.4% income tax rate, combined with the unique TABOR refund mechanism, means Denver residents often get money back from the state.

Colorado's TABOR Refund

Colorado's TABOR amendment limits government revenue growth. When the state collects more than allowed, the excess is refunded to taxpayers. In recent years, TABOR refunds have ranged from $400 to $800 per person — essentially a tax rebate that no other state offers.

The 4.4% Flat Tax Advantage

Colorado recently reduced its flat tax from 4.55% to 4.4%. For a $120,000 salary, that is $5,280 in state tax — significantly less than California ($7,800+), New York ($5,500+), or Massachusetts ($6,000). Combined with TABOR refunds, the effective rate drops even lower.

Denver Occupational Privilege Tax

Denver charges a small Occupational Privilege Tax of $5.75 per month for employees working in the city. Your employer also pays $4.00 per month. While minimal, it is unique to Denver and worth noting on your pay stub.

Outdoor Lifestyle Tax Benefits

Colorado offers a conservation easement tax credit for land preservation. While primarily for landowners, the state's commitment to outdoor access means many recreational activities and state parks are taxpayer-subsidized, stretching your after-tax dollars further.