How Colorado TABOR Refunds Changed in 2026

Authored by: Erica Lacy — Partner, CPA | Date Published: March 11, 2026

When opening your tax refund this year, you don’t want to be hit with confusion about why it seems to be so small. Where you used to get hundreds, single filers are lucky to see $50. That can’t be right.

The truth hurts. Colorado’s TABOR refund system has been a source of both pleasant surprises and questions for state taxpayers. As filing season approaches, understanding what happened to cause these changes to TABOR refunds will help you plan better for this filing season and beyond.

What are TABOR Refunds?

Most Colorado residents are well-versed in the 1992 Taxpayer’s Bill of Rights (TABOR), the bill that requires the state to return any surplus of revenue

TABOR: The premises were simple and appealing. If the government collects more revenue than the cap, the excess goes back to taxpayers. This promise had made Colorado an attractive residency for taxpayers.

These auto refunds that many are expecting are suddenly plummeting.

Colorado’s generated surplus declined by approximately $296 million this year. After accounting for homestead property tax refunds, the remaining pool for general TABOR refunds has shrunk considerably.

We aren’t seeing a repeal of TABOR, but we are seeing the effects of a tightening fiscal cap. The days of planning a vacation around your TABOR check are, for now, on hold.

Let’s unravel exactly why that is.

What is Colorado’s Six-Tier System?

Colorado used to issue a flat refund to everyone until the state switched to its current six-tier sales tax system. With these tiers, money is distributed based on adjusted gross income.

Colorado residents receive proportional relief, with lower earners receiving refunds relative to their tax burden.

Here’s what this looks like:

Lowest tier: Approximately $20
Middle-income: Around $40
Highest tier: Up to $62

Let’s put this in perspective:

Last year’s refunds ranged from $181 to $571 for single filers, and the year before featured a flat $800 payment across the board. This year, single filers can expect a mere amount ranging from $20 to $62.

Sticker shock is a real feeling for Colorado residents right now. Especially when you compare these amounts to last year’s range.

Why did Colorado TABOR Refunds Decrease in 2026?

Before calling your accountant to try to clear up your tax refund questions, we’ll offer our perspective. Understanding why your refund shrank requires examining what plays a distinct role in Colorado’s financial system.

The decline in TABOR refunds reflects several converging factors:

Lower economic activity: Colorado’s economy has slowed since the post-pandemic recovery years, translating to reduced tax revenue collection by the state.
Recent federal tax legislation: After the major tax and spending law in 2025, Colorado lost approximately $1 billion in tax revenue.
Lower-income tax credits: Colorado redirected funds toward tax credits designed to help lower-income families, including both the expanded Earned Income Tax Credit and the new Family Affordability Tax Credit.
Homestead property tax refunds: Two-thirds of this year’s surplus are allocated to the homestead property tax refunds, leaving less than $100 million for income-based TABOR payments.

Think of TABOR this way:

If TABOR is a bucket that overflows when filled past the rim, this year, the water level lowered so much that the overflow barely trickled. If a refund is something you factored into your financial plan, consider reaching out to a certified accountant to start discussing new arrangements for tax season.

What You Should Know for Filing Season

It’s one thing to read about the TABOR changes, and it’s another to adapt your tax filing. Your refund will look different this year, and there are steps you can take to confirm it was issued correctly.

Here’s a list of things to note about filing this year:

Integrated TABOR and state income tax return: The current system integrates your refund directly with your state income tax return, so you must actively claim both. File your 2025 Colorado Individual Income Tax Return by the deadline.
Select TABOR sales tax refund: There’s a checkbox option on your return specifically for the TABOR refund. Regardless of how you choose to file, make sure this refund is claimed on your behalf.
Auto temporary income tax reduction: All Colorado taxpayers who file a 2025 income tax return will automatically benefit from a temporary income tax rate reduction from 4.40% to 4.25%
Important timing: While you can file your federal return earlier, plan to file your Colorado return once the state processing systems open to receive your TABOR refund in a timely manner.

Now that Colorado has begun accepting tax returns, now is the time to connect with your accounting partner. This tax season, you can file with confidence and claim every available benefit to you.

What Colorado Residents Can Expect in the Future

A smaller refund this year is disappointing, but with projected 2026 revenue, there may be no surplus to return to taxpayers next year. The volatility of TABOR refunds highlights the importance of treating them as bonus income rather than expected revenue.

Have you adjusted your household budgeting properly?

Here’s how partnering with an experienced accounting professional can make a meaningful difference this filing season:

Maximizing Available Credits and Deductions
Checking for Proper TABOR Refund Claims
Strategic Tax Planning for Future Years
Audit Support and Documentation
Staying Current with Ongoing Changes

The value of professional guidance is especially important for the 2026 filing season. Don’t let a smaller refund check block you from the larger opportunity to improve your tax situation.

After all, tax season shouldn’t feel like deciphering a cryptic refund alone. It’s time to find a tax partner.