Colorado: On Tax Day, Governor Polis Highlights Federal Tax Policies Driving Up Costs and State Action to Support Coloradans

DENVER – As a result of recent federal tax policies, including the reconciliation law H.R.1 and increased tariffs, Americans and Coloradans are paying more while getting less. On National Tax Day, Governor Polis remains focused on making Colorado more affordable and protecting Coloradans from the worst of these failed federal tax policies.

"The Trump Administration policies such as huge tariff tax hikes make life more expensive for Coloradans, blow a hole in our state budget, and shift costs onto states and families. Colorado is stepping up to do what the federal government won't: balancing our budget, lowering costs, and protecting the services people rely on," said Governor Polis.

While some taxpayers may see small, temporary benefits, higher costs from tariffs, the loss of health care tax credits, and other policy changes outweigh those gains for all but the wealthiest Americans. Notable tax increases since the start of the Trump Administration include:

H.R.1

• Cuts nearly $1 trillion from health programs, increasing annual premiums by $1,000+ for Americans who receive healthcare through the ACA marketplace;
• Leaves households earning $96,000 or less paying more on average when factoring in lost services and rising costs, with the lowest-income household losing an average of $1,559 annually;
• Created a $1.2 billion hole in the balanced FY24-25 state budget, forcing a special session to address this gap;
• State analysis suggests that due to the corporate tax cuts in the federal bill, the state budget will forgo $700-956 million in FY 26, $535-830 million in FY27, and $616-850 million in FY28;
• While marginally cutting taxes on individuals and businesses, IRS collections data for FY25 shows that federal revenue from Individual Income Taxes remains largely unchanged, highlighting the fact that savings from H.R.1 are not as large as perceived.

Tariffs

• Colorado's effective tariff rate has skyrocketed from 3 percent in 2024 to 21 percent in 2025, the highest level in more than a century;
• Increased the effective U.S. tariff rate by 219% from 2024 to 2025;
• Added roughly $1,700 in annual costs per household in 2025;
• Imposed 15% tariffs following repeal of IEEPA tariffs will cost the average household $600-800 in 2026.

Taxes on Tips

• Caps deductions at $25,000, limiting the benefit for many full-time tipped workers;
• Provides temporary and narrow relief that does not offset rising costs from tariffs, inflation, and health care changes;
• Coloradans won't be taxed on tips up to $25,000, but this is temporary and expires in 2028;
• In Colorado most income for tipped workers comes from wages and overtime, not tips — limiting the impact of these tax changes for most workers.

Enhanced Premium Tax Credits (EPTCs)

• The expiration of the EPTCs is raising health care costs for millions of Americans;
• Contributes to reduced marketplace enrollment and increased premiums nationwide;
• Shifts costs onto working families, forcing many to choose between food, health care, rent, or utility bills.

Everyday Costs

• Gas prices exceeded $4/gallon nationally in early April, largely due to supply chain disruptions caused by the President's war with Iran;
• Grocery prices remain elevated, with key staples like beef rising more than 15% in the past year, hurting one of Colorado's largest agricultural exports.

Since taking office, Governor Polis has worked to save people money and make life better for Coloradans by:

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Cutting Income Tax

• Cutting the income tax three times, including twice at the ballot, reducing it from 4.63% to 4.40%;
• Delivered permanent tax relief, helping Colorado rank as the 7th lowest tax rate of any state.

Reducing Property Taxes

• Delivered bipartisan property tax relief, saving the average Colorado homeowner about $285 annually, while protecting school funding;
• Established a 5.5% cap on property tax growth to provide long-term stability for families and businesses.

Expanding Free Preschool and Kindergarten

• In its second year, Colorado's Universal Preschool Program enrolled more than 50,000 children, saving families more than $6,100 annually;
• Free kindergarten saves Colorado families thousands of dollars every year.

Expanding Housing Coloradans Can Afford

• Signed legislation allowing Coloradans to build Accessory Dwelling Units;
• Has deployed (https://prop123.works/dashboard) over $587 million in Prop 123 funding to date;
• Made it easier for schools and nonprofits to build housing on land they own; (https://governorsoffice.colorado.gov/governor/news/9411-creating-jobs-and-affordable-housing-polis-administration-announces-innovative-housing)
• Created the Innovating Housing Incentive Program to support the development and expansion of Colorado's innovative housing manufacturing businesses;
• Eliminated costly parking requirements and discriminatory occupancy limits;
• Created the Educator First Program, (https://www.colorado.gov/governor/news/governor-polis-signs-new-law-supporting-home-ownership-colorado-educators) helping teachers and educators to afford their first home;
• Took action to increase housing near transit;
• Broke down barriers that prevented condo construction.

Providing Tax Credits for Working Families

• Saving working families thousands annually (https://governorsoffice.colorado.gov/governor/news/governor-polis-department-revenue-and-colorado-department-public-health-environment-team-help) by including up to $3,200 per child through the Family Affordability Tax Credit, $1,200 per young child through the Child Tax Credit, and up to $3,915 through the Earned Income Tax Credit.

Saving People Money on Health Care

• Lowering the cost of prescription drugs by capping the cost of insulin, creating the Prescription Drug Affordability Board and pursuing a drug importation waiver to save Coloradans more than 60% on medications, (https://governorsoffice.colorado.gov/governor/news/4071-colorado-releases-solicitation-import-prescription-drugs-canada) with some drugs seeing even greater savings;
• Ensuring prescription drug savings go directly to patients (https://governorsoffice.colorado.gov/governor/news/7991-governor-jared-polis-sign-new-laws-protect-colorados-economy-health-lower-cost) instead of insurance companies;
• Expanding access to behavioral health care (https://governorsoffice.colorado.gov/governor/news/better-serving-foster-youth-and-improving-health-care-access-governor-polis-signs-bills-law) and increasing treatment capacity across the state.

Even as federal policies drive up costs, Governor Polis remains focused on delivering real results for Coloradans — lowering costs, supporting businesses, and making Colorado a more affordable place to live, work, and raise a family.

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