PDF OF FULL REPORT | ONE PAGER
Author: Dr. Steven Byers, Chris Brown
Introduction
Rising property taxes are part of a larger housing challenge in Colorado. Colorado continues to grapple with an acute housing shortage, resulting in sky-high home prices and an alarming affordability crisis for owners and renters. In January, Common Sense Institute calculated the number of hours that one would have to work while earning the average hourly wage in each year from 2013 to 2023 to cover the monthly mortgage payments. In the Denver metro area, the increase was 172%, from 42 to 114.
For decades, the calculation of residential property taxes in Colorado was dictated by a voter-approved formula known as the Gallagher Amendment. The interaction between that formula, disparate growth in home prices, and TABOR led the state legislature to refer a measure to Colorado voters to repeal the Gallagher Amendment in 2020. Voters ultimately voted to approve the repeal of the Gallagher Amendment without a long-term replacement.
While nobody could have predicted the events that transpired in 2020, leading to a sudden surge in home values, repealing the Gallagher Amendment without a replacement always risked uncontrolled increases in property taxes. This year’s tax bills following the latest re-assessment period reveal how costly this policy change—and the lack of substantive taxpayer protections—is for homeowners. Estimates from the Colorado Legislative Council staff indicate residential property assessed value increased over 27% in 2023. Data compiled by CSI from just three counties shows actual property taxes increased an average of 36% in Douglas County and by over 18% in both Boulder and Arapahoe counties, surpassing inflation and wage growth.
Key Findings
- Property taxes are a primary driver of Colorado homeowners’ cost of living increase this year.
- Property taxes alone account for 17% of the increase in household expenses this year.
- Property taxes combined with other housing expenses accounted for 66% of the increase in average homeowner expenses.
- Through 2023, the number of hours of work at the average weekly wage to afford the median-priced home increased 2.7 times since 2013, increasing from 42 to 114 hours.
- The property tax burden on middle-income Coloradans is growing at a staggering pace.
- Homeowners face an estimated 32% to 54% cumulative increase in their property tax bill between 2024 and 2026 for a $500,000 home.
- In 2021, 63% of Coloradans lived in a county where the property tax to income ratio was above the national average.
- Denver County has a higher property tax-to-income ratio than 63% of all U.S. counties.
Where Did Colorado Property Taxes Stand Before 2024?
Many Coloradans pay higher than average taxes, even adjusted for income. Despite effective tax rates being lower than average, the rapid increase in home values in Colorado over the past decade has made an impact.
Colorado has the 27th lowest median property tax payment in the nation. Statewide, the median property tax payment as a percent of median income ranks as the 20th lowest.
However, the 12 Colorado counties that are home to 63% of the state’s population rank above the U.S. average for median tax as a percentage of median household income.
Denver had the second lowest effective property tax rate among the largest cities in every state in 2021, yet it had the 20th lowest payment, increasing four spots over the prior four years.[i] Denver County has a higher property tax-to-income ratio than 63% of all U.S. counties.
Maintaining steady and competitive property tax payments is critical for the state’s competitiveness in attracting and retaining a growing workforce.
Figure 1
How Will Colorado Property Taxes Compare Going Forward Without a Meaningful Growth Limit?
The Gallagher Amendment’s repeal precipitated Colorado’s property tax situation.
Before its repeal, the Gallagher Amendment forced down residential property tax rates over time, keeping the growth in property tax bills below the growth in home values. This provided more predictability and stability for taxpayers. However, it made revenue less predictable and stable for local jurisdictions.
The Gallagher Amendment was one of several types of property tax limiting measures in use across the U.S. According to research by the Tax Foundation, all but three states have limiting factors governing annual property tax increases.[ii] There are three categories: assessment, rate, and levy.
Assessment limits typically restrict the increase in the assessed value of individual properties. Rate limits restrict changes in property tax millage, either at the level of individual taxing authority or in aggregate. Levy limits or revenue limits restrict the amount of revenue increases for individual authorities or groupings of taxing authorities.
The repeal of the Gallagher Amendment left Coloradans without a meaningful tax limitation structure. Coloradans now likely face some of the fastest-growing property taxes anywhere. Despite some mill levies coming down to offset assessed value growth, most homeowners saw significant property tax increases that outpaced inflation.
Over the next two years, the statewide assessment rate is set to increase from 6.7% to 7.15%. The temporary $55,000 exemption applied in 2023 will end at the same time. Under current law, Colorado homeowners will face large property tax increases even if their assessed values stay flat.
The owner of a $500,000 home in 2022 that saw their value increase 40% in 2023, then just 7% in 2025, will see a 54% increase in their property tax bills over a three-year period. The owner of a different $500,000 home in 2022 that saw their value increase 20% in 2023, then 7% in 2025, will see a 32% increase in their property taxes over a three-year period.
Figure 2
| Growth in Property Tax Under Current Law | ||||
| 2022 | 2023 | 2024 | 2025 | |
| Home Price – Scenario 1 | $500,000 | $700,000 | $700,000 | $749,000 |
| Home Price – Scenario 2 | $500,000 | $600,000 | $600,000 | $642,000 |
| Assessment Rate | 0.0695 | 0.067 | 0.07061 | 0.0715 |
| Exemption | $55,000 | |||
| Mill Levy | 0.085 | 0.085 | 0.085 | 0.085 |
| Property Tax – Scenario 1 | $2,954 | $3,673 | $4,201 | $4,552 |
| Property Tax – Scenario 2 | $2,954 | $3,104 | $3,601 | $3,902 |
| Property Tax Increase – Scenario 1 | $720 | $528 | $351 | |
| Property Tax Increase – Scenario 2 | $150 | $497 | $301 | |
| Property Tax Increase % – Scenario 1 | 24.4% | 14.4% | 8.3% | |
| Property Tax Increase % – Scenario 2 | 5.1% | 16.0% | 8.3% | |
Impact of Property Taxes on Affordability Over Recent History
Housing affordability has declined significantly under the recent growth in home prices and mortgage interest rates. CSI housing affordability reports have shown just how much the cost of purchasing a home in Colorado has outpaced incomes. A current homebuyer earning the average hourly weekly wage would need to commit 114 hours of their work each month towards purchasing the median-priced home today – 2.7 more than a decade ago.[iii]
With the removal of the Gallagher Amendment, the growth in property taxes this year will meaningfully affect affordability. Property taxes will account for 17% of the average homeowner’s increase in expenditures this year. While household expenditures have increased by over $3,700 in the last year, the average property tax increased by nearly $650.
Figure 3
Voters and elected officials expected something to replace the longstanding formula governing property taxes leading up to the Gallagher Amendment’s repeal. It has yet to come, leaving no long-term fix that can provide stability and predictability to both taxpayers and local governments.Nearly every state property tax system has meaningful tax growth limitations that provide greater certainty and avoid the recurring need for last-minute property tax relief legislation. Though Colorado has promulgated annual policy changes that offer temporary and limited relief, Colorado homeowners still face large increases in taxes under current law. These increases will likely further lower Colorado’s relative property tax competitiveness and strain overall affordability.
Appendix
Colorado Property Tax Rankings
| County | Median Tax Payment, 2021 | Median Household Income, 2021 | Median Tax Rank | Median Tax Rank Percentile | Median Tax as % of Median Household Income | Median Tax as % of Median Household Income Rank (out of 3221 counties) | Median Tax as % of Median Household Income Rank percentile |
| Dolores County | $470 | $62,500 | 200 | 6.21% | 0.75% | 55 | 1.71% |
| Prowers County | $445 | $44,984 | 176 | 5.46% | 0.99% | 129 | 4.00% |
| Otero County | $473 | $45,826 | 204 | 6.33% | 1.03% | 148 | 4.59% |
| Crowley County | $394 | $37,870 | 133 | 4.13% | 1.04% | 155 | 4.81% |
| Jackson County | $480 | $44,667 | 215 | 6.67% | 1.07% | 173 | 5.37% |
| Bent County | $443 | $40,972 | 174 | 5.40% | 1.08% | 177 | 5.50% |
| Lincoln County | $527 | $46,894 | 263 | 8.17% | 1.12% | 197 | 6.12% |
| Las Animas County | $509 | $45,118 | 237 | 7.36% | 1.13% | 200 | 6.21% |
| Gilpin County | $1,121 | $96,784 | 1234 | 38.31% | 1.16% | 217 | 6.74% |
| Cheyenne County | $803 | $69,063 | 734 | 22.79% | 1.16% | 225 | 6.99% |
| San Juan County | $791 | $63,333 | 715 | 22.20% | 1.25% | 290 | 9.00% |
| Costilla County | $440 | $35,000 | 169 | 5.25% | 1.26% | 294 | 9.13% |
| Baca County | $522 | $39,891 | 256 | 7.95% | 1.31% | 349 | 10.84% |
| Sedgwick County | $584 | $44,405 | 342 | 10.62% | 1.32% | 355 | 11.02% |
| Rio Blanco County | $781 | $58,239 | 693 | 21.52% | 1.34% | 370 | 11.49% |
| Huerfano County | $654 | $45,724 | 463 | 14.37% | 1.43% | 451 | 14.00% |
| Kiowa County | $679 | $45,476 | 506 | 15.71% | 1.49% | 502 | 15.59% |
| Saguache County | $726 | $48,413 | 575 | 17.85% | 1.50% | 509 | 15.80% |
| Montezuma County | $906 | $58,335 | 896 | 27.82% | 1.55% | 569 | 17.67% |
| Fremont County | $844 | $53,411 | 787 | 24.43% | 1.58% | 600 | 18.63% |
| Conejos County | $610 | $38,536 | 378 | 11.74% | 1.58% | 604 | 18.75% |
| Rio Grande County | $805 | $50,287 | 737 | 22.88% | 1.60% | 630 | 19.56% |
| Moffat County | $956 | $58,583 | 973 | 30.21% | 1.63% | 670 | 20.80% |
| Delta County | $848 | $51,803 | 798 | 24.77% | 1.64% | 673 | 20.89% |
| Washington County | $893 | $54,141 | 871 | 27.04% | 1.65% | 693 | 21.52% |
| Yuma County | $931 | $56,327 | 937 | 29.09% | 1.65% | 698 | 21.67% |
| La Plata County | $1,250 | $75,089 | 1439 | 44.68% | 1.66% | 714 | 22.17% |
| San Miguel County | $1,208 | $70,965 | 1357 | 42.13% | 1.70% | 761 | 23.63% |
| Logan County | $916 | $50,998 | 915 | 28.41% | 1.80% | 864 | 26.82% |
| Park County | $1,401 | $77,775 | 1694 | 52.59% | 1.80% | 867 | 26.92% |
| Kit Carson County | $958 | $52,917 | 979 | 30.39% | 1.81% | 878 | 27.26% |
| Montrose County | $1,036 | $57,225 | 1094 | 33.96% | 1.81% | 879 | 27.29% |
| Custer County | $1,095 | $59,877 | 1196 | 37.13% | 1.83% | 895 | 27.79% |
| Mesa County | $1,139 | $62,127 | 1271 | 39.46% | 1.83% | 904 | 28.07% |
| El Paso County | $1,449 | $75,909 | 1785 | 55.42% | 1.91% | 996 | 30.92% |
| Teller County | $1,318 | $68,677 | 1545 | 47.97% | 1.92% | 1008 | 31.29% |
| Lake County | $1,420 | $73,099 | 1729 | 53.68% | 1.94% | 1034 | 32.10% |
| Morgan County | $1,238 | $62,914 | 1410 | 43.78% | 1.97% | 1066 | 33.10% |
| Alamosa County | $918 | $46,217 | 918 | 28.50% | 1.99% | 1085 | 33.69% |
| Archuleta County | $1,252 | $62,907 | 1442 | 44.77% | 1.99% | 1091 | 33.87% |
| Grand County | $1,381 | $69,353 | 1662 | 51.60% | 1.99% | 1094 | 33.96% |
| Phillips County | $1,051 | $50,951 | 1124 | 34.90% | 2.06% | 1173 | 36.42% |
| Pueblo County | $1,134 | $53,430 | 1264 | 39.24% | 2.12% | 1235 | 38.34% |
| Elbert County | $2,481 | $114,904 | 2683 | 83.30% | 2.16% | 1275 | 39.58% |
| Chaffee County | $1,331 | $61,216 | 1569 | 48.71% | 2.17% | 1294 | 40.17% |
| Weld County | $1,784 | $80,843 | 2203 | 68.39% | 2.21% | 1331 | 41.32% |
| Garfield County | $1,759 | $77,212 | 2169 | 67.34% | 2.28% | 1418 | 44.02% |
| Ouray County | $1,552 | $67,228 | 1915 | 59.45% | 2.31% | 1466 | 45.51% |
| Summit County | $2,174 | $93,505 | 2511 | 77.96% | 2.33% | 1482 | 46.01% |
| Gunnison County | $1,484 | $63,341 | 1829 | 56.78% | 2.34% | 1507 | 46.79% |
| Routt County | $1,974 | $83,725 | 2386 | 74.08% | 2.36% | 1520 | 47.19% |
| Clear Creek County | $1,803 | $76,313 | 2220 | 68.92% | 2.36% | 1528 | 47.44% |
| Mineral County | $1,384 | $55,556 | 1666 | 51.72% | 2.49% | 1666 | 51.72% |
| Douglas County | $3,187 | $127,443 | 2921 | 90.69% | 2.50% | 1678 | 52.10% |
| Jefferson County | $2,490 | $93,933 | 2690 | 83.51% | 2.65% | 1835 | 56.97% |
| Hinsdale County | $1,228 | $45,714 | 1389 | 43.12% | 2.69% | 1866 | 57.93% |
| Arapahoe County | $2,378 | $84,947 | 2625 | 81.50% | 2.80% | 1980 | 61.47% |
| Larimer County | $2,281 | $80,664 | 2575 | 79.94% | 2.83% | 2008 | 62.34% |
| Denver County | $2,234 | $78,177 | 2548 | 79.11% | 2.86% | 2040 | 63.33% |
| Eagle County | $2,657 | $91,338 | 2761 | 85.72% | 2.91% | 2098 | 65.14% |
| Adams County | $2,292 | $78,304 | 2580 | 80.10% | 2.93% | 2114 | 65.63% |
| Broomfield County | $3,179 | $107,570 | 2919 | 90.62% | 2.96% | 2137 | 66.35% |
| Boulder County | $3,164 | $92,466 | 2917 | 90.56% | 3.42% | 2472 | 76.75% |
| Pitkin County | $3,400 | $92,708 | 2967 | 92.11% | 3.67% | 2624 | 81.47% |
[i] https://www.lincolninst.edu/publications/other/50-state-property-tax-comparison-study-2021
[ii] https://taxfoundation.org/research/all/state/property-taxes-guide/
[iii] https://commonsenseinstituteco.org/colorado-housing-affordability-report/