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Colorado voters voted “yes” to decrease the individual and corporate tax rate from 4.63% to 4.55% for tax years beginning on or after January 1, 2020.
Proposition 116 passed in Colorado with support from almost 58% of the voters. This will reduce the individual, estate, trust and corporation tax rate as well as the withholding rate in Colorado from 4.63% to 4.55%.
The results from the election are still “unofficial” although 100% of counties have reported in. Colorado will need to certify the results by the end of November. After the results are certified, this proposition will change the law with a proclamation from the governor. The date the law takes effect will affect the date the withholding rate takes effect and could be either December 2020 or January 2021.
Once the law takes effect, taxpayers should account for this rate change in their provisions, estimated payments and extension calculations. Employers should also monitor developments to determine when they should start withholding at the reduced rate.
If you have any additional questions, contact our experts.
November 24, 2020
