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October 30, 2020

Colorado voters to decide whether state's flat income tax rate should be retroactively reduced and if there should be paid family and medical leave insurance program

On November 3, 2020, Initiative 306 will appear on the 2020 ballot, giving voters the chance to decide if there should be a retroactive decrease the state's flat income tax rate from the current 4.63% to 4.55%. If approved by voters, the state's withholding tax rate would also decrease to 4.55%. The change would be effective with taxable years commencing on or after January 1, 2020.

Initiative 271, which would have changed the flat income tax into a graduated income tax system, failed to secure enough signatures to be placed on the ballot. The flat income tax method replaced the graduated income tax in 1987. (Colorado legislative counsel report.)

Under the state's Taxpayer Bill of Rights (TABOR), Colorado's flat income tax rate of 4.63% was reduced to 4.5% for calendar year 2019 due to a state budget surplus. Taxpayers received this first-time rate reduction when filing their 2019 Colorado state income tax returns. Proposition CC to repeal TABOR failed to be approved by voters in 2019.

See the state's TABOR website for more information.

Paid family and medical sick leave initiative also on the ballot

Voters will also have the opportunity on November 3, 2020 to approve Initiative 283 that would create a paid family and medical leave program administered by the Colorado Department of Labor and Employment. Employers would be required to contribute to the program at a rate of 0.9% on wages paid to each employee. Employers of 10 or more employees would be allowed to deduct up to 50% of the contribution from employees' wages (employees of smaller employers would pay 100% of the contributions). The contribution rate would increase to up to 1.2% as of January 1, 2025. According to the organization, contributions would begin in 2023.

The program would provide up to a maximum of 12 weeks of paid leave (16 weeks for pregnancy or childbirth complications) to qualified employees. Eligibility requirements would be similar to those for unemployment insurance benefits. Employers that offer an approved private family and medical leave plan could opt out of the program.

For more on Colorado's 2020 ballot initiatives, see the Colorado Chamber of Commerce Capitol Report and the Colorado Secretary of State website.

Contact Information
For additional information concerning this Alert, please contact:
Workforce Tax Services - Employment Tax Advisory Services
   • Debera Salam (
   • Kristie Lowery (
   • Kenneth Hausser (


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