How does Colorado’s tax code compare? Colorado's tax system is characterized by several key components. To begin with, the state imposes a flat 4.40% individual income tax rate, which applies uniformly to all taxpayers. In addition to this, there are jurisdictions within the state that levy local income taxes, adding another layer of complexity to the overall tax structure in Colorado.
When it comes to corporate income tax, Colorado maintains a 4.40% rate, aligning with the individual income tax rate. This consistency in tax rates between individual and corporate entities contributes to a certain level of simplicity in the tax system.
Furthermore, Colorado imposes a 2.9% state sales tax rate, along with an average combined state and local sales tax rate of 7.81%. These sales taxes play a significant role in generating revenue for the state and local governments, impacting consumers and businesses alike.
On the property tax front, Colorado features a relatively low effective property tax rate of 0.45% on owner-occupied housing value. This rate influences homeowners and plays a crucial role in property valuation and taxation.
It is worth noting that Colorado stands out for not having an estate tax or inheritance tax, distinguishing it from other states with additional taxation on inheritances and estates.
Other notable tax rates in Colorado include a gas tax rate of .29 cents per gallon and a cigarette excise tax rate of $1.94. These specific excise taxes contribute to state revenue and also serve as regulatory tools for certain industries.
Looking at broader financial indicators, the State of Colorado collects an average of $6387.00 in state and local tax collections per capita. This figure provides insight into the overall tax burden shouldered by residents of the state.
Moreover, Colorado carries a state and local debt per capita of $11972.00, reflecting the financial obligations and liabilities incurred by the government. Additionally, the state boasts a 71% funded ratio of public pension plans, indicating the state's commitment to fulfilling pension obligations.
Overall, Colorado's tax system is ranked 27th on the 2024 State Business Tax Climate Index, showcasing its relative tax competitiveness compared to other states. Its a median number representing a growing desire to call Colorado home for many people. Understanding Colorado's tax code requires delving into its multifaceted structure, from income and sales taxes to property and excise taxes, each playing a unique role in shaping the state's fiscal landscape.
Each state’s tax code is a multifaceted system with many moving parts, and Colorado is no exception. The first step towards understanding Colorado’s tax code is knowing the basics. Facts & Figures 2024: How Does Your State Compare?
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