Governor Jared Polis signed into law House Bill 24B-1001, a bill Colorado lawmakers successfully passed designed to reduce property taxes for homeowners and businesses, wrapping up a special four-day legislative session. This legislation, supported by leaders from both Republican and Democratic parties, aims to prevent two contentious ballot initiatives from reaching voters in November that could have led to significant cuts in local government services. One of the primary advocates of the bill, State Senator Chris Hansen, highlighted its goal of stabilizing the state’s tax environment while delivering much-needed relief to businesses, which have faced substantial pressure from Colorado’s high property tax rates.
Under the new law, property tax assessment ratios will see notable adjustments. The commercial property assessment ratio adjustments are relatively straightforward. They will be lowered from 27.9 to 27.0%, which is expected to ease the burden on businesses. There are further decreases to the commercial ratio in 2026 (down to 26%) and in 2027 (down to 25%). However, for agricultural properties, the 2026 ratio is 25% and stays flat into the future.
The new legislation particularly benefits commercial property owners who were at risk of considerable tax increases. Hansen stated that the bill is projected to lessen property tax burdens on businesses, enhancing their competitiveness in a tough economic landscape. “This initiative is about ensuring that businesses across Colorado can continue to thrive,” he noted. Governor Jared Polis echoed these sentiments, stressing that the bill not only provides financial savings for homeowners but also aids small businesses by lowering property taxes and reducing utility costs. This focus on business support is part of a larger strategy to stimulate economic growth while safeguarding essential public services such as education, healthcare, and infrastructure, all of which rely heavily on property tax revenue.
Meanwhile, for residential properties in 2025, the assessment ratio will be reduced from 6.7 to 6.25% for the local government portion of the tax bill and will move to 7.05% for the school portion of the tax bills, offering renters and homeowners some relief. (These rates assume that the statewide actual value does not increase more than 5% in 2025. If they do increase more than 5%, the ratios are 6.15% and 6.95%, respectively.) It should also be noted that in 2026, these figures increase to 6.7% if more than 5% growth for local government and 6.95% for school districts. If the growth is less than 5%, these numbers are 6.8% and 7.05%, respectively.
There are also exemptions for residential real property that are effective in 2025, 2026, and forward. The exemptions are minor for most multifamily owners, unless their property is converted to condominiums. This is favorable for single-family homeowners and small unit count multifamily properties.
Despite its passage, the bill faced criticism. Some lawmakers raised concerns about the lack of transparency in the negotiations and the potential for it to disproportionately benefit larger, more affluent commercial property owners, potentially sidelining smaller businesses and low-income residents. State Rep. Stephanie Vigil was among the critics, alleging that the negotiation process favored wealthy stakeholders. Nevertheless, supporters like Michael Fields from Advance Colorado hailed the legislation as a victory for taxpayers, arguing that it would avert even more damaging consequences from the proposed ballot initiatives, which critics warned could severely undermine funding for local government services statewide.
This bill marks a significant shift in Colorado’s property tax policy, as lawmakers strive to balance the need for relief with the necessity of maintaining funding for essential services. Our team of experts at Ryan is available to answer any questions regarding this initiative and to offer detailed insights into how these changes may affect property owners, businesses, and local government financing. If you have queries about the potential impact of Proposition 108 and Initiative 50 on commercial property taxes in Colorado, reach out to Ryan’s tax specialists for tailored advice to keep you informed and prepared as legislative discussions progress.
TECHNICAL INFORMATION CONTACT:
Matt Poling
Principal
Ryan
303.222.1845
matt.poling@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.
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- Matthew W. Poling
- Real Estate