Homeowners across Colorado may have expected their property tax bills to go down this year — after all, their homes may be worth less.
Instead, many property owners will see their bills rise again — a result of yet another chapter in the long and confusing story of Colorado's property tax rates.
Susan Murphy, the assessor in Elbert County, said her office has seen a flood of questions from surprised property owners.
“Property owners are getting their tax notices and wondering why perhaps their value may have gone down, but their taxes have gone up,” said Murphy, who is also president of the Colorado Assessors' Association.
The reason for the increase is that property tax rates are effectively increasing. The state had granted temporary tax discounts in recent years, but they are expiring. At the same time, tax rates paid to schools are also effectively increasing this year.
“Trying to explain property tax calculations now to property owners went from difficult to very difficult,” Murphy said.
Here’s an example.
For example, take a home worth $500,000 in Denver.
With the old discounts, its owner would have paid about $2,360 in taxes last year, according to calculations by CPR News.
But now, the same home (with the same value) will be taxed at $2,680, an increase of more than 13 percent.
The higher bill is the result of two changes to the property tax formula.
First, there’s the end of a discount that state lawmakers had granted to residential property owners. A 2024 law had temporarily lowered residential properties’ values by up to $55,000 for tax purposes. So, our $500,000 example home was treated as if its “actual value” was only worth $445,000.
This year, residences are being taxed based on their actual value, at least as determined by the county assessor. That change is driving most of the increase for our example property.
State lawmakers also made a permanent change to another variable in the tax equation — the “assessment rate.” The assessment rate affects how much of the property’s value is actually taxed.
Last year, homeowners were paying taxes on 6.7 percent of the actual value of their home. (That rate was applied after the valuation discount.) It was Colorado’s lowest assessment rate in modern history, the result of a complicated history we’ll explain later.
But this year, the assessment rate is changing — actually, it is becoming two different assessment rates. Now, there is one assessment rate for property taxes paid to school districts. And there’s another rate for all the other entities that might collect property taxes on a home.
The school assessment rate will increase to 7.05 percent. The assessment rate for the other districts will drop to 6.4 percent. The increase to the school rate is more impactful, since school taxes make up the largest portion of most tax bills.
The logistics of the change are hard to explain, Murphy said.
“Legislation has made it incredibly difficult to try and help property owners understand their property valuation, property assessment rate and mill levies. And then with the split assessment rate, now it's just become just overwhelming,” Murphy said. “But we try and help them the best we can.”
Even with the changes, Colorado’s residential taxes are among the lowest in the nation, but many property owners have been shocked and stressed by sudden increases after years of largely unchanging tax bills.
What will it mean for my home?
Homes across Colorado are taxed differently.
That’s because property tax rates vary from city to city, and even neighborhood to neighborhood. A home’s local property tax — also known as the mill levy — is based on the individual tax rates set by fire districts, school districts, local governments, metro districts and other entities.
After this, tax rates should be relatively stable. In fact, many bills should decrease a bit in 2027, thanks to the introduction of a new valuation discount. That $70,000 discount will apply only to the taxes paid to non-school entities.
At the same time, the non-school assessment rate will go back up to 6.8 percent. The net result is that our example home’s tax bill could drop by about $50 next year, giving back some of this year’s hike. Got it?
Why is all this happening?
We are now in the sixth year of the state’s latest debate over property taxes.
The state’s property tax bills were governed for decades by the Gallagher Amendment, which was repealed in 2020 by a bipartisan effort. Gallagher had the effect of continuously lowering the assessment rate for residential property — a perk for homeowners, but one that eroded the tax base for rural areas and schools, repeal advocates argued.
Before the Gallagher Amendment passed, homeowners were taxed on 30 percent of their value.
Without Gallagher, the state no longer had an automatic brake on residential taxes. That led to shocking increases to the final bill, more than 30 percent for many homeowners, as the market accelerated in the early 2020s.
The rate jumps spurred a complicated political war that lasted several years, resulting in several rounds of temporary rate cuts before a grand compromise was passed in a special session last year.
The compromise set a permanent residential rate that was not as low as the discounted rate, but also wasn’t as high as the old long-term rate. It also established lower permanent rates for commercial property owners, who have been paying much higher tax rates than homeowners for years.
Critics compared it to a comically small Band-Aid, saying that the state hasn’t done enough to tamp down tax rates and protect against future value spikes.
In contrast, many progressives have argued that Colorado homeowners have been paying too little, pointing out that renters have no such protections from rising property values.
The recently expired discounts were created in 2024 by a bipartisan group of lawmakers through a bill that was creatively titled “Property Tax,” also known as SB24-233.
The new system — with the split assessment rates — was created by many of the same lawmakers later in 2024, as part of a special session, through HB24B-1001. That one was also titled “Property Tax.”
