From the Fort Collins Area Chamber of Commerce

Changes to tax policy can raise important questions for businesses and their employees. As employers look ahead to 2027, understanding potential payroll implications and communicating clearly with their teams will be important. In this guest contribution, Chamber member Kevin Welch of Journey Payroll & HR shares his perspective on the changes and practical considerations for employers.

Colorado voters passed Amendment 87 on November 3, according to unofficial results, and official county canvass results are due to the state by November 25, 2026, with final statewide certification by November 30. Once it’s certified, Colorado’s flat 4.4% income tax becomes a graduated tax with six brackets for tax years that begin January 1, 2027. That will likely change a lot of 2027 paychecks. For most people the change will be small; for top earners it could be significant.

I’m not here to argue the measure. Voters have weighed in, and my job is to make sure my people aren’t blindsided. If you run a business in Colorado, I’d say that’s your job too.

I see this regularly. Employees ask their owners why something changed on their paycheck, and the owners ask us. A statewide tax change is exactly the kind of thing that starts those conversations. Whether you get guidance from a consultant, you’re a client of Journey Payroll & HR, or you lean on the Chamber’s resources, it’s our job as employers to get the facts and share what brings clarity to our team members.

What’s Actually Changing

According to the state’s official ballot guide, the 2026 Blue Book, Colorado taxable income will be taxed in brackets: 3.7% on the first $25,000, 4.2% from $25,001 to $100,000, 4.4% from $100,001 to $500,000, 7.4% from $500,001 to $750,000, 7.9% from $750,001 to $1 million, and 8.4% on anything over $1 million. Each rate applies only to the slice of income inside that bracket, and the brackets are not adjusted for inflation.

The dividing line is $510,834 of Colorado taxable income (2026 Blue Book, p. 38). Below that, people pay a little less than they do today. At or above it, they pay more. Keep in mind taxable income isn’t the same thing as wages, so the line won’t fall exactly where folks expect.

Here’s roughly what it looks like for a single filer with wage income only:

• $40,000 in wages: about $164 a year less, or about $14 a month.
• $80,000 in wages: about $252 a year less, or about $21 a month.
• $500,000 in wages: about $325 a year less, or about $27 a month.
• $1 million in wages: about $15,344 a year more, or about $1,279 a month.
• $2 million in wages: about $55,261 a year more, or about $4,605 a month.

Notice the $500,000 example. At $500,000 in wages, taxable income in this example is still below the $510,834 line, so it sees a small decrease.

For these examples, Colorado taxable income is treated as wages minus the 2027 federal single standard deduction of $16,600 (IRS Rev. Proc. 2026-35), and the annual differences are divided by 12 to show a rough monthly amount. This is not a withholding forecast, since the Colorado Department of Revenue hasn’t published 2027 withholding tables. Many filers at the three higher wage levels ($500,000, $1 million and $2 million) itemize, so those examples are illustrations, not typical returns. Nobody can tell an employee exactly what their first January check will say yet. That’s not a reason to wait. It’s a reason to start the conversation now, in plain language.

The Surprise Is the Real Problem

For most people, the tax change itself is small. But at the end of the day, it’s real money that buys food and gas, so it all matters. And the surprise is what does the damage. When net pay moves and nobody explained why, people don’t assume the state changed a rate. They assume somebody messed up their check. Now you’ve got worried employees, extra questions landing on whoever runs payroll, and a little dent in trust that didn’t need to happen.

Pay is personal. It’s rent, groceries, and daycare. When it changes, it helps when employees hear it from you first.

Think of this tax change as practice. I’ve seen much bigger swings than this, and I still do, and when changes aren’t communicated, they ruffle things up with a team fast. The big one we’re seeing right now is health insurance costs. If your employees are taking on part of those increases, that calls for the same kind of conversation: the facts, early, from you.

Tell Your Team Before the First 2027 Paycheck

This doesn’t need a big production. A short note or a few minutes at a team meeting before the first payday of 2027 covers it. I’d hit five things:

1. What changed. Colorado voters weighed in on a new income tax structure that, once certified, starts in 2027 and will likely change Colorado withholding on most checks.
2. It isn’t a payroll error. If their take-home pay moves a bit in January, this is likely why.
3. What it means for most of them. For most taxpayers, state income tax itself goes down slightly; the state’s analysis finds a decrease below $510,834 of Colorado taxable income and an increase at or above it.
4. Leave your feelings about the vote out of it. It’s extremely important to keep any personal opinion off the table, no matter which way it went. Just give them a heads up on the facts.
5. Send tax questions to a CPA outside your office. If someone wants to know what this means for their own taxes, steer them to a tax professional. That’s not your role or your payroll team’s. For anything about the paycheck itself, name a person and make it easy to ask.

An owner or HR department that communicates with their team looks thoughtful and caring, and there are no surprises.

The Heart of It

Taxes change. Rates go up, rates go down, and none of us control that. What we control is whether our people hear about it from us first, with the facts and a little reassurance. A two-minute heads-up now saves a lot of worry in January. That’s just taking care of your people.