(The Center Square) — A new ballot measure proposed in Colorado would repeal a new law requiring state income taxes on overtime pay and exempt tipped wages from state income taxes.
The measure, submitted Tuesday by the conservative advocacy group Advance Colorado, would put the state in alignment with the federal One Big Beautiful Bill Act, which was signed into law last week. The budget reconciliation bill exempted overtime work and tipped wages from federal income taxes.
During Colorado’s last legislative session, majority Democrats passed House Bill 25-1296, which made various changes to state tax credits and exemptions, including requiring taxpayers to add overtime compensation to their state taxable income.
“In Colorado, our industrial employees, first responders, and healthcare professionals often work overtime to serve the public and make ends meet for their families,” Advance Colorado said in a statement. “Waitresses, hairdressers, delivery drivers, and other manual laborers count on tips to barely afford life in our state.”
State lawmakers may have to meet in a special session to address changes to Medicaid, the Supplemental Nutrition Assistance Program and taxes made in the federal law that will affect the state’s already-tight budget.
The Sum & Substance reported lawmakers could consider taxing tips if a special session is convened.
“Hardworking families in Colorado shouldn’t be burdened with an excessive tax simply because politicians can’t balance their budget and are looking for additional sources of revenue,” Advance Colorado President Michael Fields said in a statement. “Overtaxing people who are trying to make ends meet will lead to more families leaving Colorado and seeking a state with more opportunity and a better economy.”
“Instead of targeting middle class workers, our government should be cutting their taxes, lessening regulations, and opening more options for business,” he said.
The Advance Colorado measure must undergo a review and commenting period, as well as title setting before the group can begin collecting signatures to place it on the ballot.
