Don’t tax Colorado workers’ tips, overtime
THE GAZETTE EDITORIAL BOARD
You’d think our state’s ruling Democrats would be doing their level best to win back the working class in advance of next year’s national midterm election. It will be a referendum, after all, on the Trump presidency and congressional Republicans — who won power last year with the support of workers long deemed the sole domain of the Democratic Party.
Yet, Colorado’s Legislature and Gov. Jared Polis decided to gut-punch Colorado workers, instead — by essentially taxing their hard-earned overtime wages. That provision was buried in an obscure, wide-ranging bill innocuously titled, “Tax Expenditure Adjustment,” which lawmakers passed this spring. Polis signed it into law in May.
The state’s overtime tax is intended to offset federal legislation that just passed Congress and was signed by the president, allowing joint-filing workers to deduct up to $25,000 in overtime earnings from their federal income taxes. The same legislation also lets workers deduct up to $25,000 a year in tips earned from waiting tables, styling hair and other tip-dependent trades.
The new federal tax deductions will lower filers’ adjusted gross income and thus cut the taxes they owe the IRS — which means Colorado will collect less revenue, as well. That’s because the state uses a filer’s federal adjusted gross income to calculate state income tax bills.
Of course, Colorado’s top pols weren’t about to sit still for that. So, rather than let workers reap the full benefits of federal tax relief, they made sure the state still got its cut.
Alas, even when the feds giveth — the state taketh away. In fact, the talk around the state Capitol is that if the governor convenes a special legislative session as anticipated in the coming weeks to address the looming budget shortfall, lawmakers might use the occasion to expand the state’s new overtime tax to ding tips, too. And as insult to injury, they might move up the timeline for imposing both new taxes.
Now, a citizens-advocacy group is stepping in to put a stop to the state’s sleight of hand. Advance Colorado — which has made a name for itself by sidestepping the Legislature and taking voters’ concerns straight to the statewide ballot — aims to undo lawmakers’ handiwork.
As reported Tuesday by The Gazette, the group has announced plans to petition a proposal onto the 2026 ballot repealing the state’s overtime tax and preventing the collection of overtime and tip taxes in the future. Good.
“In Colorado, our industrial employees, first responders, and health care professionals often work overtime to serve the public and make ends meet for their families,” the group said in a news release. “Waitresses, hairdressers, delivery drivers, and other manual laborers count on tips to barely afford life in our state.”
So, rather than let workers reap the full benefits of federal tax relief, they made sure the state still got its cut.
Advance Colorado has proven in its previous efforts it has a better read of public sentiments than the Legislature. We’d bet the group is right on target once again.
Democrats have remained a dominant force in Colorado politics since Republicans retook control of Congress and the White House last November. But some key Colorado Democrats have publicly acknowledged the shift in national politics has sobering implications for the Centennial State’s Democrats, too.
In an unusually frank release in November after the election, state Democratic Party Chair Shad Murib observed, “Research suggesting that the majority of Americans currently believe that the Republican Party represents the interests of the working class and the poor, and that the Democratic Party represents the interests of the wealthy, should concern us all.”
Democrats at the Capitol — poised to balance the state’s bloated budget on the backs of firefighters, utility workers, hair stylists and food servers — evidently didn’t get the message.
“Careers, like rockets, don’t always take off on schedule. The key is to keep working the engines.” Gary Sinise, American actor, director
EDITORIAL
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2025-07-10T07:00:00.0000000Z
2025-07-10T07:00:00.0000000Z
https://daily.denvergazette.com/article/281840059683655
Colorado Springs Gazette
