Known as the Centennial State, people end up moving to Colorado for many different reasons. Colorado has beautiful scenery and a range of weather conditions. If that's not enough, Colorado's residents are known to take in an active lifestyle, so it should come as no surprise that it's one of the healthiest states. But taxation may also be a deciding factor for anyone moving to the state.

Colorado has an overall tax burden of 8.9%. Because of this, Tax Foundation has ranked the state at number 35 in the nation. Both individual income and commercial tax rates are the same, topping out at 4.63%. But perhaps one of the biggest reasons people may flock to the state are its low property taxes. Since home values are, at times, high in the state, these low levies can be a boon for homeowners. 

Average Property Taxes in Colorado

The average effective property tax rate in Colorado was 0.57%, according to the most recent data available from SmartAsset. This rate gives the state the sixth-lowest property tax rate in the country. 

Colorado has a total of 64 counties. Jackson County taxed is residents the lowest rate at 0.22%. The average value of a home there was $170,300, which resulted in an average tax payment of $378 annually. Jackson County was also the lowest taxed county in the state in terms of dollar value. Meanwhile, Adams County listed the highest effective tax rate at 0.74%. The average annual tax payment of $1,602 applied to the county's median home value of $216,700. But it was Douglas County residents who paid the highest dollar value in property taxes: $2,642 for a home valued at $376,300. 

How Property Taxes Are Calculated in Colorado

Tax bills for Colorado residents are based on the tax rate set by the taxing authorities — including counties, cities, schools — and a property’s market value. Values are determined every two years and are only based on comparable sales. That means that a home’s value is set on the sale prices of other homes in the area. 

That market value is then used to determine the property's assessed value. So it is the assessed value that is taxed, not the market value. The assessment ratio is recalculated every year. For 2017 and 2018, the rates were set at 7.20%. So, a home with a market value of $200,000 would have an assessed value of $14,400. The homeowner would only be taxed on that amount — $14,400 — at the current tax rate.

Tax bills are mailed to homeowners on May 1, and can be contested up to June 1. 

Colorado Property Taxes Compared to Surrounding States and the Nation

Compared to the rest of the nation, Colorado's effective tax rate of 0.57% ranked sixth out of 50. Hawaii has the lowest effective property tax rate in the country at 0.27%. By contrast, New Jersey has the highest effective property tax rate in the nation at 2.40% The national average effective tax rate was 1.21%.

The effective property tax rate of the states surrounding Colorado varies. Wyoming's effective property tax rate is 0.61%, ranking eighth-lowest in the nation. Nebraska's effective property tax rate is 1.83%, ranking seventh highest in the nation. The state of Kansas has a 1.40% effective rate, which ranks 15th. Oklahoma's effective property tax rate is 0.89%, ranking 24th. New Mexico and Arizona have a rate of 0.76% and 0.77%, ranking 13th- and 15th-lowest, respectively. Finally, Utah's effective property tax rate is 0.67%, putting it in 11th-lowest place.

How Are Colorado's Property Taxes Used?

As a taxpayer, it helps to know how property taxes are being used. Colorado property tax revenues are designated for local government use, so none of the revenue collected goes to the state. As of the most recent data from Colorado's taxation department, state public schools take up the largest share of revenue at 50.75%, followed by county governments at 24.1%, special districts at 19.1%, municipal governments at 4.9% and local district colleges at 1.1%. These figures were accurate as of the end of the 2017 tax year.

In addition to knowing how taxes are being used, it is beneficial to know which areas of local government are getting more or less money in the coming year. In 2018, there was a 12.5% increase in funding for municipalities, 11.6% increase in funding for special districts, 10.8% increase in school districts, 8% increase in county governments and a 4% increase in local district colleges. 

The Bottom Line

High home values in Colorado can make the dream of owning property impossible. But factor in what you'll have to pay in property taxes, and it might cheer you up a little. Property taxes in Colorado are fairly low when compared to the rest of the country, especially if you compare them to its neighboring states. Knowing that you'll only have to pay on the assessed value, rather than the market value, may also be good news. 

Hawaii Property Tax Guide

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