Colorado revises property tax deferral policy for seniors and military personnel

On April 2, 2025, the Colorado State Legislature introduced Senate Bill 261, a significant piece of legislation aimed at reforming property tax deferral options for certain residents. The bill primarily seeks to assist older adults and military personnel by allowing them to defer real property taxes under specific conditions.

The key provisions of Senate Bill 261 include an increase in the deferral amount by four percent for property tax years commencing on or after January 1, 2025. Additionally, the bill stipulates that the deferral amount will be based on the average of real property taxes paid on the same homestead for the two years preceding the year in which the deferral is claimed. This change is designed to provide a more predictable and manageable tax burden for eligible taxpayers.

The bill amends existing statutes regarding the qualifications and filing process for tax deferrals. It maintains eligibility for individuals aged 65 and older and those called into military service, while also repealing certain provisions that previously allowed deferrals for taxpayers exceeding their tax-growth cap. This repeal has sparked notable debate among legislators, with some arguing that it may limit options for younger homeowners facing rising property taxes.

Opposition to the bill has emerged from various stakeholders, including advocacy groups for younger homeowners who argue that the repeal of the tax-growth cap deferral could disproportionately affect those struggling with affordability in the housing market. Proponents, however, assert that the bill simplifies the deferral process and provides necessary relief to vulnerable populations.

The economic implications of Senate Bill 261 are significant, as it aims to alleviate financial pressure on older adults and military personnel, potentially allowing them to remain in their homes longer. Socially, the bill addresses the growing concern over housing affordability and the financial stability of aging residents in Colorado.

As the legislative process continues, experts suggest that the outcome of Senate Bill 261 could set a precedent for future property tax reforms in the state. The bill's progress will be closely monitored, as it reflects broader discussions about tax policy and housing stability in Colorado. The next steps will involve committee reviews and potential amendments before a final vote is scheduled.