Concerning the taxation of property, and, in connection therewith, modifying the qualified-senior primary residence benefit and modifying the taxation of business personal property.
SB 26-116 makes several changes to Colorado property tax law affecting lodging property, senior homeowners, and business personal property. First, it authorizes municipalities, with voter approval, to adopt a municipal lodging tax up to the same rate and for the same purposes currently allowed for counties, and it bars municipalities from imposing other lodging-related taxes after January 1, 2027 unless they conform to the new framework. Existing municipal lodging taxes adopted by the end of 2026 may continue, but future rate increases, base expansions, or revenue-use changes are restricted unless the tax is brought into compliance.
The bill also changes how lodging property is valued for assessment purposes. When assessors use the income approach, they must include both net rental income and resort fee income in the valuation of lodging property, which is intended to more fully capture revenue generated by hotels, resorts, and similar properties. In addition, the bill extends the portable qualified-senior primary residence benefit beyond the 2025 and 2026 property tax years, allowing eligible seniors to continue using the benefit in future years.
For business personal property, the bill increases the state property tax exemption threshold beginning in 2027 and removes the reimbursement mechanism that previously compensated local governments for revenue lost to the exemption. It also changes the exemption’s inflation-adjustment and fallback provisions, and repeals those adjustment/reimbursement rules after 2027. The bill further subjects the new municipal lodging tax to Department of Revenue administration and requires electronic filing and payment.
The bill’s overall impact is to reshape several parts of Colorado’s property tax system: it creates a new local lodging-tax option, narrows and standardizes municipal lodging taxation, changes valuation rules for lodging properties, extends a senior property tax benefit, and increases the business personal property exemption while reducing state reimbursement obligations to local governments. These changes affect municipalities, counties, lodging businesses, assessors, treasurers, senior homeowners, and local taxing districts.
The general sentiment appears to have been favorable enough for enactment, as the bill passed through the legislature and was signed by the governor. Based on the bill text and status, the measure seems to reflect a policy compromise: support for tax relief and benefit extension on one hand, paired with new tax authority and valuation rules on the other. The main points of contention likely centered on the lodging tax restrictions, the inclusion of resort fee income in property valuation, and the reduction or elimination of reimbursement for local governments tied to the business personal property exemption.
SB 26-116 amends Colorado statutes governing property taxation, including the qualified-senior primary residence benefit under section 39-1-104.6 and the business personal property exemption under section 39-3-119.5. It also creates a new municipal lodging tax framework, limits other municipal lodging-related taxes beginning in 2027, and requires the Department of Revenue to administer and collect the authorized municipal lodging tax using electronic filing and payment rules. The bill changes assessment practice for lodging property by requiring inclusion of net rental income and resort fee income in income-approach valuations, and it extends the senior primary residence benefit to future tax years. It increases the business personal property exemption threshold and phases out state reimbursement provisions tied to that exemption after 2027, shifting the fiscal effect toward local governments and the state general fund.
The available context suggests the bill was generally supported enough to pass both chambers and be signed into law, with no recorded committee transcript or vote data indicating organized opposition in the provided materials. The measure appears to combine tax relief for seniors and businesses with new tax administration and valuation rules, which may have helped it attract broader support. At the same time, the bill’s changes to lodging taxation and local government reimbursement likely made it more controversial among affected local governments and lodging industry stakeholders.
The most likely areas of contention are the new municipal lodging tax restrictions, the requirement that assessors include net rental income and resort fee income in lodging property valuations, and the elimination of reimbursement for local governments for business personal property exemption losses after 2027. Municipalities and lodging businesses may have differing views on the new lodging tax authority and the limits placed on existing taxes, while counties, school districts, and other local taxing entities may be concerned about reduced revenue or the loss of state reimbursement. Senior taxpayers and property owners likely favored the extension of the qualified-senior primary residence benefit and the higher business personal property exemption, but those benefits come with fiscal tradeoffs that could concern local governments.