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Retail Sales Growth by Selected Industry (Jan-June 2025 vs Jan-June 2024). Figure courtesy of the Colorado Office of State Planning & Budgeting.
Retail Sales Growth by Selected Industry (Jan-June 2025 vs Jan-June 2024). Figure courtesy of the Colorado Office of State Planning & Budgeting.
Tariffs strain Colorado economy, forecast shows
ColoradoBiz Staff //September 22, 2025//
DENVER — Tariffs and escalating trade disputes are raising costs for consumers, straining household budgets, slowing job growth and fueling inflation, according to Colorado’s latest economic forecast.
In Brief:
- Colorado’s Q3 forecast shows tariffs fueling inflation
- Households face higher costs and slower job growth
- Family Affordability and Earned Income Tax Credits cut in 2026
- State projects TABOR surpluses of $363.9 million and $721.1 million
The Office of State Planning and Budgeting released its third-quarter report Tuesday, showing the state economy remains stronger than the national average but is still affected by federal trade policy. While Colorado continues to post lower unemployment and stronger growth, the report found that families are being forced to absorb higher costs in daily spending.
The forecast projects that revenue will fall below the state’s Taxpayer’s Bill of Rights cap in fiscal year 2026, primarily due to federal legislation, with revenues expected to climb above the cap later in the forecast period. Low revenue growth is expected to eliminate the Family Affordability and Earned Income Tax Credits in tax year 2026, though both credits are projected to return in 2027.
Opportunity Now Tax Credits funded through House Bill 24-1365 are expected to be cut in half in 2026. The report also projects TABOR surpluses of $363.9 million in fiscal year 2026-27 and $721.1 million in fiscal year 2027-28. A 13.6% reserve is projected in fiscal year 2025-26, supported by legislative action, executive measures, and updated forecast projections.
