A Denver judge ruled Wednesday that Colorado’s Amendment 87 graduated income tax stays on the Nov. 3 ballot.
If you run a store from Colorado, this vote decides whether your state tax on profit above $500,000 jumps from a flat 4.4% to as much as 8.4%, starting with tax year 2027. Below roughly $510,834 of taxable income you would pay less, so the measure splits store owners by size, and the ones who scaled are the ones who need a plan. At Ecommerce Paradise, the only question I care about is what a high-ticket owner changes because of the news.
Below: what the judge decided and what is still live, the brackets and the rival Proposition 136, the math at $750,000 and $3 million of taxable income, and five moves to make before Nov. 3. If you are new to the model, my guide to high-ticket dropshipping shows why margins run thin enough that a few points of state tax matter.
Whatever Colorado decides, your LLC should be formed right the first time, and Northwest Registered Agent is the best LLC formation service for ecommerce owners. Northwest does not sell your address and puts its own address on your public filings, so your home address stays off the record. Form your LLC with Northwest →
Judge Kutcher Keeps Colorado Amendment 87 on the Nov. 3 Ballot
Denver District Court Judge Heidi Kutcher dismissed the lawsuit on Wednesday, Oct. 21, 2026, in an 18-page order, according to Colorado Newsline. The plaintiff sued on Sept. 16 and asked the court to throw out thousands of signatures and bar the measure from a ballot it had already been certified for.
The Denver Gazette identifies the plaintiff as Michael A. Hancock of Centennial, represented by Brownstein Hyatt Farber & Schreck with former U.S. Attorney Jason Dunn as lead attorney. Hancock argued that 22% of the paid circulators for Initiative #195 were never registered, which would void roughly 11,216 signatures, per the Gazette’s report. The organizers and the Secretary of State’s office dispute that figure.
The margin explains why the fight mattered. The Secretary of State certified 130,938 valid signatures against 124,238 required, a cushion of about 6,700. Knock out 11,000 and the measure is effectively dead, the Gazette reported.
Kutcher did not knock them out. Secretary of State staff testified that the 69 flagged circulators were not all unregistered, and Hancock dropped his training objection for 66 of them. Kutcher noted that state law does not say how a registration failure affects signature validity, and she wrote that invalidating a signature over a circulator’s registration “would place significant restrictions” on voters’ right to participate in the initiative process, per Newsline. The plaintiff did not allege fraud by any petition entity or paid circulator.
Chris deGruy Kennedy, co-chair of Protect Colorado’s Future, said, “We are elated and relieved by the judge’s decision.” Secretary of State Jena Griswold said her office looks forward to “voters making their voices heard on this question.”
It is not over. Hancock’s lawyers plan an expedited appeal to the Colorado Supreme Court, according to the Gazette, and Election Day was 13 days away when the ruling came down. Until that appeal resolves, the ballot line is safe but not final.
Amendment 87 Brackets, Proposition 136 and Washington’s 9.9% Fight
Amendment 87 replaces Colorado’s flat 4.4% income tax with six brackets. Each rate applies only to the income inside its bracket, and the brackets are not indexed for inflation, per the legislature’s Blue Book. It would start with tax years beginning in 2027.
| Taxable income | Today | Amendment 87 |
|---|---|---|
| $25,000 or less | 4.4% | 3.7% |
| $25,001 to $100,000 | 4.4% | 4.2% |
| $100,001 to $500,000 | 4.4% | 4.4% |
| $500,001 to $750,000 | 4.4% | 7.4% |
| $750,001 to $1,000,000 | 4.4% | 7.9% |
| Over $1,000,000 | 4.4% | 8.4% |
The Blue Book estimates $958.4 million in new revenue in fiscal 2026-27, which reflects a half-year of impact, and $1.972 billion in 2027-28. The money is exempt from the TABOR limit and must go to K-12 education, health care and early childhood care. About 46,328 taxpayers earning $1 million or more would see an average increase of roughly $26,085, while most other groups would see cuts of up to $325.
The brackets apply to individuals and businesses, per the Colorado Society of CPAs’ guide for tax professionals, which puts the break-even at $510,834. That guide also flags the rival Proposition 136. It would cap individual and corporate rates at 4.4% of federal taxable income, also from Jan. 1, 2027, but it is a statute, so the legislature could change it later.
If both pass, nobody knows. The Blue Book says the conflict would need a legislative or court fix. The usual view is that the measure with more votes controls, but some analysts argue Amendment 87’s removal of the constitutional flat-rate requirement could take effect even if Proposition 136 wins more votes, per the CPA guide.
The two sides disagree sharply. Supporters say the measure cuts taxes for about 97% of taxpayers and funds schools and health care. Opponents call it a multibillion-dollar tax increase that could make Colorado less competitive and push some high earners to leave, according to the Blue Book’s arguments section.
Colorado is not the only state asking this question on Nov. 3. Washington voters decide Initiative 645, a repeal of a 9.9% tax on income above $1 million that Gov. Bob Ferguson signed in March, per the Washington State Standard.
The Tax Foundation’s Jared Walczak notes that the base includes pass-through business income and that a business sale could push a filer over the threshold, per his Oct. 15 analysis. Walczak opposes the tax. Kiplinger’s ballot roundup adds California’s Proposition 40, a one-time 5% levy on net worth for people who were California residents on Jan. 1, 2026.
I found no earlier Ecommerce Paradise coverage of this thread. The nearest payroll-side story is my post on the 2027 Social Security wage base, which also changes your 2027 numbers.
What Amendment 87 Costs a Colorado Store Owner at $750K or $3M
This section is my analysis, not reporting. I am not a tax advisor or a lawyer, so treat every figure below as a model to hand your CPA.
My read: most single-store owners are under the line and a smaller group is far over it. Take a hypothetical store doing $5 million in revenue at a 7% to 10% net margin. That is $350,000 to $500,000 of profit, right at the edge of the 4.4% bracket, which means Amendment 87 costs you little or saves you a few hundred dollars. The owners who feel it run several stores, or one store at higher margins, or they sell.
Here is the hypothetical math using the Blue Book brackets. A Colorado owner with $750,000 of taxable income pays $33,000 today at 4.4%. Under Amendment 87 the same income owes $925 on the first $25,000, $3,150 on the next $75,000, $17,600 on the next $400,000 and $18,500 on the last $250,000. The total is $40,175, or $7,175 more. At $1 million of taxable income the bill goes from $44,000 to $59,925, a $15,925 increase.
The exit scenario is where it gets expensive. Suppose a hypothetical sale puts $3 million of gain into your Colorado taxable income in 2027. The flat tax would be $132,000. Under Amendment 87 it is $227,925, which is $95,925 more. Whether and how Colorado counts that gain depends on your facts, so this is a question for a CPA, but it is the number to have before you set a closing date. My guide to valuing an ecommerce store before you sell it covers the buyer side. The SBA acquisition loan rule change affects who can pay your price.
The timing detail matters. The Blue Book says the graduated tax applies to tax years beginning in 2027, so income earned in 2026 stays at 4.4% either way. A sale that closes in December 2026 and one that closes in January 2027 could land in different tax regimes if the measure passes. I would not move a closing date on a guess, but I would price the difference before I signed.
Forming your LLC somewhere else does not fix this. A Wyoming or South Dakota entity is useful for privacy and liability, but your income tax generally follows where you live, and I break down the tradeoffs in the best state to form an LLC for tax savings. Moving is the real lever, and residency has its own rules, which I explain in the 183-day tax residency guide. Do not relocate over one vote that a court or the legislature could still rewrite.
Cash is the other piece. A bigger bill means bigger quarterly estimated payments, and credit costs more while a December Fed hike looks live, which I covered in the Fed hike odds post. Keep the tax reserve in its own business account, and my Mercury account walkthrough shows one way.
A higher tax rate on profit makes bigger, cleaner margins worth more. A store that runs without you is also a store you can sell, which is the thinking behind the done-for-you side of the business. If you would rather have my team build and run a high-ticket store while you handle the tax planning, the turnkey service is the place to start.
If state tax is going to take a bigger bite of profit, make the profit bigger. Want my team to build and run your high-ticket store for you? See the turnkey done-for-you service →
Before Nov. 3: Five Moves for Colorado Store Owners
Do these in order. None of them requires you to guess the vote.
- Close your books through September and estimate 2026 taxable income. Finaloop gives you a profit-and-loss you can hand a CPA. Synder syncs Shopify payouts and fees so the revenue side is not a guess. Compare the result to the $510,834 break-even.
- Run both tax calculations on your number in QuickBooks or a spreadsheet: flat 4.4% and the six Amendment 87 brackets from the table above. If the difference is under $1,000 either way, stop worrying and go back to your ads.
- If you are near or above the line, or planning a sale in the next 18 months, book your CPA before year-end. Ask about income timing around Jan. 1, 2027, your entity structure and payroll. If you want to talk through the store side first, book a discovery call.
- Check your entity setup. If you run owner payroll, Gusto keeps the filings clean. If you are forming a new company, my business formation guide lays out the steps.
- Set two calendar reminders: the Colorado Supreme Court appeal and the Nov. 3 result. Do not relocate, restructure or change a closing date until both resolve, and revisit the tax-efficient financial plan basics once they do.
If you sell on Shopify, a clean Shopify sales export by state also makes every one of these steps faster. Pair it with the ecommerce seller tax filing guide and you will walk into your CPA meeting with numbers instead of questions.
Frequently Asked Questions
When would Amendment 87 take effect?
It applies to tax years beginning in 2027, per the Colorado Blue Book. Income you earn in 2026 stays under the flat 4.4% rate either way.
What is the break-even income?
The Colorado Society of CPAs puts it at $510,834 of taxable income, using Blue Book examples. Below that you generally pay less, by as much as $325. Above it you pay more. Taxable income is not revenue, and it is not store profit alone, so use your return as the base. My ecommerce tax software roundup helps you get there faster.
What if Amendment 87 and Proposition 136 both pass?
Nobody knows yet. The Blue Book says the legislature or a court would have to resolve the conflict, and analysts disagree on which measure would control.
Can the court still remove Amendment 87 from the ballot?
The Denver Gazette reports that the plaintiff’s lawyers plan an expedited appeal to the Colorado Supreme Court. The Denver ruling kept the measure on the ballot, but the appeal is the last open legal risk I can see.
Does a Wyoming LLC or a virtual address change where I owe income tax?
Generally no. Your state income tax follows where you live and where the income is earned, not where you formed the LLC or where your mail goes. A service like Traveling Mailbox is useful for mail handling, but it is not a tax strategy. If you are forming a new company, Bizee is one formation service worth comparing against Northwest.
Does this matter if I live in Washington or California?
Different measures hit those states. Washington’s Initiative 645 would repeal a 9.9% tax on income above $1 million that starts in 2028, and California’s Proposition 40 is a one-time 5% levy on net worth for residents as of Jan. 1, 2026. Both are on the Nov. 3 ballot, per Kiplinger. If you are mid-move, start with the address and banking checklist.
Is this tax advice?
No. I am reporting a ballot fight and running hypothetical math from public brackets. Your CPA knows your facts, and if you want free starting points on niches while you plan, grab my free niches list.
Want to work through your 2027 tax plan with other store owners and me inside the community? Join the Skool community →
I will keep watching the appeal and the Nov. 3 count. Subscribe to the YouTube channel for daily breakdowns. More breaking news coming through the day.
Related Articles
If this was useful, these go deeper:
- Best State to Form an LLC for Tax Savings: A Complete Breakdown
- Tax Residency and the 183-Day Rule Explained for Digital Nomads in 2026
- How to Value an Ecommerce Store Before You Sell It (2026)
- Best Retirement Accounts 2026: Solo 401(k), SEP, SIMPLE, IRA and HSA for Store Owners
- Solo 401(k) Contribution Limits 2026: How Much Can You Max Out?
Trevor Fenner is an ecommerce entrepreneur and world traveler from Seattle, Washington, and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.
He maintains homes in Seattle and Bali, spends most of the year overseas, and usually returns to Seattle for about a month each summer.
