In an effort to bolster state revenue and support essential public services, the Colorado State Legislature has passed a series of new tax measures that will impact residents and businesses across the state. The legislation, which was signed into law by Governor John Smith on July 7, 2025, includes a variety of provisions designed to generate additional revenue while also addressing longstanding issues within the state's tax code.One of the key components of the new tax legislation is an increase in the state's sales tax rate from 4.63% to 5.0%. This adjustment, which will take effect on January 1, 2026, is expected to generate an estimated $100 million in additional revenue annually. Proponents of the measure argue that the increase is necessary to fund critical public services, including education, healthcare, and infrastructure projects.In addition to the sales tax increase, the new legislation also includes a tax on digital goods and services, such as streaming services and digital downloads. Under the new law, consumers will be required to pay a 2% tax on these purchases, with the revenue generated earmarked for education and technology initiatives within the state.Furthermore, the legislation also introduces a tax on luxury items, including high-end vehicles, yachts, and jewelry. The tax, which will apply to purchases over $50,000, is expected to generate millions of dollars in revenue annually and will be used to fund a variety of public programs and services.Critics of the new tax measures have raised concerns about the potential impact on consumers and businesses, particularly in light of the ongoing economic challenges facing the state. Some argue that the tax increases could deter consumer spending and harm small businesses, while others question the necessity of these measures given Colorado's already healthy economy.Despite these criticisms, supporters of the legislation maintain that the tax increases are necessary to address longstanding budget shortfalls and ensure the long-term fiscal health of the state. Governor Smith, in a statement following the bill signing, emphasized the importance of investing in Colorado's future and providing essential services to all residents.Overall, the new tax legislation represents a significant step forward for Colorado in terms of generating additional revenue and addressing key issues within the state's tax code. As these measures take effect in the coming months, residents and businesses across Colorado will need to adjust to the changes and plan accordingly for the impact on their finances.