Colorado Voters Back a Higher Top Rate on Business Income; Florida Halves Its Commercial Assessment Cap; Texas Targets Data Centers

The bottom line today

Two states voted on the cost of doing business last Tuesday and went in opposite directions. Colorado voters appear to have replaced the 4.4% flat income tax with brackets that reach 8.4%, and the official ballot analysis is explicit that the brackets apply to businesses as well as households [1, 2]. Florida voters went the other way for property owners, halving the cap on how fast commercial and rental assessments can climb [4, 6]. Then on Monday, Texas senators opened the 2027 filing period with a bill that would strip data centers of their sales tax exemption, with 23 authors listed [7, 8]. For employers, Colorado is the bigger story and Texas is the one to watch in January.

CO Colorado Amendment 87: a graduated income tax that reaches business income

What it does. Amendment 87, a citizen initiative, removes the constitutional requirement for a single flat rate and creates six brackets starting in 2027 [1]. The Blue Book states that the measure “replaces the state’s current flat income tax rate for individuals and businesses with a graduated income tax that lowers taxes for taxable income below $500,000 and raises taxes for taxable income above $500,000” [1]. Rates run from 3.7% on the first $25,000 to 7.4%, 7.9% and 8.4% on income above $500,000, $750,000 and $1 million [1]. The added money goes to K-12 education, health care and early childhood programs and is exempt from the TABOR revenue limit [1].

Where it stands. Backers declared victory on November 5, and a November 6 report had the measure ahead with about 51% of the vote [2]. The competing cap at 4.4%, Proposition 136, failed with 47% [3]. Neither result is certified.

Pratt’s read. The relief is real and small: at most $325 a year for anyone under $500,000 [1]. The increase is concentrated and large. Legislative Council Staff estimate the 46,328 filers with federal adjusted gross income of $1 million or more will pay about $1.21 billion more in total, an average of $26,085 each [1]. A business with $2 million of taxable income owes $143,925 instead of $88,000 [1]. The Blue Book also notes the brackets “are not adjusted for inflation” [1], so the $500,000 line falls in real terms every year. That is a tax increase on growth built into the schedule.

The other side’s case, from the official arguments, is that the measure cuts taxes for 97% of taxpayers, “including most households and small businesses,” and funds schools, health care and child care [1]. Fair enough for the median filer. But the National Federation of Independent Business and the Denver Metro Chamber of Commerce say owners will respond with higher prices, fewer hours or less investment, and business groups argue the rate will top eight of Colorado’s ten closest competitors, Texas and Arizona among them [3]. Revenue estimates are $1.972 billion in budget year 2027-28 [1]. Firms deciding where to put the next office will notice.

FL Florida HJR 1-F (Amendment 3): the commercial assessment cap drops to 5%

What it does. The joint resolution, sponsored by Rep. Overdorf, raises the non-school homestead exemption to $150,000 in 2027 and $250,000 in 2028, and lowers “the existing limitation on the annual increase in assessments of 10 percent each year for non-homestead property (non-homestead residential and nonresidential) to 5 percent” for county, city and special district levies [4]. School levies are not covered. It also limits what counties and cities may spend property tax revenue on [4].

Where it stands. The Legislature passed it in a June special session, 75-26 in the House and 30-9 in the Senate [5]. Voters approved it November 3 with more than 60% in unofficial returns, clearing the 60% threshold [4, 6]. It takes effect January 1, 2027 [4].

Pratt’s read. Good news for every business that owns its building, its warehouse or its rental units. Non-homestead owners have carried the 10% cap while homesteads enjoyed the tighter Save Our Homes limit [4]; this narrows that gap for the people who sign commercial leases. The cost lands on local budgets: the Revenue Estimating Conference projects -$4.95 billion in FY 2027-28 and a recurring -$11.86 billion [4]. City and county officials warned the shortfall could force cuts to public services [6]. That is the honest counterweight, and the spending-purpose limits in the amendment are the Legislature’s answer to it [4]. The next fight is over fees and assessments that fall outside the cap.

TX Texas SB 293: repealing the data center sales tax exemption

What it does. SB 293, filed by Sen. Huffman with 22 other senators listed as authors, repeals Tax Code Sections 151.359 and 151.3595, the sales and use tax exemptions for qualifying data centers and large data center projects, and removes data centers from the exemption for electricity [7, 8]. Any exemption a certified project holds “expires on that date,” the effective date, and pending applications are “considered to be denied” [7].

Where it stands. Filed November 9 [8]. It takes effect immediately with a two-thirds vote in each house, otherwise September 1, 2027 [7]. Community Impact reported the bill had the support of 23 of the Senate’s 31 senators and senators-elect [9].

Pratt’s read. Repealing an incentive for future projects is a policy choice. Cancelling certifications that companies already hold, on projects already planned around them, is a different thing, and it is the part of this bill that should worry every industry with a Texas tax break. No fiscal note exists yet, so the revenue at stake is unquantified.

TX Texas SB 32: a state permit for large data centers

What it does. SB 32, by Sen. Zaffirini, requires a Public Utility Commission permit, issued with the environmental commission, before construction begins on any computational load site of 75 megawatts or more, including a “material expansion” [10]. Applications may require water supply, grid and environmental analyses; the commission may deny a permit, charge a fee and impose administrative penalties [10]. Its companion, SB 33, would place data center transmission costs in a separate rate class so those costs “are not paid by other customers” [11].

Where it stands. Both filed November 9, effective September 1, 2027, if enacted [8, 10, 11].

Pratt’s read. SB 33 is the better instrument: it answers the cost-shift worry directly and protects manufacturers and other large users from carrying someone else’s transmission bill. SB 32 adds a discretionary permit with no deadline for a decision written into it. The bill is short. The approval process it creates has no clock.

TX Texas SB 41: personalized pricing limits for retailers

What it does. SB 41, also by Sen. Zaffirini, bars a dynamic pricing model that uses personal information or sets a customer-specific price for any good available through SNAP, whether or not the shopper uses SNAP [12]. It covers retailers with physical stores and online retailers whose business in Texas results in at least $1 billion in annual revenue, exempts uniform promotions, loyalty benefits and store-wide price changes, and makes violations a deceptive trade practice [12].

Where it stands. Filed November 9 for the 2027 session [12].

Pratt’s read. The carve-outs are sensible and narrow the target. The enforcement choice is the cost: routing violations through the deceptive trade practices statute invites litigation over what counts as “unique to the customer” [12]. Grocers will want that phrase defined before the hearing.

On the calendar

Illinois lawmakers return for the veto session November 17-19 and again December 1-3 [14]. Florida’s new cap takes effect January 1, 2027 [4]. The Texas Legislature convenes at noon on January 12, 2027 [13], where SB 293’s 23 authors already exceed two-thirds of the 31-member Senate by this release’s count [8, 9]. Colorado’s certified result is still to come.