New Hotel Taxes, Senior Property Breaks, and a $60K Exemption for Your Business

What This Bill Actually Does

At its core, SB26-116 is a sweeping tax cleanup bill that touches three very different areas of Colorado life: how we tax tourists, how we value hotels, and how we give tax breaks to seniors and businesses. It's a lot to unpack, so let's take it piece by piece.

First, it standardizes how towns and cities can tax hotels and short-term rentals. The bill authorizes a new municipal lodging tax capped at 6%, which requires voter approval. Starting January 1, 2027, cities are legally banned from creating their own rogue lodging taxes outside of this new state framework. (Existing local lodging taxes are grandfathered in, but they can't be expanded or increased without going to the voters under these new rules). The money raised isn't a blank check for city hall; the bill strictly requires revenues to be spent on specific community needs like local tourism marketing, workforce housing and childcare for seasonal workers, visitor enhancements, or public safety services like police, fire, and EMS.

Second, the bill changes how county assessors value commercial lodging properties. If an assessor uses the "income approach" to determine a hotel or resort's actual value, they are now legally required to include net rental income and resort fee income. That means those extra daily resort charges will now directly increase a property's taxable value. However, the bill specifically excludes money that a property collects but remits to individual unit owners—which is a crucial protection for "condotels" where units are individually owned but rented out by the main front desk.

Finally, the legislation locks in two major property tax breaks. For homeowners, it takes the portable qualified-senior primary residence benefit—which was set to expire—and extends it into the future permanently. On the commercial side, it tweaks the Business Personal Property Tax. Currently, businesses don't pay property taxes on the first $50,000 of their equipment. Starting in 2027, that exemption jumps to $60,000. However, there is a catch: the bill removes automatic inflation adjustments going forward and completely eliminates the state's obligation to reimburse local county governments for the revenue lost to this tax break.

What It Means for You

If you are a senior homeowner—or if you have aging parents who have been putting off downsizing—here's the part that matters most. To get the senior property tax exemption in Colorado (which shields 50% of the first $200,000 of your home's value from taxes), you generally have to live in your home for 10 straight years. In the past, if you sold that big family home to move into a smaller condo, you lost that massive tax break and had to start the 10-year clock all over again. The legislature temporarily fixed this portability issue for 2025 and 2026, but SB26-116 makes it permanent. You can finally move closer to the grandkids or into a single-story home without getting hammered by a sudden spike in property taxes.

For the average Coloradan who lives in a tourist-heavy area, this bill could also bring some serious quality-of-life improvements. By authorizing the new municipal lodging tax and legally earmarking the funds, your local city council now has a dedicated tool to tax visitors and use that money to fix local problems. If your mountain town or bustling suburb votes to approve this 6% tax, they can funnel that cash directly into workforce housing, subsidize childcare for the locals who staff the resorts, or hire more emergency medical personnel to handle the influx of out-of-towners. It directly ties the burden of tourism to the solutions locals desperately need.

Here is what you should do to prepare for these changes:

• Talk to your family about real estate: If you or your parents have been holding onto a property solely to keep the senior tax exemption, you can start planning that downsize. The portability is set to stay on the books.
• Watch your local ballot: Because the new municipal lodging tax requires voter approval, expect to see these proposals pop up in your local elections over the next few years. You will get the final say on whether to tax tourists to fund local housing and fire departments.
• Check your hotel receipts: By 2027, local lodging taxes will be much more standardized across the state, protecting you from surprise, sky-high municipal fees when you take a weekend staycation in the mountains.

What It Means for Your Business

Let's talk about your equipment. Every desk, server, 3D printer, and forklift you own is subject to the Business Personal Property Tax. Under current law, your first $50,000 of equipment is fully exempt. This bill bumps that threshold up to $60,000 starting January 1, 2027. If your total equipment value is under 60-grand, you are completely off the hook and drop off the tax rolls entirely. But keep in mind, the bill strips away future inflation adjustments. That means the $60,000 ceiling is a hard cap that will slowly lose its buying power over the next decade as equipment costs inevitably rise.

If you own a hotel, motel, or resort, you need to pay very close attention to Section 4. County assessors will now be explicitly instructed to factor in your resort fee income and net rental income when calculating your property's overall value. If you've been relying on mandatory "resort fees" or "destination charges" to boost your margins without raising the baseline room rate, those fees are now going to directly inflate your property tax bill. There is a silver lining if you operate a condotel model: the bill clearly states that any rental revenue you collect and pass through to the individual unit owner is excluded from your property's valuation.

Additionally, if your municipality successfully passes the new 6% lodging tax, the administrative landscape shifts. Instead of remitting those taxes to your local city or town clerk, the Colorado Department of Revenue will take over the collection, administration, and enforcement. That means mandatory electronic filing through the state portal and state-level audits, which requires aligning your accounting software accordingly.

Here are the specific moves a business owner should make THIS WEEK:

• Inventory your physical assets: Pull your current business personal property filings. If you are sitting somewhere between $50,000 and $60,000 in equipment value, start planning for a slight tax drop in 2027.
• Audit your resort fees: If you run a hospitality business, run the numbers immediately on how including your resort fees in your property valuation will impact your bottom line. It might be time to restructure your pricing model.
• Talk to your accountant about state filing: If you operate short-term rentals or a hotel, prepare for the possibility that your local lodging taxes will soon be collected directly by the state Department of Revenue. Ask your bookkeeper if your systems are ready for mandatory electronic state remittance.

Follow the Money

While the official fiscal note hasn't been published yet, the money trail in this bill is massive and shifts the burden in some very specific ways. On the municipal side, capping the lodging tax at 6% and strictly defining its uses will funnel millions of new tourist dollars into highly specific local buckets: tourism marketing, workforce housing, and emergency services. To pay for the overhead, the state Department of Revenue is allowed to skim up to 3.33% of those local collections to cover its own administrative and enforcement costs before passing the rest of the revenue down to the towns.

The real fiscal drama, however, is buried in Section 7. By raising the business personal property exemption to $60,000, the state is effectively cutting taxes for thousands of small businesses. But under current law, the state government is required to reimburse local governments (like counties, fire districts, and school districts) for the property tax revenue they lose due to this business exemption. This bill eliminates that state reimbursement starting in 2027. This effectively passes the cost of the business tax cut directly onto local budgets, meaning your local fire or school district will have to absorb the loss or look for revenue elsewhere.

Where This Bill Stands

SB26-116 was just introduced in the Senate on February 19, 2026, by Sponsors Mike Weissman and Yara Zokaie. It has been assigned to the Senate Finance Committee, which is the first major hurdle it needs to clear.

Because this is a "mega-bill" that touches several highly sensitive third rails of Colorado politics—local government revenues, senior citizen benefits, and business taxes—you can expect a very lively and contentious debate in committee. The elimination of the local government backfill for the business property tax exemption will almost certainly face heavy, organized pushback from county commissioners and local special districts. Meanwhile, the hospitality industry will be lobbying hard on the exact definitions of the "resort fee" valuation changes. Keep an eye out for the upcoming committee schedule; if you want to testify on how these tax shifts impact your business or your aging parents, you will need to get on the Senate Finance Committee's calendar very soon.