A handful of states are preparing to implement an unusual fiscal policy: returning money directly to taxpayers. While the federal government debates stimulus measures, state capitals, driven by constitutions and lessons learned from past booms, have automated the return of surplus funds.
By fiscal year 2026, only two states—Colorado and Oregon—have confirmed and streamlined plans to distribute direct tax rebates specifically tied to overall budget surpluses. This report breaks down the architecture of these policies, their implications, and the unique context surrounding them.
Colorado: The TABOR Tax Refunds Program Restarts
In Colorado, the word TABOR isn’t just an acronym; it’s a fiscal philosophy enshrined in the state constitution. The Taxpayer’s Bill of Rights, approved by voters in 1992, acts as an economic thermostat: when state tax revenues exceed a predetermined limit, based on inflation and population growth, the surplus must be returned to the people. By 2026, this mechanism will be triggered, albeit with a modest scale that reflects tighter times.
According to projections finalized at the end of 2025 and confirmed by the Colorado Department of Revenue, refunds for the 2025 tax year will be distributed in the spring of 2026. The amounts, however, are far from the historical checks of hundreds of dollars. A reverse progressive scale will be used: individual taxpayers with annual incomes below $56,000 will receive approximately $20. The amount increases slightly to a maximum of $62 for those with incomes above $329,001. For joint returns, these amounts are doubled, reaching a maximum of $124.
Who Gets TABOR Tax Refunds?
Receiving a refund is virtually automatic for any full-time resident over 18 years old who files a state tax return, even if their tax liability is zero. The money may arrive as a credit applied to the 2025 return or, in some cases, as a sales tax refund check. A unique feature of the Colorado system is that a portion of the surplus is also channeled toward property tax exemptions for groups such as senior citizens and disabled veterans, extending the relief beyond a simple check.
TABOR sales tax refunds to be paid in 2026
| Taxpayer income | Single fillers | Joint fillers |
|---|---|---|
| up to $54,000 | $20 | $40 |
| $54,001 – $110,000 | $26 | $52 |
| $110,001 – $176,000 | $30 | $60 |
| $176,001 – $250,000 | $36 | $72 |
| $250,001 – $329,000 | $38 | $76 |
| $329,001 and up | $62 | $124 |
Oregon: The “Kicker” Tax Refunds Are Coming
Across the Rocky Mountains, Oregon operates a similarly automatic mechanism, albeit with a more colloquial name: the “kicker.” When personal and corporate income tax revenues exceed official projections for a two-year cycle by more than 2%, the entire surplus is returned to individual taxpayers. A November 2025 report from the state’s Revenue Committee confirmed a $1.41 billion surplus for the 2023-2025 biennium, triggering the kicker for 2026.
Unlike Colorado, Oregon’s tax credit calculation is proportional to individual contributions. Each taxpayer will multiply their reported tax liability from their 2024 return (before credits) by a fixed percentage of 9.863%. In practical terms, a resident who paid $5,000 in state taxes in 2024 will receive a credit of approximately $493 on their 2025 return, which is filed in 2026.
Other Tax Relief Programs in the United States
States like California, New Jersey, Pennsylvania, and Virginia have active initiatives in 2026, but these mostly consist of property tax credits, energy efficiency grants, or “inflation relief” checks approved in specific budgets. These are not automatic refunds from overall surpluses, but rather discretionary spending items for relief purposes.
Then there’s Alaska, a unique and frequently misunderstood case. Its Permanent Fund Dividend (PFD) is an annual dividend derived from the state’s Permanent Fund oil revenues, not from general taxes. By 2026, the legislature will debate a proposal from the governor suggesting a record payment of between $3,800 and $3,900 per eligible resident. “The PFD is a mineral wealth redistribution policy, not a return of excessive taxation,” clarifies an analyst at the Tax Foundation think tank. “Its nature and legal basis are completely different.”
