Colorado Business Climate
Executive Summary
The report assesses Colorado's business climate using objective economic data, benchmarking the state against five peer and competitor states (Arizona, North Carolina, Texas, Utah, and Washington) as well as the national average. It synthesizes nine survey and ranking sources, grouped into three tiers: independent nonpartisan sources (Leeds Business Confidence Index, Kansas City Federal Reserve Bank’s Beige Book and Rocky Mountain Economist), national rankings (CNBC, Chief Executive), and Colorado business-organization surveys.
Three findings hold across sources:
Colorado's structural foundations remain strong, with workforce quality, innovation base, and educational attainment among the best in the nation.
Cost of living, housing, and affordability have measurably worsened, and housing is now the most-cited barrier to attracting talent.
Business confidence has fallen sharply, faster than objective performance data alone would predict. The cause of that decline is contested: nonpartisan sources attribute it mainly to national policy and to downturns in tech and construction, while business-organization surveys point primarily to state regulatory burden.
On the economy, Colorado's real GDP has outpaced the U.S. since 2022 but trailed its peer states. The labor market has softened, with payroll employment slightly below the prior year as of May 2026 and net domestic migration turning negative in 2025, leaving Colorado the only peer state reviewed with out-migration that year. Business formation fell sharply in 2024 (establishment births down 19.7 percent) before rebounding in 2025.
The cost analysis finds a mixed profile. Several major costs sit near national averages, but labor-related pressures are growing. The median wage rose 63 percent from 2010 to 2025 (to $59,800). The overall state and local business tax burden is close to the U.S. average (4.4 percent of the private-sector economy versus 4.5 percent nationally), though business property taxes and sales taxes on inputs run higher while income taxes are more competitive. Affordability is the clearest weakness: the housing premium over the national average widened from roughly 12 percent in 2010 to about 27 percent by 2024.
Health insurance registers as a secondary concern, with premiums tracking the U.S. average and representing a smaller share of compensation because Colorado wages are higher. Public safety ranks mid-tier; crime rose from 2013 to 2022 and has since declined broadly (property crime down 32.5 percent, motor vehicle theft down 59.2 percent from peaks). On regulatory burden, the report covers the minimum wage ($15.16 in 2026, affecting about 9 percent of workers), FAMLI, elevated unemployment insurance premiums (0.71 percent of wages versus 0.38 percent nationally), and the cumulative weight of recent labor, consumer-protection, and environmental requirements.
Introduction
Colorado’s business climate has become a prominent topic in recent legislative sessions and among business advocacy organizations. State lawmakers have considered the business climate in debates over state regulations, tax policy, workforce investment, public safety, and housing affordability while businesses advocates have pointed to a decline in Colorado’s competitive position.
How the Report Is Organized
To understand Colorado's competitive position and overall business climate, this report examines the costs businesses cite as most burdensome using objective economic data. The report includes:
a review of business and economic surveys and reports;
an overview of Colorado’s economy to provide information on how the state has performed relative to peer states and the national average; and
an examination of the costs and operating conditions that business owners have identified as important, including workforce, cost of living, business taxes and fees, health insurance, regulatory burden, and public safety.
Colorado is compared with five peer and competitor states — Arizona, North Carolina, Texas, Utah, and Washington — selected based on their competition with Colorado for talent, investment, and business location decisions, their economic performance, and their regional or industry overlap with Colorado's economy. Among the peer states, North Carolina, Texas, and Utah are consistently cited in business-climate surveys and rankings as having business-friendly policy environments.
This report mostly analyzes Colorado's business climate at the statewide level rather than by region, industry, or business type. Comparing statewide business costs to other states allows for consistent comparisons across time and assessment of the major costs and conditions impacting businesses.
Business Climate Reports and Surveys
The surveys and reports examined in this section synthesize concerns over time that have shaped the recent debate over Colorado's business climate and how conditions may have changed. The sources capture how the state's employers view current conditions (see Appendix for more information on the surveys and reports). Some of these concerns reflect structural changes to Colorado's economy since the pandemic, including the spread of remote work, a tighter labor market as net in-migration has slowed to near zero, and added pressure from inflation and new tariffs.
Three findings hold across sources:
Colorado’s structural foundations remain strong. Its workforce, innovation base, and educational attainment remain among the strongest in the nation.
Cost of living, housing, and affordability have measurably worsened. The decline appears in objective rankings, sentiment surveys, and advocacy sources alike. Housing is now the most cited barrier to attracting talent.
Business confidence has fallen sharply. Confidence fell faster than the objective performance data alone would predict. The causes of the decline are contested. Perspectives on the causes of the decline differ; the independent, nonpartisan sources attribute it mainly to national policy and to downturns in the tech and construction sectors, while business organization surveys point primarily to state regulatory burden.
Table 1 groups the nine sources into three categories and shows where they agree. Findings confirmed across all three categories carry the highest confidence. Findings that rest on a single category are labeled accordingly.
| Cross-source Finding | CATEGORY 1: Independent, nonpartisan | CATEGORY 2: Peer-state | CATEGORY 3: Business Orgs |
|||
|---|---|---|---|---|---|---|
| LBCI | RME | Beige Book | CNBC | Chief Exec | ||
| Conditions worsened vs. Colorado’s history (2022- 2025) | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| Workforce quality is a top-tier national strength | ✓ | ✓ | n/a | ✓ | ✓ | ✓ |
| Cost of living and housing is the primary weakness | ~ | ✓ | ✓ | ✓ | ✓ | ✓ |
| Labor market materially softened (objective data) | n/a | ✓ | ✓ | ~ | n/a | ✓ |
| Sentiment fell faster than objective conditions | ✓ | ~ | n/a | ✓ | ✓ | ✓ |
| Federal policy is a major driver of weak 2025 sentiment | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| Tech and construction downturn is the proximate cause | ~ | ✓ | ✓ | ~ | n/a | ✓ |
| Cost of doing business persistently bottom-third | n/a | n/a | n/a | ✓ | ✓ | ✓ |
| Departures and migration appear in objective data | n/a | ✓ | n/a | ✓ | ~ | ✓ |
| Regulatory burden as the primary state-level driver | ~ | n/a | n/a | n/a | n/a | ✓ |
| ✓ supports finding ~ partial or indirect n/a not measured. | ||||||
Category 1: LBCI = Leeds Business Confidence Index; RME = KC Fed Rocky Mountain Economist; Beige Book = KC Fed Beige Book. Category 2: CNBC Top States for Business; Chief Executive Best & Worst States. Category 3: Colorado Chamber, Colorado Business Roundtable, Metro Denver EDC/TMCC, Common Sense Institute.
Colorado’s Economy
| Colorado's recent economic performance provides important context for understanding the state's business climate and the business costs discussed throughout this report. Many of the current factors affecting business costs and operating conditions, such as inflation, higher interest rates, and federal trade policy, are national and international economic forces that are not directly influenced by state policymakers. |
| Colorado's economy has continued to expand, although growth has moderated from the strong pace immediately following the pandemic. Economic growth, as measured by inflation-adjusted (real) GDP, has exceeded U.S. GDP growth since 2022. Among peer states, Texas experienced meaningfully stronger growth over the period, while all other peer states analyzed experienced moderately stronger growth than Colorado since 2023. These trends are shown in Figure 1. [Ref 1] |
| Colorado's labor market softened over the same period, reflecting both broader national trends and Colorado-specific factors. Payroll employment was slightly below prior year levels as of May 2026, while the peer states and U.S. overall continued to post modest employment gains. Colorado also experienced slower job growth than all peer states and the U.S. since the beginning of 2022. These trends are shown in Figure 2. Slower population growth and reduced migration contributed to the slowed labor-force growth. This is a meaningful shift, as in-migration of educated workers has historically been one of Colorado's competitive advantages. The slower labor-force and migration trends are discussed further in the Workforce section. [Ref 2] |
| Although the rate of inflation moderated substantially from its June 2022 peak, the overall price level remains approximately 30 percent above pre-pandemic levels. [Ref 3] As a result, businesses continue to face higher costs for labor, construction, materials, and other operating expenses than before the pandemic. Price increases have accelerated further in 2026, driven primarily by an energy shock tied to conflict in the Middle East. |
Higher interest rates have increased borrowing costs, impacting construction, commercial real estate, and other business investment decisions, even as interest rates have stabilized from their recent peaks. These higher costs affect businesses across industries, although the magnitude varies by sector. |
Post-pandemic shifts in intertest rates and monetary policy have been paired with elevated trade policy uncertainty at the national level. Changes in federal tariff policy have increased costs for some businesses and added uncertainty which can slow investment. |
To provide additional context on economic performance and business activity, business formation should be examined alongside overall economic growth. New business formation is a widely recognized indicator of economic vitality. Research consistently links startup activity to job creation, productivity growth, and long-run economic resilience. [Ref 4] |
Colorado experienced a material decline in business formation activity during 2024. Establishment births fell 19.7 percent from the prior year, and new business applications declined 8.8 percent, reflecting a broader national cooling following the post-pandemic surge in entrepreneurial activity. Colorado's decline was nonetheless among the most pronounced nationally. The state recorded more establishment closings than births, one of only ten states with a net decline in establishments, an unusual outcome after several years of exceptionally strong business formation. |
More recent data indicate a rebound. Through the first three quarters of 2025, establishment births recovered, and Colorado ranked 8th nationally on an annualized basis, among the strongest performers in the peer group. New business applications increased 3.2 percent during 2025 and continued rising into early 2026. [Ref 5] |
Both measures of new business activity indicate that Colorado continues to rank among its peer states on business formation intensity and that entrepreneurial activity has shown resilience following the 2024 contraction. Given the research literature's strong connection between startup rates and long-run economic health, Colorado's recovery in business formation, and its continued performance among states, is an encouraging signal for economic growth and productivity. |
Business Costs
| This section examines the most frequently raised costs and concerns of doing business in Colorado in the business surveys and reports that were that can be affected by state policy: workforce, the cost of living, business taxes and fees, health insurance, regulatory burden, such as FAMLI (Family and Medical Leave Insurance) and the minimum wage, and public safety. For each, the analysis reviews the survey and report findings, main issues and trends compared with the five peer states (Arizona, North Carolina, Texas, Utah, and Washington), the national average, and relevant state policies. |
Overall, Colorado's business-cost profile is mixed. Several major costs are near national averages, but businesses face growing labor-related cost pressures, notably the cost of living, which businesses most often cite as a contributor to slower immigration and workforce growth. In addition, many businesses raise concerns about the cumulative cost and complexity of recent workforce requirements for programs that provide benefits to workers, such as FAMLI (Family and Medical Leave Insurance), paid sick leave, and wage transparency. |
Some business costs are not analyzed in depth either because they tend not to be large costs or were generally not raised in the surveys and reports. Three examples of these costs are commercial real estate, electricity, and workers' compensation insurance premiums. Colorado is broadly competitive with national averages on each of these, though several competing states, particularly in the South and Mountain West, tend to offer lower rates on electricity and workers' compensation. [Ref 6] In addition, power availability has been identified as an emerging constraint for Colorado for energy-intensive projects. |
Workforce
What the Surveys and Reports Say
Assets
Colorado's workforce is consistently identified as one of the state's strongest competitive assets. Across multiple surveys, rankings, and economic analyses, Colorado ranks among the nation's leaders in workforce quality, educational attainment, and labor-force participation.
The state benefits from a large concentration of professional and technology workers, helping support entrepreneurship, business formation, and growth in knowledge-based industries.
Challenges
Employers report continued difficulty attracting and retaining workers in some occupations, particularly those requiring specialized skills. In addition, slower immigration, slower growth in the working-age population, and housing affordability constraints have made workforce recruitment more difficult.
Business organizations cite the cumulative cost and compliance complexity of workforce-related requirements enacted in recent years.
Main Issues
Labor is typically the largest operating cost for businesses, including not only wages and benefits but also the costs of recruiting, retaining, and replacing workers, as well as the operational and growth challenges that arise when businesses cannot find or retain the workers they need.
Wages. The figure below shows Colorado's median annual wage rose from $36,770 in 2010 to $59,800 in 2025, a 63 percent increase that consistently exceeded the U.S. median and every peer state except Washington. Higher wages raise employer costs but also reflect Colorado's highly educated workforce, industry mix, and higher cost of living. After accounting for the latter, particularly housing, workers' actual purchasing-power gains are more modest.
Workforce-related requirements. In addition to wages, employers increasingly cite workforce-related requirements, including FAMLI, paid sick leave, and wage-transparency rules, discussed further in the Other Significant Regulations section, as contributing to labor costs and administrative burden, although the magnitude of these costs varies across employers. While employer surveys consistently report the costs of these requirements, there are potential offsetting benefits to employers that need further study, such as improved employee retention, reduced turnover, and greater workforce attachment.
Difficulty finding workers. Business surveys report persistent difficulty finding workers with specific skills, concentrated in health care, skilled trades and construction, advanced manufacturing, and selected technology occupations, which raises recruiting and training costs and constrains expansion and new business formation. The labor market has been tight by most measures. As the figures below show, Colorado has ranked among the strongest peer states on prime-age employment and among the highest on job openings, both peaking in 2022 and 2023 before easing as the market softened. Federal Reserve analysis attributes much of the recent softening to downturns in technology and construction.
Figures 6 and 7: Labor Market Conditions
State population and in-migration. Colorado's workforce has long been bolstered by in-migration, particularly by more highly educated workers, but that pipeline has diminished. As the figure below shows, net domestic migration declined steadily until contracting in 2025, leaving Colorado the only peer state reviewed with net domestic out-migration that year. International migration offset much of the domestic decline from 2022 through 2024 but slowed sharply in 2025. Working-age population growth has similarly slowed, with a year-over-year decline in 2025. Across surveys, housing affordability is the factor most consistently cited behind these trends.
| Educated workforce. Despite the slowdown in-migration, Colorado remains one of the most highly educated states in the nation. Colorado ranks third behind Washington D.C. and Massachusetts in the share of adults holding a bachelor's degree or higher. [Ref 7] This is a competitive advantage that supports higher productivity and is part of why wages in Colorado are higher than in many other states. |
Overall, Colorado's labor market remains a competitive strength, but employers generally pay more and compete harder for workers than in most peer states, and the most significant emerging concern is whether slower workforce growth and migration will push labor costs higher and increase hiring difficulty over time.
State Policy
State policy can only partially offset demographic and broader economic forces, but it can influence workforce supply, workforce skills, and the cost and administration of state employment requirements, such as programs like FAMLI, paid sick leave, and wage transparency obligations. These requirements are discussed further in the Regulatory Burden section.
On workforce supply and skills, Colorado operates a substantial workforce-development system spanning K–12 and higher education, workforce centers, registered apprenticeships, career and technical education, sector partnerships, and childcare assistance. Below is a summary of major workforce development bills since 2021.
Workforce Investment, Talent Development, and System Alignment
House Bill 21-1264, House Bill 22-1350, and House Bill 24-1365 — Invested state and federal funding in workforce development and expanded regional talent-development initiatives: House Bill 21-1264 funded reskilling, career and technical education (CTE) capacity, and adult education; House Bill 22-1350 created the $91 million Opportunity Now Colorado regional grant program; and House Bill 24-1365 extended Opportunity Now, created regional talent summits, and established a tax credit for workforce training facility and equipment investments.
Senate Bill 23-051 and House Bill 26-1317 — Strengthened Colorado's workforce-development framework by codifying the Office of the Future of Work in statute, conforming apprenticeship statutes to federal rules, and creating a transition advisory committee to develop recommendations for integrating workforce development and postsecondary education under a more unified state structure.
Work-Based Learning, Career Readiness, and Apprenticeships
Senate Bill 22-140, Senate Bill 24-104, House Bill 24-1439, House Bill 25-1186, and House Bill 25-1221— Expanded work-based learning and apprenticeship pathways by connecting students and workers to career opportunities through employer intermediaries and digital navigation, aligning CTE programs with registered apprenticeships, creating an employer apprenticeship tax credit, authorizing a higher-education work-based learning pilot contingent on receipt of at least $2 million in outside funding, and authorizing an apprenticeship-based Associate of Applied Science pathway through Emily Griffith Technical College.
Senate Bill 24-143 — Strengthened credential-quality standards and alignment between workforce credentials, apprenticeships, and labor-market needs.
Targeted Workforce Shortage and Training Proposals
Senate Bill 24-050 and House Bill 25-1263 (did not pass) — Would have created a workforce demonstration grants pilot tied to evidence-based practices and long-term wage outcomes, and grants to expand medical residency capacity to address physician shortages.
Finally, as discussed in the Affordability and Cost of Living section, housing costs are the barrier most consistently cited in surveys, meaning housing policy can indirectly affect labor availability and labor costs.
Business Taxes and Fees
| What the Surveys and Reports Say |
| Business taxes surface across the surveys and reports reviewed as one factor within a broader cost concern rather than a standalone top issue. State and local taxes likely receive less standalone attention because they represent a relatively modest share of total tax burden when combined with federal obligations. However, several rankings and perception measures indicate Colorado's tax-climate standing has eroded over the past several years. The most specific and recurring tax-related signal is growth in state fees. Business surveys consistently name fees enacted in recent years as a distinct concern within the overall cost picture. |
| Main Issues |
| Taxes affect business costs, investment decisions, competitiveness, and after-tax returns, although the importance of taxes varies across industries and firms. Colorado's overall state and local business tax burden sits close to the U.S. average, but business property taxes and sales taxes on business inputs run higher, while corporate and pass-through income taxes are more competitive. Figure 9 analyzes Colorado’s state and local business taxes over time and compares it with peer states and the U.S. average. The analysis uses two measures of tax burden: business taxes paid as a share of Colorado's private-sector economy and per-employee business taxes paid. [Ref 8] |
Highlights from FY 2015 to FY 2024:
Business taxes as a share of Colorado's private-sector economy remained constant at 4.4 percent, just below the national average of 4.5 percent.
Among peer states, using the business taxes paid as a share of the economy measure, Colorado tied Texas (4.4 percent), edged above Washington (4.3 percent), and more materially exceeded Arizona (3.5 percent), Utah (3.6 percent), and North Carolina (3.2 percent).
Using another measure of tax burden, per-employee business taxes paid rose from about $7,100 to $8,600 (inflation-adjusted), with the FY 2024 level matching the national average.
Property taxes. Property taxes are the most significant outlier among the state’s business taxes. Colorado has higher business property taxes than many states and is in the top quartile nationally. This affects capital-intensive businesses hardest, and the business personal property tax remains a common complaint despite recent exemption increases.
Sales taxes. Sales tax on business inputs also are higher than the U.S. average. Colorado's home-rule structure, allowing for separate local tax bases, filings, and administration, adds complexity, though recent reforms have helped. Colorado has among the most onerous sales tax structures in the country.
Income taxes. Corporate and individual income taxes on business income generally compare favorably due to lower rates and single-sales-factor apportionment, which bases a multistate firm's Colorado tax solely on in-state sales and rewards firms with substantial Colorado workforce or property.
Important caveats. The figures in this analysis reflect statutory liability, not who ultimately bears the cost, since costs are shifted to workers, consumers, or owners. In addition, they measure average taxes, not the marginal tax on new investment, which is usually more relevant for location and expansion decisions. Tax levels also vary by industry. A capital-intensive business will find Colorado less favorable than a less capital-intensive one.
State Policy
Business taxation is among the areas where state policy can act most directly on the business climate. In Colorado, tax policy is affected by the Taxpayer's Bill of Rights (TABOR), the constitutional amendment that requires statewide voter approval for new taxes and tax rate increases and caps annual government revenue growth.
Colorado's business tax structure has changed in recent years, generally in offsetting directions, with voter-approved income tax rate reductions alongside legislatively enacted fee growth and tax base expansions that increase business tax liabilities. Some recent changes were enacted amid state budget pressures, including revenue effects associated with the federal H.R.1 (“OBBBA”), while others reflect longer-standing state tax policy debates.
Income taxes. The flat income tax rate, which applies to individuals and corporations alike, has been cut twice by voters, while the legislature has separately narrowed several income tax credits and exemptions available to businesses.
Proposition 116 (2020) — Lowered the flat income tax rate from 4.63 percent to 4.55 percent beginning in tax year 2020.
House Bill 21-1311 — Changed how Colorado calculates corporate income tax for large multistate corporations that file as a combined group, affecting the share of their sales attributed to Colorado for tax purposes, and required certain foreign affiliates in "tax haven" jurisdictions to be included in that filing, generally effective in tax year 2022.
Proposition 121 (2022) — Lowered the flat income tax rate further, from 4.55 percent to 4.40 percent beginning in tax year 2022.
House Bill 25-1296 — Capped the aggregate amount of enterprise zone investment tax credits that may be claimed at $2 million per taxpayer beginning in tax year 2026, subject to waiver by the Colorado Economic Development Commission, and prohibited certain industries from claiming the credit.
House Bill 25B-1001 — Made permanent an existing requirement, set to expire after 2025, that certain high-income pass-through business owners add back the federal qualified business income deduction for Colorado tax purposes.
House Bill 25B-1002 — Modified Colorado's treatment of multinational corporate income, including changes related to foreign-derived income deductions and tax-haven jurisdiction rules.
Property taxes. Property tax policy has shifted substantially since the repeal of the Gallagher Amendment, with subsequent legislation phasing down nonresidential assessment rates and adjusting the treatment of business personal property.
Amendment B (2020) — Repealed the Gallagher Amendment, which had pushed the residential assessment rate downward over time and increased the relative burden on nonresidential property.
Senate Bill 24-233 and House Bill 24B-1001 — Reduced assessment rates for certain nonresidential property types, particularly improved commercial property.
House Bill 21-1312 — Increased the business personal property tax exemption from $7,900 to $50,000 of actual value, removing many smaller businesses from the tax.
House Bill 25-1296 — Repealed the related refundable income tax credit for business personal property taxes paid, beginning in tax year 2026.
Sales taxes. The state has broadened the sales tax base in recent years and adjusted the vendor fee retailers retain for collecting and remitting state sales tax.
House Bill 21-1312 — Codified the taxation of digital goods and eliminated the sales tax vendor fee for retailers with more than $1 million in monthly taxable sales.
House Bill 26-1223 — Narrowed the downloaded software sales tax exemption so that only custom software and software governed by a negotiable license agreement remain exempt; many downloaded software products become taxable beginning January 1, 2027.
House Bill 25B-1005 — Eliminated the state sales tax vendor fee for all remaining retailers, effective January 1, 2026.
Fees. The state has increasingly funded programs through new fees and fee increases, some of which add to business costs. The retail delivery fee is among the most frequently cited examples, applying broadly to retail deliveries by motor vehicle and creating ongoing compliance costs for retailers, restaurants, and logistics firms. Others include air-quality permitting fees and transportation-enterprise fees, which fall more heavily on manufacturers, energy producers, and freight-related industries. The growth of fees, and whether some function as taxes that should require voter approval, is a contested issue. In 2020, voters required statewide approval of large new fee-funded enterprises (Proposition 117).
Affordability and Cost of Living
| What the Surveys and Reports Say |
Across the survey sources reviewed, affordability and the cost of living are consistently cited as a critical pressure on Colorado’s ability to attract and retain workers. The finding holds across independent, commercial, and business-advocacy sources. |
The signal is clearest where surveys ask directly about talent. In the Colorado Chamber’s business survey, leaders named high cost of living and housing as the top two barriers to attracting and retaining workers, cited by 73 percent and 50 percent respectively among their top concerns, ahead of any other factor. The Colorado Business Roundtable reported housing affordability as the largest Colorado-specific talent barrier among large employers. Relative to peer states, Colorado ranked near the bottom of all states for cost of living, driven by housing. |
These factors can influence business decisions, particularly for firms sensitive to labor costs, cost of living, and site-selection considerations. Cost of living can also contribute to slower population growth and reduced labor force expansion. |
At the same time, these pressures should be considered alongside Colorado’s continued strengths, including a relatively strong labor force, high levels of entrepreneurship, and a diverse economy. |
Main Issues |
The survey findings, which are largely perception-based measures, are also supported by other data. |
Overall cost of living. Colorado’s overall cost of living sits above the U.S. average and above most peer states, and that gap is driven almost entirely by housing rather than other goods and services. One way to compare the cost of living across states is to use regional price parities (RPPs), which measure differences in price levels across geographic areas relative to the national average, showing how far a dollar stretches in one place compared to another. [Ref 9] A value above 100 means prices are higher than the national average; a value below 100 means they are lower. Figure 10 compares Colorado’s prices relative to peer states and the U.S. average across four categories: all items, housing, goods, and other services in 2024, with each chart ordering states from the lowest prices (left) to the highest prices (right) by category. Colorado’s RPP of 103.1 for all items indicates that prices are 3.1 percent higher than the national average. [Ref 10] |
| Housing. Colorado’s housing costs run well above the national benchmark and above peer states such as Arizona, North Carolina, Texas, and Utah; only Washington is higher. In contrast, goods and other services in Colorado price below the U.S. average. The housing premium has widened over time, from roughly 12 percent above the U.S. average in 2010 to about 27 percent above by 2024. Housing-related costs also extend beyond purchase and rent prices. The Federal Reserve Bank of Kansas City’s Beige Book reported that Colorado property-insurance premiums rose 30 to 50 percent in the year before September 2023, driven by weather-related claims, a concrete cost increase affecting homeowners and businesses alike. Figure 11 shows housing/rents RPPs for Colorado and peer states relative to the U.S. average in 2010 and 2024. [Ref 11] |
| Wages adjusted for cost of living. Colorado has one of the highest median wages among the states, [Ref 12] which helps workers manage higher living costs but can reduce employer competitiveness relative to lower labor-cost states. |
Workforce and migration. Housing costs also affect the state’s workforce. Colorado’s highly educated workforce has been developed substantially through in-migration rather than home-grown talent. Only 22.7 percent of the state’s college-educated adults were born in Colorado, ranking 46th among the states. [Ref 13] Surveys most often cite housing affordability as the reason in-migration has slowed, with net domestic migration turning negative in 2025. Because the state’s workforce advantage depends on continued in-migration, sustained affordability pressure poses a longer-term risk to one of Colorado’s core competitive strengths, as discussed further in the Workforce section. |
State Policy
Housing affordability sits at the intersection of state policy, local control, and market forces, and state policy reaches only part of it. Colorado has been active on housing legislation in recent sessions, with most state action concentrated in several areas.
Land use and zoning. A series of 2024 laws directs local governments to allow more housing in specific ways. These set state requirements but rely on local implementation, and they target a long-cited barrier to entry-level for-sale housing: new housing construction, which dropped significantly with the Great Recession, has contributed to the steep run-up in prices.
House Bill 24-1152 — requires many jurisdictions to permit accessory dwelling units on single-family lots.
House Bill 24-1313 — pushes higher-density zoning near transit.
House Bill 24-1304 — limits minimum parking requirements.
House Bill 24-1007 — bars non-safety occupancy limits.
Permitting and project approvals. Where zoning rules govern what can be built, the development-review process affects the time and cost of building it. Recent legislation has targeted that process as well.
Proposition 123 (2022) — conditions affordable-housing funding eligibility on local governments implementing a 90-day fast-track review process for qualifying affordable-housing projects.
House Bill 24-1107 — limits certain litigation-related delays by requiring unsuccessful challengers of qualifying residential land-use approvals to pay the prevailing local government’s attorney fees.
House Bill 26-1001— the “HOME Act,” further expands by-right approval requirements for qualifying housing developments on certain publicly owned and nonprofit-owned properties.
Supporters argue these changes reduce delays and uncertainty, while opponents raise concerns about local control and public input.
Construction-defects liability. House Bill 25-1272 — the “Colorado American Dream Act” (effective January 2026), creates a voluntary program giving condominium and townhome builders a more predictable litigation framework in exchange for added inspections and warranties. It targets a long-cited barrier to entry-level for-sale housing, since condo construction had fallen sharply amid litigation and insurance costs.
Other state levers touch development costs more indirectly, including fee and regulatory requirements and the property-insurance market, where rising premiums have drawn state attention.
Much of what determines housing supply and price, however, operates at the local government level and from market forces. Local governments retain control over many zoning requirements, and how the new state zoning requirements are implemented, along with permitting timelines and approvals, which shape how much housing gets built and how fast. Market conditions, including land costs, mortgage rates, construction and materials costs, and in-migration demand, largely drive prices independently of policy.
Health Insurance
| What the Surveys and Reports Say |
Health insurance costs were cited as a meaningful but secondary concern in the surveys reviewed, behind labor costs and workforce supply, regulation, and affordability. In the Colorado Chamber's business survey, controlling health care costs was named a top challenge by about 6% of leaders and appeared in the top three for roughly 19%, placing it among the middle-ranked business concerns. |
The survey evidence indicates that health care remains a meaningful source of cost pressure for employers. Health insurance premiums are part of the overall cost of employing workers, and increases in those premiums raise labor costs regardless of whether business leaders identify them as a foremost concern. |
| Main Issues |
Health insurance affects labor costs because employer-sponsored coverage represents a significant component of employee compensation. Health insurance premiums made up 7.3 percent of private employees’ compensation in June 2026. [Ref 14] Along with wages, payroll taxes, and other employee benefits, health insurance contributes to the overall cost of employing workers and is one element of the broader cost structure businesses must manage. |
Two trends define Colorado's employer health premiums.
1) As shown in the figure below, premiums have risen steadily over the past decade and tracked close to the U.S. average.
a. Single coverage employer premium contributions. Colorado’s average annual premium per employee increased 57 percent ($4,100 to about $6,500) while the U.S. average increased 71 percent ($3,900 to $6,700) from 2010 to 2024.
b. Family coverage employer premium contributions. Average cost of family coverage healthcare for employers’ workers increased 70 percent ($10,300 to $17,500) in Colorado and 68 percent in the U.S. ($10,300 to $17,300) from 2010 to 2024.
2) As shown in the figure below, similar premium costs represent a smaller share of employee compensation in Colorado than in many peer states. As a share of median wages, employers’ contributions to health care have declined and now sit below peer states and the U.S. average. The decline in Colorado is largely due to an increase in median wages outpacing employer contributions relative to the U.S. average.
a. Single coverage employer premium contributions. As a share of median wages, contributions declined from about 12% of median wage in 2010 to roughly 11% by 2024, ending as the lowest among the peer states and below the U.S. average.
b. Family coverage employer premium contributions. As a share of median wages, contributions declined from about 33% to roughly 30% from 2010 to 2024, again finishing near the bottom of the peer group and below the U.S. average.
Employer-sponsored health insurance remains a significant and rising component of total compensation. While premiums are broadly similar across states, higher wages here mean that premiums represent a smaller share of the median worker’s income. This provides useful context for understanding the cost structure, though it does not necessarily indicate that employers face a lighter or heavier cost burden than in other states.
| State Policy |
The employer premiums shown above are shaped mostly by forces outside state policy, such as overall healthcare costs and competition for workers among employers. State influence runs through two points in the system, and they reach different shares of the employer market. |
The insurance contract. The state regulates coverage terms, but only for fully insured plans. These include benefit mandates, rate review, the Colorado Option [Ref 15] , and the reinsurance program. [Ref 16] This reaches individual and small-group coverage and employers that buy fully insured small-group coverage, but not the large and self-insured employers that cover most workers. Because many larger employers self-insure, state insurance regulations often have their most direct effect on smaller employers and employers purchasing fully insured coverage. Within that segment, the reinsurance program and Colorado Option are designed to lower premiums, while benefit mandates raise required coverage and add to them, with the cost effect dependent on the type of mandate. Along with wages, payroll taxes, and other employee benefits, health insurance contributes to the overall cost of employing workers and is one element of the broader cost structure businesses must manage. |
The cost of care. The price and supply of medical services impact premiums for every employer, regardless of how a plan is funded. This is the only point that reaches self-insured plans. Colorado has focused on the following areas to influence the cost of care:
Drug prices. House Bill 23-1225 expanded the state board’s authority to cap payments for certain high-cost drugs; the policy is being challenged in court and will not take effect until 2027.
Price transparency. Hospitals must post prices, with noncompliance treated as a deceptive trade practice. This provides price transparency but does not set price levels.
Specific charges. House Bill 23-1215 limits certain hospital facility fees.
Provider reimbursement. The Colorado Option lets the state set provider rates where premium targets are missed, but only in the regulated market, not employer plans directly.
Market structure. Antitrust and merger oversight impact provider concentration that influences prices; Colorado requires advance notice of hospital mergers but has little authority to block or change them.
Most of what drives employer health insurance premiums is beyond the state's direct control. Colorado's current tools reach smaller employers most directly; large, self-insured employers are largely exempt. Drug pricing and transparency measures are steps forward but do not provide broad leverage over what providers charge.
Public Safety
What the Surveys and Reports Say
Business surveys generally indicate that public safety, crime, homelessness, and related quality-of-life concerns are considerations for some Colorado businesses, particularly in large urban and commercial areas. Homelessness and public safety were identified by approximately 15 percent of respondents in the Colorado Chamber of Commerce's 2025 Business Leaders Survey as one of their top three business challenges. However, public safety issues typically rank below workforce availability, labor costs, housing affordability, regulations, and broader economic conditions among statewide business concerns.
Main Issues
Crime trends. Colorado experienced a rise in reported crime rates during and after the pandemic period, followed by a broad-based decline in recent years. Within the pre-pandemic period (2013 to 2020), Colorado's overall crime rate increased modestly, as sharp rises in motor vehicle theft and violent crime were only partially offset by declines in burglary and larceny. The national overall crime rate fell steadily over the same period, creating a gap between Colorado and the national average.
Colorado improved across most crime categories since the 2021-2022 peak. By 2025, the violent crime rate had declined five percent from 493 per 100,000 to 469 per 100,000 and the property crime rate decreased 16 percent from 3,148 per 100,000 to 2,654 per 100,000. These trends suggest the pandemic crime increase has substantially reversed, though crime rates remain elevated by national standards and key categories, particularly motor vehicle theft and aggravated assault.
| Figures 16 and 17 show trends in crime rates for Colorado over the pre-pandemic period from 2013 to 2020 and from 2021 to 2025. Because Colorado and the nation transitioned to a new crime-counting system beginning in 2021, pre- and post-2021 figures are not directly comparable and are presented as two separate trend periods. [Ref 17] |
Methodology note: Cross-state crime comparisons are sensitive to differences in agency reporting practices, classification standards, and participation rates in the FBI’s NIBRS reporting system, and are substantially less reliable than state trends tracked over time. For that reason, this section generally focuses on Colorado’s own trajectory rather than comparisons to other states. However, the analysis includes the trajectory of Colorado and U.S. reported activity, which requires only that Colorado and the U.S. each measure crime consistently with themselves over time, not identically to one another. Additionally, because of issues with the NIBRS system, year-over-year trends are most reliable through the 2013–2019 period; figures spanning 2020 to 2022 should be read with more caution.
State Policy
Public safety is another area where state policy can act directly on the business climate, shaping criminal penalties, law-enforcement capacity, crime-prevention efforts, and firearms regulation. Recent policy activity spans both legislative action and statewide citizen-initiated ballot measures.
Criminal penalties, sentencing, and bail. Colorado restructured motor vehicle theft penalties and expanded related criminal liability, while voters approved measures lengthening time served for violent offenders and restoring judges' authority to deny bail in murder cases.
Senate Bill 23-097 — Overhauled motor vehicle theft penalties, moving from a system based on the vehicle's value to one based on offender conduct, and created a new related offense for unauthorized vehicle use.
House Bill 25-1062 and House Bill 25-1171 — Made theft of a firearm a class 6 felony regardless of value and added first-degree motor vehicle theft to the offenses that can trigger Colorado's possession of weapons by previous offender restrictions.
Proposition 128 — Required people convicted of specified violent crimes to serve at least 85 percent of their sentence before becoming eligible for parole or earned-time reductions, up from the prior 75 percent threshold, and required people convicted of a third or subsequent crime of violence to serve their full sentence without parole eligibility.
Amendment I — Restored judges' authority to deny bail in first-degree murder cases when proof is evident or the presumption is great, authority curtailed by a 2023 Colorado Supreme Court ruling that followed the 2020 repeal of the death penalty.
Law-enforcement funding and crime prevention. Colorado expanded motor vehicle theft prevention efforts, and voters approved additional state funding to support local law-enforcement recruitment, training, and retention.
Senate Bill 23-257 — Expanded funding and allowable uses for the Colorado Auto Theft Prevention Authority, including theft prevention, enforcement, prosecution, victim assistance, and technology enhancements.
Senate Bill 24-003— Authorized state-level investigation of illegal firearms activity.
Proposition 130 and Senate Bill 25-310 — Directed $350 million in additional state funding to local law enforcement for recruitment, training, and retention, plus a death benefit for officers killed in the line of duty; the legislature funded the measure through a mechanism tied to the state pension system.
Firearms regulation and related funding. Since 2023, Colorado has enacted several firearms-related measures addressing purchases, storage, dealers, enforcement, and training requirements; related efforts to roll back parts of this framework were considered and rejected in 2025. Voters also approved a firearms and ammunition excise tax dedicated to crime victims and related services.
House Bill 21-1106 — Required secure storage of firearms left in unattended homes.
Senate Bill 23-169 and House Bill 23-1219 — Raised the minimum firearm purchase age and established a waiting period before delivery.
House Bill 24-1348 — Required secure storage of firearms left in unattended vehicles.
Proposition KK (2024) — Created a 6.5 percent excise tax on retail sales of firearms, firearm precursor parts, and ammunition, dedicated to crime victim services and related mental-health and school-safety programs.
Regulatory Burden
Colorado businesses operate under a broad set of state regulations intended to protect public health, safety, welfare, consumers, individual rights, and market integrity. Compliance can create costs for businesses and materially impact their operations. This section reviews major regulatory policies and those often cited by businesses, including the minimum wage, the FAMLI paid-leave program, unemployment insurance, and other consumer-protection, labor, and environmental rules affecting Colorado businesses.
Minimum Wage
| What the Surveys and Reports Say | ||
| Across the sources reviewed, business leaders did not specifically identify the minimum wage as a concern. However, trade associations and chambers of commerce, particularly those representing labor-intensive industries, cite minimum wage levels as a contributing factor to higher operating costs. Businesses with thin margins, including small businesses, are disproportionately impacted by the cost of higher minimum wages. | ||
Main Issues | ||
| For employers, the minimum wage increases labor expenses and can create costs associated with compliance and administration. The minimum wage has climbed since 2016, including when adjusted for the cost of living, but it affects a relatively small share of workers. | ||
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| State Policy |
| Colorado’s minimum wage is set in the state constitution and automatically adjusted each year for inflation, limiting year-to-year legislative discretion. In addition, state law allows cities and counties to adopt higher local minimum wages, creating a framework in which wage policy is determined at both the state and local levels. |
A constitutional floor with automatic indexing. Amendment 70 (2016) raised the minimum wage [Ref 20] in steps to $12.00 an hour by 2020 and required an annual inflation adjustment, tied to the Denver-area consumer price index, every year after. Because the minimum wage level is constitutional rather than statutory, the legislature cannot lower the wage or change the annual adjustment without a further vote of the people. For employers, this makes the minimum wage a predictable but automatic annual cost increase, independent of the legislative calendar or current economic conditions. Supporters frame the annual increases as preserving low-wage workers’ purchasing power as costs rise. Critics note that it raises labor costs automatically even in downturns, when employers are least able to absorb them. |
Local authority. House Bill 19-1210 allowed local governments to set local minimum wages above the state level, subject to statutory limits. Denver, Edgewater, and unincorporated Boulder County have adopted local minimums above the state level. |
The tipped-wage offset. Colorado allows tipped employees to be paid a lower wage as long as tips bring total earnings to the full minimum. The offset is the same dollar amount statewide, and it bears most directly on food-service employers. |
Family and Medical Leave Insurance (FAMLI) and Other Recent Employee-Related Requirements
What the Surveys and Reports Say
As noted in the Workforce section, recent business surveys often reference FAMLI alongside paid sick leave, wage transparency— all enacted in recent years— and other employment-related requirements as part of the cumulative cost and compliance burden facing employers. Concerns typically center on added labor costs, administrative complexity, compliance obligations, and uncertainty regarding the long-run effects of the workforce requirements. These concerns appear most prominently in business-advocacy surveys and employer-association feedback, while broader economic surveys reference them as one component of a changing labor and regulatory environment. Survey findings emphasize employer perceptions of higher costs and complexity but provide more limited direct evidence on measured business outcomes.
| Main Issues |
Colorado's FAMLI program is a state-administered insurance system that provides paid leave for covered family and medical events, funded through a payroll premium shared by employers and employees. Small businesses (those with fewer than 10 employees) are exempt from paying FAMLI premiums. For 2026 the premium is 0.88 percent of covered wages, divided evenly between employer and employee. [Ref 21] [Link] FAMLI increases employer labor costs, payroll administration, and employee-management responsibilities, while offering potential offsetting benefits such as improved employee retention, recruitment, and workplace stability. |
At the 2026 employer rate of 0.44 percent, FAMLI costs an employer roughly $4.40 per $1,000 of covered wages, applied only up to the federal Social Security wage cap. [Ref 21] [Link] Premium collection began in 2023 and benefit payments in 2024. Statewide, total FAMLI premiums run on the order of $1.5 billion annually, with the employer share accounting for a little under half. To date, premiums collected have substantially exceeded benefits paid, supporting the reduction from 0.90 to 0.88 percent effective 2026; first-year benefit payments nonetheless exceeded the program's initial actuarial projection, and it remains unclear whether current utilization reflects long-term experience or early-program dynamics. [Ref 23] |
In addition to FAMLI, Colorado has adopted other workforce-related requirements in recent years, including paid sick leave under the Healthy Families and Workplaces Act and wage-transparency and pay-equity provisions under the Equal Pay for Equal Work Act. Paid sick leave increases compensation costs to the extent employees use accrued leave, while wage-transparency and pay-equity requirements primarily affect compliance, recordkeeping, and reporting practices. Employers often cite these policies collectively, emphasizing their cumulative effect on labor costs and workforce-related compliance obligations. |
Compared with most peer states, Colorado employers are subject to a larger set of statewide leave and pay transparency requirements, although the scope and structure of these policies vary across states. Among the peer group, only Washington operates a comparable state-administered, mandatory paid family and medical leave insurance program. Washington's 2026 premium is higher in total (1.13 percent of wages) but structured differently: [Ref 24] |
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As a share of payroll, Colorado's employer-side cost (up to 0.44 percent of covered wages) therefore sits modestly above Washington's (near 0.32 percent). |
State Policy |
State policy largely determines the cost, administration, and compliance requirements associated with FAMLI and other workforce-related mandates. Policymakers establish program financing, benefit structures, employer responsibilities, reporting requirements, and enforcement mechanisms, which influence employer costs, administrative burdens, and program effectiveness. |
Unemployment Insurance
What the Surveys and Reports Say
Unemployment Insurance (UI) premiums were not among the concerns cited in any of the business climate surveys reviewed for this report, suggesting that businesses generally experience UI as part of the overall cost of employing workers rather than as a distinct burden. The costs of the UI program was more of a concern among businesses during the COVID period when the system was under pressure from pandemic-related unemployment claims that were resulting in the need for higher premiums. However, state and federal pandemic relief funds were used at the time to help mitigate the increase of premiums. Further information on premiums increases is discussed in the State Policy section below.
| Main Issues |
UI premiums are a mandatory payroll cost employers pay to fund benefits for workers who lose their jobs through no fault of their own, with each employer's rate based on its layoff experience and the condition of the state's UI Trust Fund. |
As shown in the figure below comparing Colorado's UI premiums with peer states and the U.S. as a percent of total wages, [Ref 25] Colorado's UI premium costs have increased substantially since the pandemic. By 2025, Colorado employers paid UI premiums equal to approximately 0.71 percent of total wages, nearly double the U.S. average of 0.38 percent and the highest level among the peer states reviewed, slightly above Washington. |
Colorado's premiums as a share of total wages sat below the national average every year from 2000 through 2021 before crossing above it in 2022 as the state rebuilt its UI Trust Fund. |
State Policy |
Colorado's higher UI premium costs in recent years largely reflect mechanisms to rebuild its UI Trust Fund, which was depleted by the pandemic, and to meet federal solvency standards. Two factors are particularly relevant for employers. First, a temporary solvency surcharge remains in effect while the fund remains below its statutory benchmark. Second, Senate Bill 20-207 increased the taxable wage base to $30,600 for 2026, with indexing thereafter. Together, these changes raise employer-paid UI costs but improve the long-term solvency of the system. While premiums have increased for businesses, they would have risen further without the use of pandemic relief funds to restore the trust fund's solvency. |
Other Significant Regulations
Beyond the major costs and concerns for businesses discussed throughout the report, Colorado businesses navigate a layered set of consumer-protection, labor, and environmental regulations that may individually impose modest costs but collectively add to the regulatory burden. Concerns are generally raised in three areas:
Consumer protection. A 2019 overhaul strengthened Colorado's Consumer Protection Act by broadening the scope of conduct subject to state enforcement and making certain claims easier to pursue and raised state-enforcement penalties to up to $20,000 per violation; private plaintiffs can recover damages, fees, and sometimes triple damages. Additionally, a new total price law passed in 2025 requires nearly all businesses to disclose mandatory fees up front, while Colorado enacted a first-in-the-nation artificial intelligence (AI) regulation in 2024 that was repeatedly delayed until it was replaced with a revised framework in 2026 before either version took effect. These examples show the potential cumulative effect of consumer protections requirements that can increase compliance costs and litigation exposure.
Labor. As discussed in the Workforce section and FAMLI section, there are employee-related state requirements (FAMLI, paid leave, etc.) that businesses cite as a concern.
Environment. The 2019 oil and gas and emissions statutes (Senate Bill 19-181 and House Bill 19-1261), described as among the strictest in the country, generate permitting delays and capital uncertainty for operators, and the packaging producer responsibility program (House Bill 22-1355) introduces recurring, volume-based dues for producers beginning in 2026.
Businesses have pointed less to any single rule than to the cumulative weight of these requirements, including the compliance costs, and the uncertainty they can create. Policymakers have recently responded to business concerns with two initiatives. In May 2026, state lawmakers passed a law, Senate Bill 26-137, to reduce administrative burden for businesses, directing each state department to review all of its rules at least every five years and, in doing so, to identify redundant, outdated, or obsolete rules and opportunities to improve their effectiveness. On the environmental side specifically, Governor Polis and the Colorado Chamber of Commerce Foundation announced a new permitting working group in June 2026 aimed at speeding up permitting for emission-reducing projects in manufacturing, energy production, and transmission. The group convenes state agencies, businesses, and non-governmental organizations to identify ways to accelerate permitting and provide greater regulatory certainty for these investments.
Appendix
Survey and Report Categories
The surveys and reports fall into three categories, each with different methodologies, scopes, and organizational perspectives, which affect how their findings should be interpreted. Sources span nonpartisan government and academic data, commercial peer-state rankings, and business advocacy surveys. They agree on the overall trend but disagree on its causes.
Category 1: Independent economic and academic sources. These surveys and indices consist of nonpartisan academic and public sources that draw on objective government data and independent research, providing the most direct evidence of actual economic conditions separate from how businesses perceive them
Leeds Business Confidence Index: Produced by the Business Research Division (BRD) at the Colorado University Leeds School of Business. The quarterly survey gauges Colorado business leaders' optimism and expectations across the state economy, the national economy, industry sales, industry profits, industry hiring, and capital expenditures. Responses come from a panel of Colorado business leaders.
Beige Book Tenth District section. Produced by each regional branch of the Federal Reserve Bank. The Kansas City Branch gathers qualitative information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources.
Kansas City Federal Reserve Bank’s Rocky Mountain Survey/Rocky Mountain Economist. Produced by the Denver Branch of the Federal Reserve Bank of Kansas City. A quarterly publication that provides economic information for the states of Colorado, New Mexico and Wyoming. It draws on the Branch's regional business surveys (manufacturing, services), business and industry roundtables, and interviews with regional business contacts to track conditions such as employment, wages, and overall business activity across the three-state Rocky Mountain region.
Category 2: National rankings and indices.
Top States for Business. CNBC's annual composite-index that scores all 50 states on 135 metrics in 10 broad categories of competitiveness (such as economy, infrastructure, workforce, cost of doing business, and business friendliness).
Chief Executive Best and Worst States. A perception survey conducted by Chief Executive magazine (Chief Executive Group) capturing the perceptions of business leaders. The survey polls more than 650 U.S. CEOs, presidents and business owners, with representation from every state, asking them to rank the best and worst states; respondents rate states on three criteria: taxes and regulations, workforce quality, and living environment.
Category 3: Colorado and regional business organization surveys and reports. These sources help identify which policies organized employers find burdensome.
Colorado Chamber Business Survey. Produced by the Colorado Chamber of Commerce, the survey polls business leaders in the state to assess economic sentiment and the health of Colorado’s business climate.
Executive Outlook Survey. The Colorado Business Roundtable produces the report to gauge the sentiment and expectations of senior executives in Colorado.
Toward a More Competitive Colorado. An annual report produced by the Denver Metro Chamber of Commerce that tracks several economic and social indicators in relation to competitor states.
Free Enterprise Report. A study of Colorado’s competitiveness produced by the Common Sense Institute. The report uses an economic performance index and a free enterprise competitive index to measure Colorado’s competitiveness.