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Demographics and Migration of Colorado Income Tax Filers

Prepared by Office of Research and Analysis

October 2022

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Overview

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Income Tax Return

Age

Single vs. Joint

Tax Data

Job

Location

Income

Children

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Outline

  • Methodology
  • Total filers vs. total population
  • Migration at state, region, and county levels
  • Age and income trends
  • Relationship between income & housing prices
  • How could you use this data
  • Key takeaways

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Methodology

What we did:

  • Pulled return-level data by tax year for two consecutive years
  • Split joint return data → one record per filer (individual)
  • Matched records from year 1 and year 2 on filer ID
  • Attributed age and income to the tax year
  • Assumed returns were filed the year after the tax year
  • Determined filer location at the time of filing using addresses on returns
  • Compared filer locations from one year to the next to determine migration

How we did it: GenTax; SQL code; Excel

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Total Filers < Total Population

Total 2020 Population: 5,782,914 (Colorado State Demography Office)

Total Tax Year 2020 Filers: 3,714,181 (64%)

Filer counts exclude:

  • Dependents without income
  • Some low income earners
  • Non-filers
  • People with unclear addresses

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Filers Represent 29% - 90% of County Populations

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Compared counties with highest (Top 5) and lowest (Bottom 5) percentages

Filer % of Population by Age Group

Average Income by Age Group

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Migration Definitions

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Filers Who Stayed

Same location both years

New Filers

New to the location

Filers Who Left

Left the location

Total Resident Filers

(New + Stayed)

Net Migration

(New - Left)

Year 1

Location

Year 2

Location

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Migration at Three Location Levels

State

Region

County

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State-Level

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State: Total Resident Filers (New + Stayed)

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YOY Growth Rates

New

Stayed

Total

2021

2.8%

1.7%

1.9%

2020

9.4%

1.3%

2.1%

The numbers to the right of the bars are Total Resident Filers

New Filers = 10%

Filers Who Stayed = 90%

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State: Net Migration

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The numbers to the right of the bars are Net Migration

Pandemic effect?

YOY Growth Rates

New

Left

Net Migration

2021

2.8%

5.2%

-4.8%

2020

9.4%

6.3%

21%

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Region-Level

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Region: Total Resident Filers in 2021

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84% of filers live in the Front Range

New filers are 11% - 16% of the total filers in each region

The numbers to the right of the bars are Total Resident Filers

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Region: Net Migration from 2020 to 2021

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For every 1,000 filers there were 21-40 net new filers

The numbers to the right of the bars are Net Migration

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County-Level

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County: Population & Net Migration are Correlated

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Net migration decreased 55-65% in 2021 for these high population counties:

Boulder, Jefferson, and Denver

Pandemic effect?

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County: New Filer Composition in 2021

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48% of new filers moved from another county or from out of state

The numbers to the right of the bars are Total New Filers

52% of new filers did not file a return in 2020

  • Didn’t live in CO
  • No/Low income
  • Didn’t file

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Demographics

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Income Tax Return

Age

Single vs. Joint

Location

Income

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Demographics Definitions

Single vs. Joint: One or two tax filers per return

Age: Age of filer on December 31st of the tax year

Income: Federal adjusted gross income (AGI)

For joint returns, divided AGI in half

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Number of Filers and Median Income Vary by Age

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Average age is 46

Median income is $43K

Number of Filers & Median Income by Age (2020)

Steady increase of filers up to age 30

Median income peaks at $59K at age 50

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Joint Filers Have Higher Income

Median Income for Single & Joint Filers by Age (2020)

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Joint filers earned 20 - 40% more than single filers for ages 30 - 73

Single income remains fairly flat after age 28

Income peaks at age 50

  • Single = $47K
  • Joint = $65K

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Age and Income Vary by Migration Status

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New Filers and Filers Who Left tend to be younger & have lower income

Filers Who Stayed are oldest & have highest income

Age & Income (2020) by Migration (2020 to 2021)

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County-level Income & Home Prices are Correlated

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Average Home Price

Source: Zillow home value index by county, 2020

Average Income

Source: 2020 Colorado Income Tax Returns

Correlation = 0.95

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How Could You Use This Data?

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  • Economic and population forecasting
  • Improving customer service or targeting outreach
  • Estimating demographic impacts of legislation
  • Tracking migration patterns for state and local planning

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Key Takeaways

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Migration

  • Total filers < total population → Filers are 64% of 2020 population
  • Filer growth slowed in 2021, especially New Filers → Pandemic effect?

  • Population & net migration are correlated, but some high population counties had a 55-65% drop in net migration Pandemic effect?

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Key Takeaways

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Demographics

  • Average age is 46 and median income is $43k in tax year 2020
  • Joint filers have higher income than single filers

  • New filers and filers who left tend to be younger and have lower income

  • Income and housing prices are highly correlated across counties

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Thank you!