Colorado’s new voter-approved gun initiative has a target unlike those of previous measures meant to reduce gun violence. The tax on guns and ammunition is meant to generate revenue to support cash-strapped victim services, and it’s an open question whether it will affect firearms sales.
The 6.5% tax on manufacturers and sellers — including pawnbrokers — of guns, gun parts, and ammunition will generate an estimated $39 million a year. The money is aimed primarily at crime victim services, including groups that help victims of domestic violence. Some of it is earmarked for behavioral and mental health for veterans and youth, and a sliver will support school security.
Firearm deaths have been rising in Colorado since at least 2006, growing more quickly than the state’s population, and with a notable bump in homicides early in the covid pandemic, which prompted a national gun-buying spree. The tax could have public health effects beyond generating money for social services, researchers said. But they don’t know for sure because only one other state, California, has a gun-and-ammo tax — an 11% tax that has been in effect only since July.
Emmy Betz directs the Firearm Injury Prevention Initiative at the University of Colorado School of Medicine and wonders if the tax will change consumer behavior. “The question is whether that will change gun sales or not,” she said.
A federal tax has been levied on gun manufacturers for more than a century — currently at 10% for pistols/revolvers and 11% for other kinds of firearms, plus cartridges and shells.
Colorado state Rep. and Majority Leader Monica Duran, a Democrat, co-sponsored the new law, scheduled to take effect in April. Voters approved it in November as Proposition KK. The connection between firearms and domestic violence is stark: Nationally, every month an average of 57 women are killed by an intimate partner using a gun. Researchers have also found that 59% of mass shootings between 2014 and 2019 in the United States were related to domestic violence.
Support groups for victims of domestic violence and other crimes receive funding through the 1984 federal Victims of Crime Act. Those dollars mostly come from fines and penalties from convicted federal criminals and fluctuate annually depending on what cases the Department of Justice pursues. Federal prosecutions and fines have dropped, so the state’s pot of money has shrunk from nearly $57 million in 2018, when Duran was first elected, to about $14 million in 2024 — a 76% drop.
But the need for victim support services has grown, said Duran, who is a gun owner and a survivor of domestic violence who used such services to escape homelessness.
Colorado’s new tax is what economists call a “Pigouvian” tax, which seeks to compensate financially for the societal toll or damage a product causes. For example, people who drive cars pay a tax on gas, which goes toward repairing roads.
“It’s not because you’re a bad driver that we’re taxing gasoline. It’s because we need this money to be able to improve our infrastructure in ways that allow people to continue to use that product,” said Rosanna Smart, an economist who co-directs the Rand Gun Policy in America initiative.
She said Colorado’s gun tax is similar: It supports the social infrastructure that’s required in a society with firearms.
In 2022, the U.S. Supreme Court ruled that people can carry a gun outside their homes for self-defense. Smart said the decision made it harder to pass laws restricting gun possession and highlighted the importance of historical precedent. Both the California and Colorado tax laws cite taxes passed by eight states and then-independent Hawaii between 1844 and 1926.
The actual effect of the Colorado and California laws won’t be known for some time. But should other states pursue similar policies, researchers think focusing taxes on specific weapons or places might be more effective at reducing harm, rather than simply generating revenue.
Smart, for example, found that if the goal is to reduce harm, a more optimal design would be to follow the lead of alcohol policies and have varying tax levels based on an item’s likelihood to cause harm.
Adam Rosenberg, a doctoral candidate in economics at Stanford University, found doing so at the national level, by rejiggering the federal tax to be 13.3% on handguns and nothing on long guns, would prevent deaths while holding industry profits steady.
The Colorado tax applies to firearms dealers, manufacturers, and ammunition vendors that make at least $20,000 a year (excluding sales to law enforcement or active-duty military). Neither state officials nor lawmakers nor industry groups could confirm what fraction of firearm businesses that represents. According to data from the Bureau of Alcohol, Tobacco, Firearms and Explosives, about 2,200 firearms dealers or pawnbrokers and manufacturers of ammunition/firearms operate in the state. Ammunition sellers aren’t tallied in that figure.
Some firearms businesses worry the tax will drive people across state lines to purchase guns.
“We’ve already got people saying, ‘Well, we can run over to Utah or Wyoming instead,’” said Frank Sadvar of Northwest Outfitters, a gun store and pawn shop in Craig. The city is a 40-minute drive to Wyoming and 1½ hours to Utah.
“The way it was worded on the ballots, it looked really good,” he said. But Sadvar suspects the revenue will fall short of the $39 million estimated because supporters didn’t factor in sales lost to other states.
In Cortez, which is a half-hour drive from New Mexico, Jesse Fine said he’s heard people say they’d rather drive there to buy a gun than pay the tax in Colorado — even though they’d face a seven-day waiting period there.
Fine, who manages Goods for the Woods, an outdoor gear shop carrying a range of firearms and hunting equipment, said he believes the tax discriminates against gun owners who are exercising their civil rights.
“It makes it hard for a mom-and-pop shop to stay in play,” he said. “We’re going to take the biggest hit because we’re not a big corporation.”
Victim services organizations said they will be in a tight spot financially until the new tax’s revenue starts to fully flow in 2026.
Courtney Sutton, public policy director of the Colorado Organization for Victim Assistance, said most victim service agencies in the state, many of which are members of COVA, “heavily, heavily rely on” the federal funds that have been ballooning up and down.
“We did get $6 million from the state budget, but that’s not very much across 215 programs,” she said, referencing the state’s four victim services coalitions.
The new tax is estimated to bring in $30 million a year to such groups.
Rocky Mountain Victim Law Center executive director Emily Tofte Nestaval said she hopes the new tax revenue will help the center restart a program for people sorting out protection orders, housing issues, and name changes, among other things. Nestaval said that, for now, crime victims in Colorado are on their own.
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