About Colorado State Income Tax

Colorado uses a flat tax rate of 4.4% on all taxable income. This simple system makes Colorado competitive with other western states and attractive for both individuals and businesses.

Colorado Tax Features

• Flat Tax Rate: 4.4% on all income (reduced from 4.55% in 2020)
• Simple Calculation: Easy to understand and calculate
• TABOR Refunds: State may issue tax refunds when revenue exceeds limits
• Standard Deduction: Follows federal standard deduction

How Colorado Tax is Calculated

Colorado's flat tax system is straightforward:

1. Start with your federal taxable income
2. Make Colorado-specific adjustments (additions/subtractions)
3. Multiply by 4.4% to get your Colorado tax
4. Calculate federal tax separately

TABOR and Tax Refunds

Colorado's Taxpayer Bill of Rights (TABOR) requires voter approval for tax increases and limits government spending growth. When state revenue exceeds TABOR limits, Colorado issues refunds to taxpayers, making the effective tax rate even lower in some years.

Frequently Asked Questions

What is Colorado's income tax rate?

Colorado has a flat income tax rate of 4.4% as of 2026. This rate has been gradually reduced from 4.63% in 2019 and may continue to decrease in future years.

What are TABOR refunds?

TABOR (Taxpayer Bill of Rights) refunds are issued when state revenue exceeds constitutional limits. In recent years, Colorado has issued billions in refunds, effectively lowering the tax burden for residents.

Does Colorado tax Social Security?

Colorado allows taxpayers to subtract some or all Social Security benefits from their taxable income, depending on age and income level. Those 65+ can generally exclude all Social Security.

How does Colorado compare to neighboring states?

Colorado (4.4%) is competitive: Utah (4.65%), New Mexico (5.9%), Wyoming (0%), Kansas (5.7%), Nebraska (6.84%), Oklahoma (4.75%), and Arizona (2.5%). Colorado is in the middle of the pack.

Colorado vs. Neighboring States

Tax comparison with surrounding states:

• Wyoming: No state income tax
• Utah: 4.65% flat rate
• New Mexico: Progressive up to 5.9%
• Arizona: 2.5% flat rate
• Kansas: Progressive up to 5.7%
• Nebraska: Progressive up to 6.84%
• Oklahoma: Progressive up to 4.75%

Why Choose Colorado

Beyond the 4.4% tax rate, Colorado offers:

• Outdoor Lifestyle: Access to mountains, skiing, hiking
• Strong Economy: Tech hub, aerospace, tourism industries
• TABOR Protection: Constitutional limits on tax increases
• Quality of Life: Excellent schools, healthcare, culture

Tips for Colorado Taxpayers

• Take advantage of Colorado's flat 4.4% rate
• Watch for TABOR refunds that lower your effective rate
• Seniors can exclude Social Security income
• Colorado follows federal deductions - simplifies filing
• Consider Colorado's overall quality of life and tax burden