Charles Trautman, EA · Since 1969
The changes on the return you file in 2026.
Four new credits, a bigger Social Security break for people in their late fifties and early sixties, a much smaller TABOR refund, and a long list of credits and subtractions that quietly ended. Here is what actually changed, checked against the Department of Revenue’s own publications, and a few things you may have heard that aren’t true.
Current as of October 2026
The 2024 rate was temporarily cut to 4.25% as a way of returning a large TABOR surplus. The 2024–25 surplus was small, so the cut did not repeat. The 2025 rate is the normal 4.40%. On $80,000 of Colorado taxable income that’s $120 more tax than the same income in 2024.
The sales tax refund on the 2025 return runs from $19 to $59 per person ($38 to $118 joint), depending on income. Most of the surplus went to reimbursing counties for the senior and veteran property tax exemptions before anything reached the refund. Full table on the Colorado tax overview.
Four credits and one expanded subtraction that didn’t exist on last year’s return.
HB24-1142. If you’re 55 to 64 and your federal AGI is $75,000 or less (single) or $95,000 or less (joint), all of your federally taxable Social Security is now subtracted, the same as it has been for people 65 and older. Above those limits, the old $20,000 pension cap still applies. People 65 and older are unaffected; their Social Security was already fully exempt.
HB24-1312. A refundable $1,200 for child care workers registered in Colorado Shines and for direct care workers in long-term care (nursing homes, assisted living, home- and community-based care) who worked at least 720 hours in the year, with AGI of $75,000 or less single / $100,000 joint. Child care workers need an attestation ID from the Department of Early Childhood. Form DR 1217. Runs 2025–2028.
HB24-1340, as amended by SB25-319. Refundable credit for out-of-pocket tuition and fees (after grants and scholarships) at a Colorado public college, for students who enroll within two years of high school graduation with household income of $90,000 or less, carrying at least six credits with a 2.5 GPA. The student claims it, using a certificate from the school. Covers the first 65 credit hours.
HB24-1268. Replaces the disability route into the PTC rebate. Refundable, for people totally disabled and receiving full disability benefits all year, Colorado residents all year, with AGI of $20,000 or less (single) or $32,000 (joint). Attach proof of benefits.
Replaces the old subtraction. 100% of qualifying mitigation costs on Colorado property, up to $1,000, for federal taxable income of $129,200 or less.
HB24-1439. For businesses, not individuals: $6,300 per registered apprentice employed at least six months, plus $1,050 per additional month up to $12,600, for up to ten apprentices a year. Certified by Apprenticeship Colorado before you file. Also new for businesses: credits for employee ownership conversions, affordable housing in transit communities, and middle-income housing.
| Item | 2024 | 2025 |
|---|---|---|
| Income tax rate | 4.25% | 4.40% |
| TABOR sales tax refund, per person | $177 – $565 | $19 – $59 |
| Electric vehicle credit (MSRP $80,000 or less) | $5,000 | $3,500 |
| Extra EV credit for MSRP under $35,000 | $2,500 | $2,500 |
| Early childhood educator credit, by credential level | $852 / $1,136 / $1,705 | $872 / $1,162 / $1,743 |
| Wildfire mitigation, income limit | $126,300 | $129,200 |
| Rural health care preceptor credit, per preceptorship / max | $1,000 / $1,000 | $2,000 / $6,000 |
| Colorado EITC, as a share of the federal credit | 50% | 50% |
The EITC stays at 50% for 2025 and drops to 25% for 2026.
| Item | 2025 |
|---|---|
| Family affordability credit, maximum per child under 6 / 6–16 | $3,273 / $2,455 |
| Family affordability credit, income where it reaches $0 (single / joint) | $85,001 / $95,001 |
| Colorado child tax credit, top income limit (single / joint) | $77,000 / $87,000 |
| CollegeInvest 529 and ABLE subtraction, per beneficiary (single / joint) | $25,400 / $38,100 |
| PTC rebate income limits (single / married) | $19,094 / $25,788 |
Figures from the DOR’s December 2025 update, the 2025 forms, and its income tax topic publications. The family affordability credit was paid in full for 2025 because the state’s revenue trigger was met.
Most of these were repealed by HB24-1036, a cleanup bill that retired little-used tax breaks. Carryforwards from earlier years can still be used where noted.
The up-to-$800 refundable credit for people 65 and older with income under $75,000 / $125,000 was for 2024 only. SB25-013 would have brought it back for 2025 and 2026; it died in Senate Appropriations in May 2025. The DOR’s wording: “cannot be claimed for tax year 2025.”
Still available on the 2025 return ($872 to $1,743), but it was not extended. Many of the same workers may also qualify for the new $1,200 care worker credit; check both.
The federal bill signed in July 2025 created new deductions for tips, overtime, seniors, and car loan interest. Because Colorado starts from federal taxable income, each of these flows into your Colorado return unless the legislature says otherwise.
The tips deduction, the overtime deduction, the $6,000 senior deduction and the car loan interest deduction all reduce Colorado taxable income on 2025 returns. No addbacks.
HB25-1296, signed in May 2025, requires Colorado taxpayers to add back the federal overtime deduction starting with tax year 2026. A lawsuit claiming this violates TABOR is pending. Tips are not added back in any year. Details on the 2026 page.
The federal law made the 20% qualified business income deduction permanent. Colorado’s addback of that deduction for AGI over $500,000 / $1,000,000 was going to expire after 2025; the August 2025 special session (HB25B-1001) made it permanent too. Nothing changes on the 2025 return.
Every tax bill from that session takes effect in 2026: the permanent QBI addback, corporate “tax haven” rules, the end of the sales tax vendor fee, and an insurance premium tax change.
Things we’ve been asked about, or seen in “tax update” handouts, that don’t match Colorado law.
Colorado is now limiting the Social Security subtraction for people over 65.
No. The opposite happened. People 65 and older still subtract all of it. The 2025 change extends the full subtraction to ages 55–64 under the income limits.
Starting in 2025 everyone adds back 50% of their QBI deduction.
No. The addback is 100% of the deduction, and only for AGI over $500,000 single / $1,000,000 joint. Nobody below that adds back anything.
Colorado requires a special 4.63% withholding rate on overtime and a W-2 Box 14 code.
No. Colorado’s rate hasn’t been 4.63% since 2019, and there is no overtime box requirement. The real overtime change is an addback on 2026 returns.
There’s a new standard deduction addback for 2025.
Not new. Since 2023, filers with AGI of $300,000 or more have added back the part of their federal deduction above $12,000 / $16,000. It gets much stricter in 2026, not 2025.
Individual income tax returns must be e-filed, phased in through 2028.
No. The DOR’s new mandatory e-filing rules cover sales, fuel, alcohol and similar business taxes. Individual returns can still be filed on paper, though e-filing is faster and we recommend it.
The new child care credit for 2025 is 20% to 70% of the federal credit.
Not for 2025. The 2025 credit is still 50% of the federal credit for AGI of $60,000 or less. The 70% version starts with 2026 returns.
We prepare federal and Colorado returns together, year round, in Lone Tree.
These pages are general information, current as of October 2026, and are not advice about your situation. Colorado law changes every session, and the Department of Revenue updates its publications through the year. Confirm anything that matters to you at tax.colorado.gov or call us.