Charles Trautman, EA · Since 1969
The rules for tax year 2025, in plain English.
Colorado has one of the simpler state income taxes in the country: a single flat rate on your federal taxable income. The nuance is in what Colorado adds back, what it lets you subtract, and a long list of credits that change almost every year. This page covers the return you file in 2026.
Current as of October 2026 · Tax year 2025 returns are due April 15, 2026
Colorado starts where your federal return ends.
Every Colorado taxpayer pays the same rate on Colorado taxable income, whether they earn $30,000 or $3 million. For tax year 2025 the rate is 4.40%. (It was temporarily 4.25% for 2024 because of a TABOR surplus; that reduction did not repeat for 2025.)
Colorado does not have its own standard deduction, itemized deductions, or personal exemptions. Your federal taxable income, after the federal standard or itemized deduction, is the starting point. Colorado then makes its own additions and subtractions, and applies its own credits.
Returns are due April 15, 2026. Colorado gives an automatic six-month extension to October 15 with no form to file, but that only extends the time to file. To avoid penalties, at least 90% of what you owe has to be paid by April 15.
If your Colorado tax after withholding and credits will be more than $1,000, you’re expected to make quarterly estimated payments (April 15, June 15, September 15, and January 15). Self-employed people, retirees with pension and IRA income, and landlords are the ones who usually get caught by this.
If you moved in or out during the year, or live elsewhere but earned money here, you compute tax on all your income and then apportion it using Form DR 0104PN. Colorado residents get a credit for tax paid to other states on the same income.
Colorado has no local income taxes. Denver, Greenwood Village, Glendale and Sheridan have small “occupational privilege” taxes handled through payroll (Denver’s is $5.75 a month for employees), but nothing goes on your income tax return. Aurora repealed its OPT effective January 1, 2025.
The Taxpayer’s Bill of Rights caps how much revenue the state can keep. When the state collects more than the cap, the excess comes back to taxpayers, and the method and amount change from year to year. The history of TABOR and its refunds.
| Adjusted gross income | Single | Joint |
|---|---|---|
| $52,000 or less | $19 | $38 |
| $52,001 – $105,000 | $25 | $50 |
| $105,001 – $168,000 | $29 | $58 |
| $168,001 – $233,000 | $35 | $70 |
| $233,001 – $299,000 | $37 | $74 |
| $299,001 or more | $59 | $118 |
Source: Colorado DOR, Income Tax Topics: State Sales Tax Refund. For comparison, the 2024 refund ran from $177 to $565 per person.
You must have lived in Colorado the entire year and been at least 18 before the year started (or have Colorado tax liability if younger), and you must file by October 15, 2026. Part-year residents don’t qualify. People who owe no tax still get it, but only if they file a return (or the DR 0104PTC application).
The refund shrank in 2025 because the surplus was small, and most of it went first to reimbursing counties for the senior and veteran property tax exemptions. There was no surplus at all for the state’s 2025–26 fiscal year, so there will be no TABOR refund on 2026 returns. See changes coming for 2026.
A handful of federal deductions don’t count for Colorado purposes. These get added to your income on Form DR 0104.
If you itemize on your federal return and deduct state income tax, Colorado adds it back. (If your federal SALT deduction was made up of property and sales tax instead, there’s nothing to add back.)
If your federal adjusted gross income is $300,000 or more, Colorado adds back the part of your federal standard or itemized deduction that exceeds $12,000 (single, head of household, married separate) or $16,000 (joint). This has been the rule since 2023. For 2026 the allowance drops to $1,000 / $2,000 under Proposition MM, passed in November 2025. Charitable gifts are added back with everything else; see charitable giving over $300,000.
Owners of pass-through businesses with federal AGI over $500,000 (single) or $1,000,000 (joint) add back the entire federal §199A deduction. Farmers filing Schedule F are exempt. This was set to expire after 2025; the August 2025 special session made it permanent.
Interest on bonds issued by other states and their cities is tax-free federally but taxable in Colorado. Colorado bond interest stays tax-free.
For tax years 2024 through 2030, any business meal deduction above the 50% federal baseline is added back.
The new federal deductions for tips, overtime, and the $6,000 senior deduction from the 2025 federal tax law flow through to Colorado for 2025. Starting in 2026, the overtime deduction gets added back (HB25-1296). Tips do not.
Claimed on Schedule DR 0104AD. These are the ones that matter to most households.
Age 65 and older: up to $24,000 of taxable pension, annuity, IRA, 401(k) and similar retirement income. Age 55 to 64: up to $20,000. Under 55: nothing, except survivor benefits. The cap is per person, so a married couple can each take it, and it’s shared with Social Security (below). The full guide for retirees.
Age 65 and older: all federally taxable Social Security is subtracted, regardless of income. New for 2025: ages 55 to 64 also subtract all of it if federal AGI is $75,000 or less (single) or $95,000 or less (joint). Otherwise Social Security counts toward the $20,000 pension cap. Any Social Security you subtract reduces the pension cap above.
Up to $25,400 (single) or $38,100 (joint) per beneficiary for 2025. This is one of the few places Colorado is more generous than the federal rules, which give no deduction for 529 contributions. Grandparents contributing to a grandchild’s plan qualify.
If you don’t itemize federally, Colorado lets you subtract charitable contributions above the first $500. Keep the receipts; the rules are the federal ones.
Up to $15,000 of military retirement pay for retirees under 55 (who don’t yet qualify for the pension subtraction). Runs through 2028.
Gone as of 2025: the first-time home buyer savings account, medical savings account, catastrophic health insurance, and wildfire mitigation subtractions (the last one became a credit).
Colorado’s credits are the part of the return that changes most, and they are where preparers who don’t know the state leave money behind. “Refundable” means you get it even if you owe no tax.
For 2025, 50% of your federal EITC. Colorado also allows it for workers who file with an ITIN and for some 18–24 year olds without children who can’t get the federal credit. Drops to 25% for 2026.
For each child under 6: $1,200 if AGI is $26,000 or less (single) / $36,000 (joint); $600 up to $51,000 / $61,000; $200 up to $77,000 / $87,000. The child does not need a Social Security number. Claimed on DR 0104CN.
The big one for 2025. Up to $3,273 per child under 6 and $2,455 per child 6 to 16 at the lowest incomes, shrinking by about $225 for every $5,000 of AGI, and gone above $85,000 (single) or $95,000 (joint). Stacks on top of the child tax credit and EITC. Not available for 2026 because the state had no surplus.
50% of your federal child care credit if AGI is $60,000 or less. Families with AGI of $25,000 or less who got no federal credit can instead take 25% of expenses, up to $500 for one child or $1,000 for two or more (the “low-income” version). Both are on DR 0347. For 2026 these merge into one larger credit.
$1,200 for child care workers registered in Colorado Shines and for direct care workers in nursing homes, assisted living and home care, if you worked at least 720 hours and AGI is $75,000 or less (single) / $100,000 (joint). Both spouses can qualify. Form DR 1217. Runs 2025 through 2028.
Students who enroll at a Colorado public college within two years of high school graduation, with household income of $90,000 or less, get a credit for out-of-pocket tuition and fees after grants and scholarships. The student claims it, not the parent, and the school issues a certificate. Covers the first 65 credit hours; requires a 2.5 GPA.
$400 to $1,200 for people who were totally disabled all year, received full disability benefits all year, and have AGI of $20,000 or less (single) / $32,000 (joint). This replaces the disability route into the PTC rebate.
$872, $1,162 or $1,743 depending on credential level, for educators who worked at least six months at an eligible program and have AGI of $75,000 or less (single) / $150,000 (joint). Form DR 1703. It expires after 2025.
$3,500 for a new EV bought or leased in 2025 with an MSRP of $80,000 or less, plus $2,500 more if the MSRP was under $35,000. Most buyers assign it to the dealer at purchase for an instant discount (Form DR 0618); otherwise claim it on DR 0617. Drops to $750 for 2026.
100% of what you spent on qualifying mitigation on your Colorado property, up to $1,000, if federal taxable income is $129,200 or less. Replaces the old subtraction.
50% of a cash donation to a qualifying Colorado child care organization, which issues Form DR 1317. Nonrefundable, but it carries forward. Extended in 2026 through tax year 2037 (HB26-1004).
The $800 credit for people 65 and older with modest income existed for 2024 only. A bill to extend it to 2025 and 2026 died in the Senate. Low-income seniors should look at the PTC rebate instead: income under $19,094 (single) or $25,788 (married), age 65 or older, or a surviving spouse 58 or older.
Thirty-plus years of Colorado returns, and these are the mistakes we fix most often.
The family affordability credit, the care worker credit, and the Promise credit are new and unfamiliar. National software asks about them poorly, and national chains often skip them. A family with two small kids and $40,000 of income can be looking at several thousand dollars.
If you’re 65 or older, none of your Social Security is taxable in Colorado. If you’re 55 to 64 with AGI under the limits, same thing starting this year. We see returns every season where it was left in.
The $24,000 cap is per person, not per return, but it’s shared with that person’s Social Security subtraction. A couple both over 65 get up to $24,000 each for Social Security and other retirement income combined (more if Social Security alone is higher), and only against each person’s own income. How the shared cap works.
High earners who itemize are often surprised that Colorado takes most of the deduction back, including what they gave to charity. For 2026 it gets much tougher: everything above $1,000 / $2,000. What donors can do.
Brokerage statements don’t flag it. If your bond fund holds other states’ bonds, that interest is taxable here.
Colorado’s automatic extension is generous, but if you haven’t paid 90% by April 15, penalties and interest run from April 15, not October.
Part-year residents are taxed on Colorado-source income only, but the apportionment form is where mistakes happen, especially with retirement income, equity compensation, and the sale of a house in the old state.
Colorado’s SALT Parity election lets an S corporation or partnership pay the state tax at the entity level, which gets around the federal cap on state tax deductions. It has to be elected on the entity return, and the owners then add back their QBI deduction. Worth running the numbers if the business clears real income.
Not if you’re 65 or older. For 2025 and later, not if you’re 55 to 64 with federal AGI of $75,000 or less (single) or $95,000 or less (joint). Younger than that, or above those limits, the taxable portion counts toward the $20,000 pension subtraction.
Often yes. The Colorado EITC, child tax credit, family affordability credit, and care worker credit are refundable, and the TABOR refund requires a filed return. Many low-income households leave real money unclaimed by not filing.
4.40% flat. It was 4.25% for 2024 because of a TABOR surplus. There was no surplus for 2025, so the rate is back to 4.40%, and it stays at 4.40% for 2026.
Yes. The Colorado credit does not require the child to have an SSN, and ITIN filers can claim both it and the Colorado EITC.
Federally, no. In Colorado, yes: up to $25,400 single or $38,100 joint per beneficiary for 2025, as long as it goes into a CollegeInvest (Colorado) plan.
Yes, as a nonresident, on the income you earned in Colorado. Your home state generally gives you a credit for the Colorado tax so you aren’t taxed twice.
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.