Colorado has a state income tax, and it applies to most residents and workers
Yes, Colorado charges a state income tax. If you live in Colorado or earn income there, you will owe state income tax on wages, self-employment income, investment gains, and other sources. The tax rate is 4.63 percent of your federal taxable income, and it applies the same way regardless of your income level — Colorado does not use tax brackets the way the federal government does.
The state collects this tax through payroll withholding if you are an employee, or through quarterly estimated payments if you are self-employed. You report and pay Colorado income tax on Form 104, the state's individual income tax return, which you file alongside your federal return each year.
Key Takeaways
- Colorado's state income tax rate is a flat 4.63 percent applied to your federal taxable income, with no variation by income level.
- If you are employed, your employer withholds Colorado income tax from your paycheck; if self-employed, you pay estimated taxes quarterly.
- You file Colorado taxes using Form 104, which you submit to the Colorado Department of Revenue by the same important date as your federal return (usually April 15).
- Certain types of income, including Social Security benefits and some retirement distributions, are exempt from Colorado state income tax.
- If you move to Colorado or leave the state, you may owe partial-year taxes, and the rules depend on when you establish or leave residency.
How the 4.63 percent flat tax rate works
Colorado's income tax is a flat tax, meaning everyone pays the same percentage regardless of how much they earn. This is different from the federal system, where your rate increases as your income rises. At 4.63 percent, a person earning $30,000 pays the same rate as someone earning $300,000.
The tax applies to your federal taxable income, not your gross income. This means you benefit from the same deductions and exemptions you claim on your federal return — the standard deduction, itemized deductions, and adjustments like educator expenses or student loan interest. You calculate your federal taxable income first, then explore the 4.63 percent rate to arrive at what you owe Colorado.
Colorado has no local income taxes. Some cities and counties charge sales tax or property tax, but income tax is a state-level tax only.
Who has to file and pay Colorado income tax
You must file a Colorado return if you are a resident and your income exceeds the filing threshold. For 2024, that threshold is the same as the federal standard deduction — currently $14,600 for a single filer and $29,200 for a married couple filing jointly. If your income is below that amount, you do not have to file, though you may want to if you had taxes withheld and are due a refund.
Non-residents who earn income in Colorado (such as someone who works in Denver but lives in Wyoming) must also file a Colorado return on the income earned within the state. If you moved to Colorado partway through the year, you file a part-year resident return and pay tax only on income earned after you established residency.
Military members stationed in Colorado are treated as residents for tax purposes. If you are a federal employee, your income is still subject to Colorado tax.
Income that is exempt from Colorado state tax
Colorado excludes certain types of income from state taxation, even though they may be taxable at the federal level. Social Security benefits are never taxed by Colorado, regardless of your total income. This is one of the most significant exemptions for retirees.
Distributions from may have access to retirement plans — including traditional IRAs, 401(k)s, and pensions — are exempt from Colorado income tax if you are over 55 years old. If you are younger than 55, these distributions are taxable. Military retirement pay is also exempt.
Other exempt income includes workers' compensation, certain disability benefits, and gifts. Interest and dividends are taxable, as are capital gains from the sale of stocks or real estate.
How payroll withholding and estimated taxes work
If you are an employee, your employer withholds Colorado income tax from your paycheck using a W-4 form. You can adjust your withholding by changing your W-4 — for example, if you claim more dependents, less tax is withheld; if you claim fewer, more is withheld. Your employer sends the withheld amount to the Colorado Department of Revenue on your behalf.
If you are self-employed or have income not subject to withholding, you pay estimated quarterly taxes directly to the state. These are due on April 15, June 15, September 15, and January 15 of the following year. You calculate your expected annual income, explore the 4.63 percent rate, and divide by four. If you underpay, you may owe a penalty; if you overpay, you receive a refund when you file your annual return.
You can adjust your withholding or estimated payments at any time during the year if your income changes.
Filing your Colorado return and important date
You file your Colorado income tax return using Form 104, the Colorado Individual Income Tax Return. This form is filed with the Colorado Department of Revenue, not with your federal return — they are separate filings, though you use your federal taxable income as the starting point.
The important date to file is the same as the federal important date, usually April 15 of the year following the tax year. If April 15 falls on a weekend or holiday, the important date moves to the next business day. You can request an extension, which gives you until October 15 to file, though taxes are still due by April 15 even if you extend.
You can file by mail or electronically through the Colorado Department of Revenue website. Many tax software programs allow you to file Colorado returns directly. If you use a tax preparer, they can file on your behalf.
What happens if you move to or from Colorado
If you move to Colorado during the year, you file a part-year resident return and pay tax only on income earned after you became a resident. The state considers you a resident once you establish a permanent home in Colorado with the intent to stay. This typically means signing a lease, buying a home, or registering to vote.
If you leave Colorado during the year, you file a part-year return on income earned before you left. You must notify the Colorado Department of Revenue of your move and provide your new address. If you move to another state, you may owe taxes to both states on income earned while you lived in each, though you can usually claim a credit on one return to avoid double taxation.
Military members and their spouses have special rules: if you are stationed in Colorado but your home state is elsewhere, you may be able to claim that home state as your tax residence instead.
Frequently Asked Questions
Is Colorado income tax higher or lower than other states?
At 4.63 percent, Colorado's flat tax is lower than the top federal rate (37 percent) but falls in the middle range compared to other states. Some states have no income tax at all (Texas, Florida, Wyoming), while others charge rates above 10 percent (California, New York). Colorado's rate is competitive for a state with income tax.
Do I have to file a Colorado return if I only lived there part of the year?
Yes, if your income during the months you lived in Colorado exceeds the filing threshold, you must file a part-year return. You report only the income earned while you were a resident and pay tax on that portion. The threshold is the same as for full-year residents.
Can I deduct federal income tax paid from my Colorado return?
No. Colorado does not allow you to deduct federal income tax as an itemized deduction. However, you can deduct state and local taxes (SALT) on your federal return, up to $10,000 per year, which may include Colorado income tax paid.
What if my employer did not withhold enough Colorado tax?
When you file your return, you will owe the difference between what was withheld and what you actually owe. You can adjust your W-4 when ready to increase withholding for the rest of the year, or you can make quarterly estimated payments if you expect the same problem next year.
Are retirement distributions taxed differently in Colorado than other states?
Colorado exempts may have access to retirement distributions (IRAs, 401(k)s, pensions) from state tax if you are 55 or older, which is more generous than some states but less so than others. Social Security is never taxed in Colorado, which is true in most states.