Colorado's state income tax is a flat 4.4% on all income levels
Colorado uses a flat tax rate, which means everyone pays the same percentage regardless of how much money they earn. That rate is 4.4% of your federal taxable income. Unlike some states that charge higher percentages to higher earners, Colorado applies 4.4% to a retiree's Social Security and a six-figure salary alike.
The 4.4% applies to wages, self-employment income, investment gains, and most other income sources. You will also owe federal income tax on top of this — that is separate and determined by the IRS, not Colorado. Property taxes, sales taxes, and local taxes are different systems entirely and are not part of your state income tax bill.
Key Takeaways
- Colorado's state income tax rate is 4.4% for all taxpayers, applied to federal taxable income.
- You calculate Colorado tax on the same income you report to the IRS, not on a separate state definition.
- Sales tax in Colorado ranges from 2.9% to 11.2% depending on your county and city, and is separate from income tax.
- Property tax rates vary by county and are assessed on home value, not connected to your income tax.
- Self-employed people in Colorado owe both state income tax and self-employment tax to the federal government.
How Colorado calculates your state income tax
Colorado starts with your federal taxable income — the number you report on your federal tax return after deductions and exemptions. The state then applies 4.4% to that figure. You do not calculate a separate Colorado income; you use the same income number the IRS sees.
If you are married filing jointly and your federal taxable income is $80,000, your Colorado state income tax is $3,520. If you are single with $50,000 in federal taxable income, you owe $2,200 to Colorado. The math is straightforward because there are no brackets, no phase-outs, and no adjustments based on filing status.
Colorado does not allow a state income tax deduction for federal taxes paid, and you cannot deduct state income tax from your federal return either. These are two separate tax systems that do not reduce each other.
Sales tax, property tax, and other Colorado taxes
Colorado's sales tax is not the same as income tax. The state base sales tax is 2.9%, but most counties and cities add their own local sales tax on top. Depending on where you shop, you might pay anywhere from 2.9% to 11.2% in total sales tax. A purchase in Denver carries a different rate than a purchase in Boulder or a rural county.
Property tax in Colorado is assessed by county and is based on the value of your home or land, not on your income. Tax rates vary significantly — some counties charge around 0.4% of home value per year, while others charge closer to 0.7%. This is a separate bill from your income tax and is usually paid to your county assessor.
Colorado also taxes capital gains at the same 4.4% rate as ordinary income. If you sell a stock or real estate at a profit, that gain is subject to state income tax. Long-term capital gains (assets held over a year) are taxed the same way as short-term gains in Colorado, unlike the federal system.
Who files Colorado income tax and when
You must file a Colorado state income tax return if you are a resident and your income exceeds the filing threshold. For 2024, that threshold is generally around $13,850 for single filers and $27,700 for married couples filing jointly, though these numbers change yearly. Even if you do not owe tax, you may need to file to claim refundable credits.
Colorado considers you a resident if you lived in the state for more than six months of the tax year, or if you maintained a permanent home there. If you moved to Colorado mid-year, you may file as a part-year resident and only pay tax on income earned while you lived in the state.
The Colorado state income tax important date is the same as the federal important date: April 15 of the following year. If you file your federal return late, your Colorado return is also late. You can request an extension from the IRS, and that extension applies to your Colorado return as well.
Self-employment tax in Colorado
If you are self-employed, you owe Colorado state income tax on your net business income at the 4.4% rate. You also owe federal self-employment tax to the IRS, which covers Social Security and Medicare. That federal tax is roughly 15.3% and is separate from both your Colorado state tax and your federal income tax.
Colorado allows you to deduct half of your self-employment tax when calculating your federal taxable income, which then reduces your Colorado taxable income as well. You can also deduct legitimate business expenses — supplies, equipment, home office costs, vehicle mileage — before calculating your net income for tax purposes.
Many self-employed people in Colorado make quarterly estimated tax payments to both the state and the IRS. These payments are due on April 15, June 15, September 15, and January 15. If you expect to owe more than $500 in state tax for the year, the state recommends making these payments to avoid penalties.
Tax credits and deductions available in Colorado
Colorado offers several credits that can reduce your state income tax bill. The Colorado Child Care Expense Credit helps working parents offset childcare costs. The Earned Income Tax Credit (EITC) is available to lower-income workers and is more generous at the state level than the federal level in some cases.
Seniors over 55 may may have access to for the Senior Homestead Property Tax Exemption, which reduces property tax rather than income tax. Disabled veterans can claim a property tax exemption as well. These are property tax benefits, not income tax credits, but they reduce your overall Colorado tax burden.
Colorado also allows a standard deduction similar to the federal system. For 2024, the standard deduction is tied to the federal amount. If you itemize deductions on your federal return, you can also itemize on your Colorado return, though the state does not allow deductions for state and local taxes (SALT) paid.
Retirement income and Social Security in Colorado
Colorado taxes Social Security benefits at the state level if your total income exceeds certain thresholds. However, Colorado offers a pension exemption that allows residents to exclude up to $24,000 of pension and retirement account distributions from state taxable income. This applies to income from 401(k)s, IRAs, and traditional pensions.
Military pensions are fully exempt from Colorado state income tax, regardless of amount. If you are a retired military member, you do not pay state tax on your military pension income. This exemption does not explore to other types of retirement income unless they fall under the $24,000 pension exemption.
If you are over 55 and withdraw money from your IRA or 401(k), you can exclude up to $24,000 per year from Colorado taxation. This exemption is available whether you are retired or still working. The exemption resets each year, so you cannot carry forward unused amounts.
Frequently Asked Questions
Does Colorado tax out-of-state income?
Colorado taxes you on income earned within the state, even if you live elsewhere. If you work remotely for a Colorado company but live in another state, Colorado may claim tax on that income. You may be able to claim a credit on your home state's return to avoid double taxation, but you should file in both states and let each state know about the other.
What if I moved to Colorado partway through the year?
You file as a part-year resident and only pay Colorado tax on income earned after you moved to the state. You will need to show your move date and provide documentation of your residency change. Your federal return covers the whole year, but your Colorado return only covers the months you lived there.
Is there a local income tax in Colorado cities?
Colorado cities do not charge local income tax. The only income tax is the state 4.4% rate. However, some cities and counties do charge local sales tax and property tax, which are separate from income tax and vary by location.
Do I have to pay Colorado tax if I am not a resident?
Non-residents only pay Colorado tax on income earned within the state. If you worked in Colorado for part of the year, you file as a non-resident and pay tax only on that Colorado-source income. Income from your home state or other sources is not subject to Colorado tax.
Can I deduct federal income tax from my Colorado return?
No. Colorado does not allow you to deduct federal income tax paid. You calculate your Colorado tax on the same federal taxable income the IRS uses, without any adjustment for federal taxes. The two tax systems are separate.