Colorado State Income Tax in 2025: A Guide

Colorado’s flat state income tax of 4.25% simplifies filing for everyone—whether you’re earning a salary, freelancing, or running a business. You don’t have to juggle multiple tax brackets and income thresholds to figure out your tax liability. 

Colorado is one of several states with a flat tax, which makes state income taxes more predictable than in states that still employ tiered tax brackets.  

For individuals filing Colorado income tax returns, the flat tax means less guesswork and fewer headaches when tax season rolls around.  

To get the full picture of how Colorado’s state income taxes work, let’s explore deductions, filing rules, and other key considerations for the 2024 tax season (the taxes you file in 2025). 

*Note you are still responsible for Federal taxes if you make the IRS income filing threshold. This article addresses state-specific taxes only.

What is Colorado’s standard deduction?

Unlike many states, Colorado doesn’t have a standard deduction, which is a fixed dollar amount that reduces your taxable income. It’s typically available to most taxpayers who do not itemize deductions, a process that involves listing and claiming specific eligible expenses.  

While there’s no standard or itemized deduction in Colorado, there is an important consideration for higher-income earners. Starting with the 2023 tax year, Colorado requires an “addback” for single or joint filers whose federal adjusted gross income (AGI) exceeds $300,000. This rule applies whether you claim itemized deductions or the federal standard deduction on your federal return. 

The addback is the amount by which your federal deductions—standard or itemized—exceed state-imposed limits. The limits are: 

Filing status	Limit
Single	$12,000
Married filing jointly	$16,000

Source: Colorado Department of Revenue

Colorado’s addback can be challenging to make sense of, so let’s look at an example: Let’s say your AGI is $335,000, you’re married and file jointly, and your deductions total $20,000. Because your deductions exceed the state limit of $16,000 by $4,000, you must add $4,000 back to your Colorado taxable income. 

Who has to file Colorado state income tax?

Colorado income tax is calculated based on the taxpayer’s residency status. You could be classified as a resident, part-year resident, or a nonresident. Your residency status determines how much of your income is taxable in the state. Additionally, five Colorado cities—Denver, Aurora, Glendale, Greenwood Village, and Sheridan—impose an occupational privilege tax on individuals working in these jurisdictions. 

Here’s a deeper look at how the residency statuses affect Colorado taxes for each group: 

Residency status	Definition	How Colorado taxes income
Resident	Someone who lives in Colorado full-time or maintains a permanent residence and spends more than six months per year in the state.	All income is taxed, regardless of where it’s earned.
Part-year resident	Someone who lived in Colorado for part of the year and moved in or out of the state.	Income earned during the time in Colorado is taxed.
Nonresident	Someone who does not live in Colorado but earns income in the state.	Only income sourced from Colorado is taxed.

Determining your residency status is the first step in determining how Colorado’s state income tax applies to you. Use the state’s definitions to identify which forms you’ll need for your specific circumstances.  

Thankfully, filing your taxes with TurboTax simplifies the process. Our platform guides you through the process, helping you determine your residency status and complete the correct forms with confidence.

Other income tax considerations in Colorado

Various types of income, from retirement benefits to military pay, have unique tax rules under Colorado’s tax system. Here’s a quick overview of how the state taxes different income types: 

• Investment income: Generally taxed at Colorado’s flat 4.25% rate, just like other forms of personal income. There is a deduction available for farmers that recognize a capital gain from the sale of agricultural real property. 
• Retirement and pension income: Taxable, but taxpayers 55 to 64 (or those of any age receiving the income as a death benefit) may exclude the lesser of $20,000 or their taxable retirement income. Taxpayers that are 65 and older can subtract the lesser of $24,000 or their taxable retirement income. Different rules apply to Social Security and military retirement benefits (see below). 
• Social Security income: For tax years 2022 and later, the amount subtracted for Social Security benefits received is reduced by the amount deducted for pension and annuity benefits deducted. The combined total deducted cannot exceed $24,000.
• Military income: Active duty pay is exempt for nonresidents; certain benefits may also be excluded for residents. Active duty pay earned in a combat zone is not subject to Colorado income tax. Service members under 55 years of age who receive military retirement benefits can exclude up to $15,000 from their income. Taxpayers 65 and older can deduct up to the full amount of their federally taxable benefits, up to $24,000. Taxpayers between 55 and 64 years of age can deduct up to $20,000.

Colorado tax deductions and credits

Here’s a quick look at common Colorado-specific tax deductions and credits for income tax. These can help reduce the amount of tax you owe or even increase your refund.  

Tax credit	Description	Amount
Colorado Child Tax Credit (CTC)	Helps families with qualifying children under 6 years old based on income.	Varies by income (up to $75,000 for single filers or $85,000 for joint filers) and family size, up to federal limits ($2,000 per child).
Colorado Earned Income Tax Credit (EITC)	A boost for low- to moderate-income workers who qualify for the federal EITC.	38% of the federal EITC, which is $7,830.
Child Care Contribution Credit	For donations to qualifying child care organizations in Colorado.	50% of the total donation, capped annually at $100,000.
Child Care Expenses Credit	Helps offset child care costs for working parents.	Based on income and expenses; up to $500 per child for low-income families. For residents and part-time residents only. Federal adjusted gross income must be under $25,000 to qualify.
Property Tax/Rent/Heat Rebate (PTC)	Rebates for qualifying seniors or individuals with disabilities who pay property taxes, rent or heating bills. Submitted separately on Form DR 0104PTC, not on your Income Tax Return.	Up to $1,112 annually, depending on income and expenses. For full-year Colorado residents who are either 65 years of age or older, a surviving spouse 58 years of age or older, or disabled, regardless of age.
Innovative Motor Vehicle Credit	Encourages purchase or lease of alternative fuel vehicles or conversions, specifically electric vehicles (EVs) and plug-in hybrid EVs (PHEVs).	$5,000 for vehicles with a manufacturer-suggested retail price (MSRP) of up to $80,000, and an additional $2,500 for any new vehicle with an MSRP of up to $35,000.
Innovative Truck Credit	Encourages purchase or lease of a new electric, plug-in hybrid electric, or hydrogen fuel cell truck that is titled and registered in Colorado.	Up to $12,000 for medium duty electric trucks (10,001 – 26,000 lbs GVWR) and heavy duty trucks (greater than 26,000 GVWR).

For the complete list of Colorado’s tax credits and deductions, visit the Colorado Department of Revenue website. 

How to file Colorado income tax

Filing your Colorado state income taxes doesn’t have to be overwhelming. TurboTax simplifies everything, from understanding residency rules and state-specific deductions to navigating complex forms. TurboTax gives you the tools to: 

• Do it yourself: TurboTax provides easy-to-use software that guides you step by step, helping you identify every deduction and credit you qualify for in Colorado. 
• Get expert help: Need a little extra support? TurboTax’s team of tax professionals is here for you. From answering questions to preparing and filing your return, we’ve got you covered. 
• Maximize your refund: Our software ensures you can leverage every tax-saving opportunity available and get the most out of your Colorado state income tax refund. 

No matter your situation, TurboTax makes filing your Colorado income taxes straightforward and stress-free. Want personalized assistance? Connect with a Colorado tax expert who will handle everything for you—from start to finish. 

File with TurboTax today and feel confident that you’re making the most of every credit, deduction, and rebate.