Does Colorado tax retirement income?

Does Colorado tax Social Security?

Colorado fully exempts Social Security at 65 or older; some people under 65 with higher incomes pay tax on part of it.

Taxable Social Security is included in Colorado income and then subtracted. At 65 or older (by year-end) you can subtract all of it. From 2025, at 55–64 you can subtract all of it if AGI is $75,000 or less single or $95,000 or less joint; above those amounts it falls under the shared $20,000 pension cap. Under 55 it generally can’t be subtracted (death benefits are an exception). On a joint return each spouse is figured separately, and a Social Security subtraction uses up room under the cap for other pension income.

Your federal return is a separate question — see how much of your benefit the IRS taxes with the taxable Social Security calculator.

Are pensions taxed in Colorado?

At 55–64, up to $20,000 a person of pension and IRA income is subtracted; at 65+, up to $24,000.

The pension and annuity subtraction is generally for people 55 or older. It is limited to $20,000 a year, or $24,000 for people 65 or older, per person. Public and private pensions qualify alike, and the cap is shared with IRA withdrawals (and, for some people under 65, Social Security).

Public vs. private pensions: Public and private pensions are treated the same.

Are IRA and 401(k) withdrawals taxed in Colorado?

Taxable IRA and 401(k) withdrawals share the same $20,000 / $24,000 subtraction.

Traditional, SEP and SIMPLE IRA distributions and employer-plan distributions count within the cap. IRA distributions that are premature for federal purposes do not qualify.

Required minimum distributions (RMDs) are IRA and 401(k) withdrawals, so the same rules apply. Estimate your RMD.

Is military retirement pay taxed in Colorado?

Under 55, up to $15,000 of military retirement pay can be subtracted (2022–2028). At 55+, it falls under the general $20,000 / $24,000 pension subtraction.

What is Colorado’s income tax rate?

A flat 4.4%.

A flat 4.4% on Colorado taxable income, which starts from federal taxable income. The Legislative Council’s September 2026 forecast shows no TABOR refund and no temporary rate cut for 2026; the next temporary cut (to 4.36%) is projected for 2029.

Standard deduction and exemptions

Colorado starts from federal taxable income, so your federal standard or itemized deduction carries over. If AGI is over $300,000, deductions above $1,000 single or $2,000 joint must be added back from 2026 ($12,000 / $16,000 for 2023–2025).

What tax breaks do seniors get in Colorado?

Besides the pension and Social Security subtractions, the federal $6,000 senior deduction (2025–2028) flows through automatically because Colorado starts from federal taxable income. The Property Tax/Rent/Heat Credit rebate is available to people 65+ (surviving spouses 58+), based on income.

What changed for 2026?

The full Social Security subtraction for ages 55–64 under the income limits began in 2025. Federal overtime deductions must be added back from 2026. HB26-1062, which would have removed the pension cap from 2027, was postponed indefinitely on February 9, 2026. On the November 3, 2026 ballot: Amendment 87 would replace the flat tax with graduated rates from 2027 (3.7% up to $25,000, rising to 8.4% over $1 million, not indexed), and Proposition 136 would cap the rate at 4.4% from 2027.

The 4.4% rate is set in law; no TABOR temporary rate cut or refund is expected for 2026.