Colorado taxes income at one flat rate: 4.4% for tax year 2025, the return you file in early 2026. In 2024 it was 4.25%. The difference is TABOR, and it is the reason half the pages that rank for this question are wrong.
The rate, year by year
The rate written into Colorado statute is 4.4%. What actually applies in a given year can be lower, because the Taxpayer's Bill of Rights caps how much revenue the state may keep and one of the ways it returns the excess is a temporary rate cut. The Department of Revenue publishes the rate that applied to each year:
| Tax year | Rate | Why |
|---|---|---|
| 2021 | 4.5% | — |
| 2022 | 4.4% | — |
| 2023 | 4.4% | — |
| 2024 | 4.25% | TABOR surplus large enough to trigger a temporary cut |
| 2025 | 4.4% | Surplus below the trigger; statutory rate applies |
| 2026 | Not yet published | Forecasts project no surplus, which would mean 4.4% |
Source: Colorado Department of Revenue, Individual Income Tax Guide (opens in new tab), Part 2. Checked September 2026.
If a website tells you the 2025 rate is 4.25%, it is repeating 2024.
Some also print 4.36%, which was a projected reduction that never took effect because the surplus came in under the threshold. For the 2025 return, use 4.4%. If your withholding or estimated payments were set using 4.25%, expect a smaller refund or a balance due.
How TABOR changes the rate
When the state collects more than its constitutional limit, it has to give the excess back. Under the current law (Senate Bill 24-228, in force for tax years 2024 through 2034), the form of the refund depends on how much is left after the state reimburses counties for the homestead property tax exemption:
| Remaining surplus | Rate cut that year | Plus |
|---|---|---|
| Up to $300 million | None | Sales tax refund on the return |
| $300M to $500M | 0.04 points (to 4.36%) | Sales tax refund |
| $500M to $600M | 0.07 points | Sales tax refund |
| $600M to $700M | 0.09 points | Sales tax refund |
| $700M to $800M | 0.11 points | Sales tax refund |
| $800M to $1 billion | 0.12 points | Sales tax refund |
| $1B to $1.5B | 0.13 points | Sales tax refund |
| Over $1.5 billion | 0.15 points (to 4.25%) | A temporary sales tax rate cut, then the refund |
Source: SB 24-228, Colorado General Assembly (opens in new tab).
Two things follow. First, the rate for a tax year is not known until the state closes the books on the fiscal year that ends that June and the forecasters settle the surplus, which is why no one can honestly quote a 2026 rate in September 2026. Second, the two refund mechanisms work differently for you:
- The rate cut is automatic. It is baked into the tax you compute. There is nothing to claim.
- The sales tax refund is not. It is claimed on Form DR 0104, and there is a box asking whether you want it. Leave the box unchecked and the refund stays with the state. People who file with software usually get asked; people who file on paper sometimes miss it.
What “flat” does and does not simplify
A flat rate removes bracket planning. It does not remove the return, and it does not make Colorado's return a copy of the federal one. The state starts from federal taxable income and then applies its own additions and subtractions, several of which are worth real money:
- Retirement income. Pension and annuity income is subtractable up to $20,000 (ages 55 to 64) or $24,000 (65 and up), per person on a joint return. Social Security is fully subtractable at 65 and up, and from tax year 2025 also at 55 to 64 if adjusted gross income is $75,000 or under (single) or $95,000 or under (joint). Bills to remove the caps entirely were introduced in 2025 and again in 2026; both died in committee, so any page saying the caps are gone is wrong.
- Part-year residents and nonresidents. Moved to Denver in June? You owe Colorado tax on everything earned while domiciled here plus any Colorado-source income from before, and the return apportions it on a separate schedule. Keeping a Colorado home and spending more than six months of the year here makes you a resident even if you claim domicile elsewhere.
- Withholding and estimates. Because the rate can drop after the year starts, employers withhold at the statutory rate and the difference comes back as a refund. If you pay quarterly estimates, they are due April 15, June 15, September 15 and January 15.
- Business owners. The corporate rate follows the same schedule (4.25% for 2024, 4.4% for 2025). Partnerships and S corporations can elect to pay Colorado tax at the entity level under the SALT Parity Act, which restores a federal deduction the owners would otherwise lose. The election is annual and cannot be undone once made.
Deadlines and the extension nobody has to ask for
Colorado returns are due April 15, the same day as the federal return. Unlike the IRS, Colorado grants every individual filer an automatic six-month extension with no form to file. That is genuinely convenient, and it hides a trap: the extension covers the paperwork, not the payment. Interest runs from April 15 on anything unpaid, and the late-payment penalty is waived only if at least 90% of the tax was paid by the original date. If you expect to owe, pay an estimate by April 15 and file later.
One more date that matters for anyone behind: a refund is lost if the original return is not filed within four years of its due date.
When the flat rate is not the whole story
Most Colorado filers with one W-2 and no moves can handle the state return with software. The situations where a local CPA earns the fee are the ones the flat rate does nothing about:
- You moved into or out of Colorado during the year, or you work in one state and live in another.
- You are 55 or older with pension, IRA or Social Security income and want the subtractions applied correctly across a joint return.
- You own a pass-through business and need someone to run the numbers on the SALT Parity election before the deadline.
- You sell taxable goods in Colorado. Sales tax, not income tax, is where Colorado is hard: the state rate is 2.9%, but 72 home-rule cities plus Denver and Broomfield counties collect their own tax under their own rules.
See what a Colorado CPA costs before you decide, and verify the license before you hire.
Frequently asked questions
What is the Colorado income tax rate for 2025?
4.4%. That is the rate on the 2025 return you file in early 2026. Tax year 2024 was 4.25% because a TABOR surplus triggered a temporary reduction; the 2025 surplus fell below the level that triggers one, so the rate returned to the statutory 4.4%. Many websites still show 4.25% for 2025. The Department of Revenue’s own rate table shows 4.4%.
What will the rate be for 2026?
Not yet published. The statutory rate is 4.4%, and the state’s September 2026 revenue forecasts project no TABOR surplus for the fiscal year that ended in June 2026, which would leave 2026 at 4.4%. A forecast is not a rate. Until the Department of Revenue adds 2026 to its table, plan on 4.4% and treat any lower number as unconfirmed.
Do I still have to file a Colorado return if the tax is flat?
Yes. Every Colorado resident who is required to file a federal return must file a Colorado return (Form DR 0104), and so must part-year residents and nonresidents with Colorado-source income. A flat rate removes bracket math, not the return.
How do I get my TABOR refund?
Two ways, depending on the year. When the rate is temporarily reduced, the refund is built into the lower rate and you do nothing. The sales tax refund is different: it is claimed on your Colorado return, and you have to check the box that asks whether you want to claim it. Leave it unchecked and you do not get it.
Does Colorado tax Social Security?
Not if you are 65 or older; the entire taxable amount is subtracted. From tax year 2025, filers aged 55 to 64 can also subtract all of it if their adjusted gross income is $75,000 or less (single) or $95,000 or less (joint). Above those limits, and for other pension and annuity income, the subtraction is capped at $20,000 for ages 55 to 64 and $24,000 at 65 and up. Bills to remove those caps failed in both the 2025 and 2026 sessions.
When is the Colorado return due, and can I get an extension?
April 15, the same as the federal date. Colorado gives every individual filer an automatic six-month extension to file with no form to submit. The extension does not extend the time to pay: interest runs from April 15, and you avoid the penalty only if at least 90% of the tax was paid by then.
Sources
- Colorado DOR, Individual Income Tax Guide (opens in new tab) (rates, deadlines, residency)
- Colorado DOR, TABOR refunds (opens in new tab)
- SB 24-228, TABOR Refund Mechanisms (opens in new tab)
- Colorado DOR, Income Tax Topics: Social Security, Pensions and Annuities (opens in new tab)
- SB 25-136 (opens in new tab) and HB 26-1062 (opens in new tab), both postponed indefinitely
- Colorado DOR, Income Tax Topics: SALT Parity Act (opens in new tab)
This guide is general information, not tax advice. Rates and thresholds were checked against the sources above in September 2026 and can change; confirm the current figures with the Department of Revenue or a licensed CPA before acting on them.
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