Colorado Tax Guide: Flat 4.4% Income Tax

Understand Colorado's flat tax system, TABOR refunds, and all state tax obligations for the 2025 filing year.

4.4%

Flat Income Tax Rate

7.77%

Combined Sales Tax

0.51%

Property Tax Rate

Varies yearly

TABOR Refund

Tax Overview

Colorado uses a flat income tax system, currently set at 4.4% of federal taxable income with certain modifications. The state has been gradually reducing its rate from 4.63% in recent years. Colorado's tax system is unique because of the Taxpayer's Bill of Rights (TABOR), a constitutional amendment that limits government revenue growth and requires voter approval for tax increases.

When state revenues exceed TABOR limits, Colorado must return the surplus to taxpayers through refunds. These TABOR refunds have been substantial in recent years, effectively lowering the true tax burden for residents. The refund mechanism varies but has included sales tax refunds, earned income tax credits, and direct payments.

Sales tax in Colorado has a moderate state rate of 2.9%, but local taxes can add significantly to the total. Some areas, particularly in the Denver metro region, see combined rates above 8%. Property taxes are relatively low thanks to the Gallagher Amendment and assessment rate limitations, though recent changes have modified how residential and commercial properties are assessed.

Income Tax

Colorado's flat rate has been declining from 4.63%. TABOR surplus refunds further reduce the effective tax burden for residents.

Flat Tax Rate: 4.40%

Sales Tax

State Rate2.90%

Avg. Local Rate4.87%

Combined Rate7.77%

Property Tax

Effective Rate0.51%

Median Annual Bill$2,017

Key Deductions in Colorado

✓Colorado uses federal taxable income as the starting point
✓State income tax addback for SALT deduction
✓Pension and annuity income subtraction (up to $24,000 for age 65+)
✓Colorado 529 plan contribution deduction
✓Wildfire mitigation measures deduction
✓Child care expenses tax credit

Filing Information

Filing Deadline: April 15

Tax Authority: Colorado Department of Revenue

Phone: (303) 238-7378

Website: https://tax.colorado.gov

Frequently Asked Questions

What is the TABOR refund in Colorado?

TABOR (Taxpayer's Bill of Rights) is a Colorado constitutional amendment that caps government revenue growth. When revenues exceed the limit, the surplus must be refunded to taxpayers. Refund amounts and methods vary each year based on the surplus size.

Does Colorado tax Social Security?

Colorado does not tax Social Security benefits for taxpayers age 65 and older. For those under 65, Social Security benefits may be partially taxable at the state level, following federal taxability rules with some modifications.

How does Colorado calculate state income tax?

Colorado starts with your federal taxable income and applies certain additions and subtractions to arrive at Colorado taxable income. The flat 4.4% rate is then applied to this amount.

Are groceries taxed in Colorado?

Colorado exempts most grocery food items from the state sales tax of 2.9%. However, some local jurisdictions may still tax groceries, so the exemption is not universal across all locations.

Neighboring State Guides

Wyoming Nebraska Kansas Oklahoma New Mexico Utah Arizona

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