Colorado Tax Calculator
Colorado Income Tax
Colorado levies a flat income tax of 4.4% on all taxable income. Colorado's constitution mandates a flat rate structure, meaning progressive or graduated rates are not permitted without a constitutional amendment. The rate was reduced from 4.55% in 2020 and further to 4.4% through Proposition 121 in 2022, approved by voters.
Colorado uses federal taxable income as the starting point for calculating state tax, which simplifies the filing process considerably. This means you benefit from the federal standard deduction ($14,600 single / $29,200 married in 2024) before calculating Colorado tax. The state then allows additional subtractions and additions to arrive at Colorado taxable income. Notable Colorado subtractions include Social Security benefits (now fully exempt), certain pension and annuity income for those over 55, and military retirement benefits.
Colorado also imposes local occupational privilege taxes in some jurisdictions. For example, Denver levies a $5.75 monthly Occupational Privilege Tax on employees and a $4.00 monthly tax on employers. Aurora charges a similar tax. These small but notable local taxes add to the overall income-based tax burden.
Colorado Sales Tax
Colorado's state sales tax rate of 2.9% is one of the lowest in the nation among states that levy a sales tax. However, the state's complex local tax structure significantly increases the effective rate. Cities, counties, and special districts can all add their own taxes, pushing the average combined rate to approximately 7.79%. Denver's combined rate is about 8.81%, while some mountain resort communities have combined rates exceeding 10%.
Colorado is unique in having many "home rule" cities that collect and administer their own sales taxes separately from the state. This means businesses operating in multiple jurisdictions may need to register with and file returns to multiple tax authorities. Groceries (unprepared food) are exempt from the state sales tax but may still be subject to local taxes. Colorado began collecting sales tax on online marketplace sales in 2019, earlier than many states.
Colorado Property Tax
Colorado's effective property tax rate of approximately 0.49% is well below the national average, thanks in large part to the Gallagher Amendment (repealed in 2020) and TABOR's revenue limitations. Residential property in Colorado is assessed at 6.7% of actual value (recently adjusted), while commercial property is assessed at 29%. The millage rate varies by district.
In recent years, Colorado has struggled with rising home values pushing up property tax bills despite the low effective rate. The legislature passed temporary property tax reductions in 2023 and 2024 to offset the impact. Colorado offers a property tax deferral program for seniors (65+) and active military members, and a homestead exemption that reduces the assessed value by 50% on the first $200,000 of actual value for qualifying seniors and disabled veterans.
TABOR: Colorado's Taxpayer Bill of Rights
Colorado's most distinctive fiscal feature is the Taxpayer's Bill of Rights (TABOR), a constitutional amendment passed by voters in 1992. TABOR requires voter approval for any new taxes or tax rate increases and limits annual revenue growth to inflation plus population growth. When state revenue exceeds the TABOR cap, the excess must be refunded to taxpayers.
TABOR refunds have become a regular feature of Colorado's fiscal landscape, particularly in strong economic years. In recent years, refunds have ranged from approximately $400 to over $800 per taxpayer, depending on revenue conditions. The refund mechanism has been modified over the years through voter-approved measures like Proposition EE and the "Earned Income Tax Credit" expansion, which redirect some TABOR excess to targeted programs. Despite ongoing political debate about TABOR's impact on public services, it remains firmly embedded in Colorado's constitution and is unlikely to be repealed.
Colorado Marijuana Tax Revenue
Since legalizing recreational marijuana in 2012 (with sales beginning in 2014), Colorado has collected over $2.5 billion in marijuana tax revenue. The state imposes a 15% excise tax on wholesale marijuana transfers and a 15% special sales tax on retail sales (in addition to the regular 2.9% state sales tax). Local jurisdictions can add their own marijuana taxes. The first $40 million of annual excise tax revenue is constitutionally dedicated to school construction. The remaining revenue funds various programs including substance abuse treatment, youth education, and local governments.
Colorado vs. Neighboring States
- Utah — Utah's flat income tax rate of 4.65% is slightly higher than Colorado's 4.4%. Utah has a higher combined sales tax (7.19% avg) and similar property tax (0.58%). Colorado edges Utah on income tax and property tax.
- Wyoming — Wyoming has no income tax and no state corporate tax. Wyoming's sales tax (5.36% avg) is lower, and property tax (0.56%) is similar. Wyoming is clearly more tax-friendly overall, though it lacks Colorado's amenities and job market.
- Kansas — Kansas has graduated income tax up to 5.7%, higher than Colorado's flat rate. Kansas sales tax (8.70% avg) is higher, and property tax (1.33%) is much higher. Colorado has a significant advantage on all three major taxes.
- Nebraska — Nebraska's top income tax rate is 5.84% (being reduced). Sales tax averages 6.94%, and property tax is 1.63%. Colorado is more favorable on all major tax categories.
- New Mexico — New Mexico has graduated rates up to 5.9%. Sales tax averages 7.58%, and property tax is very low at 0.67%. Colorado wins on income tax; the two are competitive on sales and property taxes.