Colorado tax guide
Colorado maintains a flat tax system, which simplifies tax planning for residents by ensuring a consistent 4.40% rate regardless of income level. This structure contrasts with neighboring states like Kansas and Nebraska, which utilize progressive brackets. While the state-level tax is uniform, employees should be aware of small, fixed occupational privilege taxes in specific cities like Denver.
Key tax highlights
Payroll
- Colorado applies a uniform flat income tax rate of 4.40% to all taxable income.
- The state tax rate is lower than nearby progressive states like Nebraska (5.20%) and New Mexico (5.90%).
- Employers are required to withhold Colorado state income tax from employee paychecks according to the flat 4.40% rate.
Local taxes
- While Colorado does not have municipal income taxes based on a percentage of earnings, four cities collect a small flat monthly occupational privilege tax.
- Denver residents pay a $5.75 per month occupational tax, while Glendale residents pay $5 per month.
- Greenwood Village and Sheridan also impose small monthly flat fees of $2 and $3, respectively, for those working within their city limits.
Deductions
- Colorado generally follows federal adjusted gross income as the starting point for state tax calculations, making federal deductions relevant to your state return.
- The state provides specific credits and deductions that can lower your effective tax burden beyond the standard federal provisions.
Salary examples
Pre-computed take-home estimates at common salary levels. For example, a $75,000 salary in Colorado yields about $58,292 after all deductions (77.7% take-home rate). Use the calculator above with your actual salary to see your specific estimate.
| Salary | Federal | State | FICA | Take-Home | Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $2,200 | $3,825 | $40,155 | 80.3% |
| $75,000 | $7,670 | $3,300 | $5,738 | $58,292 | 77.7% |
| $100,000 | $13,170 | $4,400 | $7,650 | $74,780 | 74.8% |
| $150,000 | $24,734 | $6,600 | $11,475 | $107,191 | 71.5% |
Neighboring states
How Colorado compares with border states on income tax. At a $75,000 salary, a Colorado worker pays $3,300 in state tax annually.
Cost of living context
The Denver-Aurora-Lakewood, CO area has a Regional Price Parity of 105.9, which is 5.9% above the national average. Your dollar goes slightly less far here.
HUD Fair Market Rent estimates: Studio $1,412/mo, 1-BR $1,595/mo, 2-BR $1,941/mo.
Cities with local taxes
These Colorado city pages factor local taxes into the take-home estimate. A city like Denver adds an extra local deduction on top of statewide withholding.
| City | Local rate |
|---|---|
| Denver | $5.75/month |
| Glendale | $5/month |
| Greenwood Village | $2/month |
| Sheridan | $3/month |
| Aurora | $2/month |
Tax tips for Colorado
- Review your paystub to ensure your employer is withholding the correct 4.40% flat rate for Colorado state income tax.
- If you work in Denver, Glendale, Greenwood Village, or Sheridan, confirm that your employer is correctly applying the specific monthly occupational tax.
- Keep track of federal tax changes, as Colorado's taxable income calculation is tied to federal figures.
- Check the Colorado Department of Revenue website annually for state-specific credits that may reduce your total tax liability.
Did you know?
- •Colorado is one of the few states that imposes a specific, flat monthly 'occupational privilege tax' rather than a percentage-based local income tax.
- •The Colorado tax rate is significantly lower than that of neighboring New Mexico, which reaches a top marginal rate of 5.90%.
Filing guidance
When filing in Colorado, you will primarily use Form DR 0104. Because the state uses a flat tax, the calculation is often straightforward, beginning with your federal taxable income and applying the 4.40% rate. Be sure to include your city of employment if you work in a municipality with an occupational tax to ensure accurate reporting of all payroll deductions. Always verify your residency status, as this dictates whether you file as a full-year resident, part-year resident, or non-resident.
Relocation context
Comparing Colorado with nearby states can reveal whether paycheck differences are driven by state tax, local tax, or payroll deductions.