Colorado retirement taxes at a glance (2026)
| State income tax | Flat 4.4%Colorado has a flat 4.4% income tax. |
|---|---|
| Social Security | Not taxedSocial Security is fully exempt at 65+. At ages 55-64 it is fully exempt if AGI is at or below $75,000 (single) or $95,000 (joint); otherwise it shares the $20,000 pension subtraction. |
| Pensions | Partly taxedTaxpayers 65+ can subtract up to $24,000 of pension, annuity and Social Security income; ages 55-64 can subtract up to $20,000. Exclusion: up to $24,000 (age 55+). |
| 401(k) and IRA withdrawals | Partly taxedIRA and 401(k) distributions qualify for the same $20,000 (55-64) or $24,000 (65+) subtraction. |
| Government pensions | Partly taxedGovernment pensions use the same $20,000/$24,000 pension subtraction. |
| Military retirement pay | Partly taxedRetirees under 55 can subtract up to $15,000 of military retirement pay (tax years 2025-2028); at 55+ they use the general pension subtraction. |
| Estate tax | No |
| Inheritance tax | No |
| Property tax help for seniors | Homeowners 65+ who have owned and lived in the home for 10+ years can exempt 50% of the first $200,000 of actual value. |
| Sales tax | State rate 2.9%; average combined rate about 7.89%. |
Recent changes and good to know
- From tax year 2025, Social Security is fully deductible for ages 55-64 below the AGI limits.
- The Social Security subtraction and pension subtraction do not stack: Social Security claimed reduces the pension cap (except the full SS subtraction at 65+).
How to lower your retirement taxes in Colorado
- Mix your income sources. Roth IRA withdrawals are tax-free at the federal level and generally in Colorado too, so a Roth conversion before retirement can cut state tax later. Try the Roth conversion calculator.
- Watch federal Medicare costs. Large IRA withdrawals can raise your Medicare premiums. Check the 2026 IRMAA brackets.
- Think about your heirs. See what your IRA will really cost your family with the Family Tax Rate calculator.
- Comparing states? These have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
Frequently asked questions
Does Colorado tax retirement income?
Partly: Colorado exempts Social Security for most retirees and lets people 55+ subtract $20,000-$24,000 of retirement income, then taxes the rest at 4.4%.
Does Colorado tax Social Security?
Social Security is fully exempt at 65+. At ages 55-64 it is fully exempt if AGI is at or below $75,000 (single) or $95,000 (joint); otherwise it shares the $20,000 pension subtraction.
Does Colorado tax pensions?
Taxpayers 65+ can subtract up to $24,000 of pension, annuity and Social Security income; ages 55-64 can subtract up to $20,000.
Does Colorado tax 401(k) and IRA withdrawals?
IRA and 401(k) distributions qualify for the same $20,000 (55-64) or $24,000 (65+) subtraction.
Does Colorado tax military retirement pay?
Retirees under 55 can subtract up to $15,000 of military retirement pay (tax years 2025-2028); at 55+ they use the general pension subtraction.
Sources (last verified 2026)
- 2025 Colorado Individual Income Tax Booklet (DR 0104) — Colorado Department of Revenue (2025-10-29)
- Retired servicemembers — Colorado Department of Revenue (2026-09-24)
- Colorado State Taxes for 2026 — AARP (2026)
Educational content only, not tax, legal or investment advice. Plans and tax laws change; confirm details with your employer's plan documents or your state revenue department. Smart Financial Lifestyle is not affiliated with any employer named on this site.