Colorado State Tax Guide 2026
Colorado has a flat 4.40% income tax rate that applies to all residents regardless of income. The Centennial State is known for its Taxpayer's Bill of Rights (TABOR), which caps state revenue growth and requires voter approval for tax increases. Colorado also has the LOWEST property taxes in the nation at just 0.49% effective rate - making it very attractive for homeowners.
🎯 Colorado Tax Benefits:
- 4.40% flat rate - simple, predictable taxation
- LOWEST property taxes in USA - 0.49% effective rate!
- TABOR protection - limits government spending growth
- NO local income tax
- No Social Security tax
- Lowest state sales tax - 2.9% (though locals add more)
- Marijuana tax revenue - funds education, infrastructure
⚠️ 2026 Ballot Alert:
- Progressive tax proposal - replace 4.4% flat with graduated rates
- Rates: 4.2% (lowest) → 9.2% (over $10M income)
- Cost: $4.1 billion tax increase
- Impact: 98% get tax cut, top 2% pay more
- Status: Bell Policy Center gathering signatures for Nov 2026 ballot
Colorado's TABOR (Taxpayer's Bill of Rights)
Colorado's constitution includes unique taxpayer protections:
- Revenue cap: State spending limited by inflation + population growth
- TABOR refunds: Excess revenue returned to taxpayers
- Voter approval: Tax increases require direct voter consent
- Flat tax mandate: Constitution requires single rate (except refund credits)
- 2024 example: Rate temporarily dropped to 4.25% due to TABOR surplus
What Taxes Do You Pay in Colorado?
Colorado residents pay the following taxes:
- Federal Income Tax: Standard federal rates apply (10% - 37%)
- Federal Self-Employment Tax: 15.3% on net self-employment income
- CO State Tax: 4.40% flat rate
- NO Local Income Tax: Unlike many other states
- Property Tax: 0.49% effective (LOWEST in USA!)
- Sales Tax: 2.9% state (lowest!) + local up to 8.3% (11.2% max combined)
Colorado Tax Calculation Method
Colorado uses a simplified approach:
- Starting point: Federal taxable income (already includes federal standard deduction)
- NO state standard deduction: Uses federal amount
- Required additions: Some federal deductions must be added back (Section 199A QBAI)
- Flat 4.40% rate: Applied to modified federal taxable income
Example: $60,000 gross income, Single filer
- Federal standard deduction: -$16,100
- Federal taxable income: $43,900
- Colorado taxable income: $43,900 (same as federal)
- Colorado tax: $43,900 × 4.40% = $1,931.60
2026 Federal Tax Brackets (Applies to CO Residents)
| Tax Rate |
Single |
Married Filing Jointly |
| 10% | $0 - $12,400 | $0 - $24,800 |
| 12% | $12,401 - $49,500 | $24,801 - $99,000 |
| 22% | $49,501 - $105,400 | $99,001 - $210,800 |
| 24% | $105,401 - $201,150 | $210,801 - $402,300 |
| 32% | $201,151 - $255,425 | $402,301 - $510,850 |
| 35% | $255,426 - $640,600 | $510,851 - $768,700 |
| 37% | $640,601+ | $768,701+ |
Pros and Cons of Living in Colorado
Pros:
- Simple 4.40% flat income tax
- LOWEST property taxes in USA (0.49%!)
- TABOR protects taxpayers from government overreach
- NO local income tax
- No Social Security tax
- Stunning natural beauty (Rocky Mountains, skiing, hiking)
- Strong economy (tech, aerospace, outdoor recreation)
- 300+ days of sunshine per year
- Legal recreational marijuana (tax revenue funds schools)
Cons:
- High combined sales tax (up to 11.2% with local taxes)
- Rising cost of living (especially Denver metro)
- Expensive housing market (Front Range)
- Traffic congestion in Denver/Boulder
- 2026 ballot may increase taxes significantly
- Wildfire risk in some areas
2026 Progressive Tax Ballot Proposal
A coalition led by the Bell Policy Center is pushing a constitutional amendment to replace Colorado's flat tax:
| Income Level |
Current Rate (4.4%) |
Proposed Rate |
Change |
| Under $500k | 4.4% | 4.2% | -0.2% (tax cut!) |
| $500k-$600k | 4.4% | 4.4% | No change |
| $600k-$1M | 4.4% | 4.6% | +0.2% |
| $1M-$2M | 4.4% | 5.1% | +0.7% |
| $2M-$5M | 4.4% | 6.1% | +1.7% |
| $5M-$10M | 4.4% | 7.7% | +3.3% |
| Over $10M | 4.4% | 9.2% | +4.8% |
Key details:
- Impact: 98% of Coloradans get tax cut, top 2% pay more
- Revenue: $4.1 billion annual increase
- TABOR change: Would let state keep revenue above TABOR cap
- Likelihood: Faces strong conservative opposition
CO vs Neighboring States (2026)
| State |
Income Tax |
Property Tax |
| Colorado | 4.40% flat | 0.49% (lowest!) |
| Wyoming | 0% (none) | 0.56% |
| New Mexico | 1.7-5.9% | 0.74% |
| Utah | 4.55% flat | 0.55% |
| Kansas | 3.1-5.7% | 1.33% |
| Nebraska | 2.46-5.84% | 1.54% |
Who Should Move to Colorado?
- Outdoor enthusiasts: Skiing, hiking, climbing, camping paradise
- Tech workers: Growing Denver/Boulder tech scene
- Aerospace professionals: Major industry (Lockheed, Ball, Northrop)
- Remote workers: Great quality of life, moderate taxes
- Homeowners: LOWEST property taxes in nation!
- Active retirees: No Social Security tax, outdoor lifestyle
- Families: Good schools, safe communities
Major Colorado Cities & Metros
- Denver Metro: Mile High City, tech hub, sports (Broncos, Nuggets, Rockies, Avalanche)
- Boulder: University town, tech startups, outdoor recreation
- Colorado Springs: Military bases (Air Force Academy, Fort Carson), Pike's Peak
- Fort Collins: Craft beer capital, CSU, outdoor lifestyle
- Aspen/Vail: World-class ski resorts, luxury living
Colorado Marijuana Tax Revenue
Colorado was the first state to legalize recreational marijuana (2012):
- Marijuana sales tax: 15% retail + 15% excise + local taxes
- Annual revenue: $400M+ per year
- Funding priorities: Public schools, infrastructure, drug treatment
- Economic impact: $2.5B+ in annual sales
Important: This calculator estimates Colorado state + federal taxes using 2026 rate of 4.40%. Colorado has NO local income taxes and the LOWEST property taxes in America (0.49%). The state uses federal taxable income as its starting point (no separate standard deduction). A progressive tax ballot measure may appear in November 2026 that could raise rates to 4.2-9.2%. For complete tax planning, consult with a Colorado CPA.