Colorado Tax and CPA Services: State, County and City Taxes

Colorado has a single flat income tax rate for individuals, but that rate can move from year to year because of the state's Taxpayer's Bill of Rights (TABOR), and its sales tax system is split between the state and self-collecting home-rule cities. This page covers what residents, remote workers, retirees, business owners and employers should understand about Colorado taxes. We help Colorado clients remotely from our Naperville, Illinois office.

Individual income tax

The Colorado Department of Revenue lists the 2025 income tax rate as 4.4 percent, noting that "the Colorado income tax rate varies by tax year" under a statute that allows temporary adjustments. Colorado does not use brackets for ordinary income. It begins with federal taxable income, which makes it different from states that start from adjusted gross income, and then adds and subtracts items on its own schedules. Residents with Colorado taxable income under $50,000 can use the department's tax tables, and a separate alternative minimum tax, at 3.47 percent of Colorado alternative minimum taxable income, applies only when it exceeds the regular tax.

Retirement income gets generous treatment. A taxpayer 55 or older (or a beneficiary of any age) can subtract the smaller of $20,000, or $24,000 if 65 or older, or the taxable pension or annuity income included in federal taxable income. For tax years 2022 and later, taxpayers 65 or older can subtract their full Social Security benefits when more than $24,000 of those benefits are included in federal taxable income. Check the current-year schedule, because these rules are tied to tax year and age.

The return is due April 15, and an automatic extension to October 15 requires paying at least 90 percent of the liability by April 15. Interest, rather than penalties, applies to the remaining balance paid during the extension. TABOR refunds, when they occur, can appear as a sales tax refund claimed on the Colorado return or a Property Tax/Rent/Heat rebate application.

Part-year, nonresident and remote workers

Colorado prorates its tax for part-year residents and nonresidents so that only income received in Colorado or from Colorado sources is taxed, using Form DR 0104PN alongside the DR 0104. Both groups first compute income as if they were full-year residents. A Colorado resident who lives abroad generally keeps filing as a full-year resident unless they truly abandon Colorado residency, and the burden of proving that falls on the taxpayer. Colorado ties such as a driver's license, voter registration or owned property can keep residency alive. People relocating from or to Colorado, and visa holders on assignment, should review these facts before filing. See our multi-state tax service.

Business taxes

Entities that must file a federal return must file a Colorado return, and returns are due on the 15th day of the fourth month after year end. A multistate business apportions its income, while a Colorado-only business taxes 100 percent of its Colorado income.

Under the SALT Parity Act, partnerships and S corporations can elect to pay tax at the entity level. The election is annual and, once made, is irrevocable and binds all partners or shareholders. The process differs by tax year, so confirm the current steps with the Department of Revenue. It is one way to work around the federal cap discussed in SALT deduction and property taxes.

Sales and use tax

Colorado sales tax is layered: the state, then counties, cities and special districts. Every Colorado county that imposes a sales tax is state-collected, except Denver County and Broomfield County. Home-rule cities that run their own programs are self-collected, which means they set their own rules on what is taxable, and the seller must contact or file with them directly. The Department of Revenue publishes the DR 1002 rate publication every January 1 and July 1, and a location lookup tool shows the combined rate for an address. Sellers file through the Sales and Use Tax System (SUTS) or Revenue Online.

One 2026 change: under House Bill 25B-1005, starting January 1, 2026, retailers may no longer keep the state sales tax service fee, although the local service fee remains. Marketplace facilitator rules under HB19-1240 apply to online sellers; see our nexus guide and sales tax service.

Payroll in Colorado

• Withholding: employees complete the DR 0004 and employers withhold under the Department of Revenue's wage withholding program. See state income tax withholding.
• Unemployment insurance: managed by the Colorado Department of Labor and Employment (CDLE), which sets premium rates and a taxable wage base each year; confirm the current figures with CDLE. See state unemployment insurance.
• Paid family and medical leave: Colorado runs a state program called FAMLI, funded by premiums that employers and employees share. See state paid family and medical leave and check the FAMLI program for the current premium rate.
• Local employer taxes: a few cities, Denver among them, charge occupational privilege taxes on a per-employee basis; confirm with the city. See local payroll taxes.

Counties, cities and property tax

Denver and Broomfield are both city and county governments with self-collected sales taxes. Other Colorado counties, including those along the Front Range, have state-collected county taxes layered with city and district taxes. Property tax is administered locally by county assessors and treasurers, and the state offers a Property Tax/Rent/Heat (PTC) rebate for qualifying residents.

How we can help

We prepare Colorado resident, part-year and nonresident returns, review the retirement subtractions you may qualify for, evaluate the SALT Parity election, and help sellers set up SUTS filings and track home-rule city obligations. If you receive a letter from the Department of Revenue, see state tax notices and representation. Contact us to start. This page is general information.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.