Does Colorado tax Social Security benefits?

For taxpayers aged 65 and older, Colorado fully subtracts the federally taxable portion of Social Security benefits, so they pay no Colorado tax on Social Security. Filers aged 55 to 64 can shelter Social Security within the broader retirement subtraction cap, and those under 55 generally cannot.

What is the Colorado pension and annuity subtraction?

Colorado lets retirees subtract qualifying retirement income before applying the flat 4.40% tax. The cap is $24,000 for taxpayers 65 and older and $20,000 for those aged 55 to 64. Qualifying income includes pensions, annuities, and IRA or 401(k) distributions.

How does the subtraction work for someone 65 or older?

At 65+, the federally taxable portion of Social Security is fully subtracted on top of the $24,000 cap, and the remaining cap then shelters pension, annuity, and retirement-account distributions. This is one of the more generous retirement-income breaks among flat-tax states.

Are 401(k) and IRA withdrawals taxed in Colorado?

Yes, but only the portion above your available subtraction. Distributions from traditional 401(k) and IRA accounts count as retirement income; whatever exceeds your age-based subtraction cap is taxed at Colorado's flat 4.40% rate.

Does this calculator handle federal tax too?

No. It models the Colorado state side only — the subtractions and the flat 4.40% rate. Your federal tax on Social Security, pensions, and retirement-account withdrawals is calculated separately on your federal return.

Colorado Retirement Income Tax Calculator

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The Colorado retirement income tax calculator shows how much of your Social Security, pension, and 401(k) income actually faces the state’s flat 4.40% tax after Colorado’s generous retirement subtraction — a major reason retirees favor the state.

How it works

Colorado shelters a large slice of retirement income before applying its flat rate:

Total retirement income = taxable Social Security + pension/annuity + IRA/401(k) distributions.
Age-based subtraction: $24,000 for ages 65+, $20,000 for ages 55–64, and $0 under 55.
Full Social Security subtraction for 65+: the federally taxable portion of Social Security is removed entirely, and the $24,000 cap then applies to your other retirement income.
Colorado tax: whatever remains × 4.40%.

The tool runs these steps and shows your Colorado taxable retirement income and the resulting tax.

Worked example

A 67-year-old with $18,000 taxable Social Security, a $24,000 pension, and $12,000 in IRA withdrawals:

Social Security subtraction (65+): −$18,000
Pension/IRA subtraction (up to $24,000): −$24,000 (covers $36,000 of pension+IRA, capped at $24,000)
Colorado taxable retirement income: $54,000 − $42,000 = $12,000
Colorado tax: $12,000 × 4.40% = $528

The same household under age 55 would get no subtraction and owe 4.40% on the full $54,000.

Notes and tips

Turning 65 is a meaningful threshold: the full Social Security subtraction plus the higher $24,000 cap can drop many retirees’ Colorado tax to near zero.
The subtraction is per taxpayer, so married couples filing jointly can each claim their own cap if both qualify.
This tool models the Colorado side only — pair it with the Colorado income tax calculator to see how other income stacks on top of your retirement streams.