Nova55Living › Colorado Springs › Colorado Retirement Income Tax Guide
Verified against Colorado DORA and General Assembly sources · 2025
Colorado has a flat 4.40% income tax rate and meaningful pension and annuity subtractions for retirees 55 and older. Here’s exactly how it works for common retirement income sources.
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Talk to a Specialist →| Income Source | Colorado Treatment | Notes |
|---|---|---|
| Social Security | Partially taxable; subtraction up to $24K at 65+ | Coordinated with pension subtraction |
| Military retirement (under 55) | Up to $15K subtraction | HB23-1084, through 2028 |
| Military retirement (55–64) | Up to $20K pension subtraction | Standard pension exclusion applies |
| Military retirement (65+) | Up to $24K pension subtraction | Standard pension exclusion |
| Civilian pension / annuity (55–64) | Up to $20K subtraction | Includes 401k distributions |
| Civilian pension / annuity (65+) | Up to $24K subtraction | 401k, IRA, pension all count |
| VA disability pay | Not taxed | Federal law; CO follows |
| Investment income | Taxed at 4.40% | No special exclusion |
| State income tax rate | 4.40% flat | 2025 rate |
Colorado’s pension subtraction and Social Security subtraction are coordinated — they share a combined maximum of $24,000 at age 65+. If you receive $18,000 in Social Security and $30,000 in pension income, you cannot subtract the full amount of each independently. The coordination rules require a calculated limit. For couples each filing jointly, each spouse has their own subtraction limit — a household with two 65+ retirees can shelter up to $48,000 total.
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| State | Top Rate | SS Taxable | Pension Taxable |
|---|---|---|---|
| Colorado | 4.40% flat | Partially | Up to $24K subtraction at 65+ |
| California | Up to 13.3% | No | Yes, fully |
| New York | Up to 10.9% | No | Partially exempt |
| Illinois | 4.95% flat | No | No (fully exempt) |
| Texas / Florida | 0% | N/A | N/A |
Note: IL exempts retirement income entirely but charges 2.1% property tax. CO’s combined burden often beats IL on total picture.
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