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1667 Cole Boulevard, Suite 400
Golden, CO 80401
p 303.202.2965 • f 303.202.2967
Corporate & Personal Income Tax
Corporate Income Tax
Colorado’s income tax rate is a flat 4.63 percent of Colorado net income, defined as the corporation’s federal taxable income, with some modifications.The state's income tax is among the lowest of any state with a corporate income tax. Corporate income taxes were lowered twice during the past two years from 5 percent to 4.75 percent to the present 4.63 percent tax.

State method of apportioning income
Colorado is unique among states in that two alternative apportionment formulas have been adopted which allow the taxpayer to choose the method that produces the lesser tax liability. The taxpayer can make a decision annually on whether to use the standard three-factor formula or a special two-factor formula.

The three-factor formula averages the corporation’s wages, property, and sales in Colorado and compares that average to total wages, property, and sales to determine what proportion of its profits will be taxed.

The two-factor formula averages property and sales in Colorado only, and compares that average to the total property and sales.


Personal Income Tax
The state income tax rate for resident individuals, estates, and trusts is 4.63 percent of Colorado taxable income. To find the Colorado taxable income, use the following computation:

Federal Taxable Income
Plus
(+)
Any state income tax included in federal itemized deductions
Plus
(+)
Non-Colorado state & municipal bond interest
Plus
(+)
Lump sum distributions from pension or profit-sharing plan not included in federal taxable income
Minus
(-)
State income tax refunds included in federal taxable income
Minus
(-)
Interest on obligations of the United States
Minus
(-)
Previously taxed PERA or School District #1 benefits
Minus
(-)
Pension exclusion of up to $20,000 if age 55 or older
Minus
(-)
Colorado Source Capital Gain
Equals
(=)
Colorado Taxable Income

Allowable credits include taxes paid to other states, earned income credit and childcare/child tax credit for full-year and part-year residents.
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