Money from the State Affordable Housing Fund is designated for affordable housing programs. This equates to about 2 percent of income tax revenue from both individual and corporate income taxes. One-tenth of one percent of state taxable income is credited to the State Affordable Housing Fund pursuant to Proposition 123, passed by voters in 2022. One-third of one percent of state taxable income is credited to the State Education Fund pursuant to the requirements of Amendment 23. This equates to about 8 percent of income tax revenue from both individual and corporate income taxes. Money from the State Education Fund is required to be spent on “accountable education reform, for accountable programs to meet state academic standards, for class size reduction, for expanding technology education, for improving student safety, for expanding the availability of preschool through kindergarten programs, for performance incentives for teachers, for accountability reporting, or for public school building capital construction.” 16 The Department of Revenue publishes information on income tax expenditures, including subtractions, deductions, and credits, in its biennial Tax Profile and Expenditure Report.

Withheld taxes are submitted by employers to the Colorado Department of Revenue.Įstimated payments include income for self-employed individuals, as well as income from dividends, interest, capital gains, rent, and royalties. These payments are filed quarterly or annually depending on the type and source of income earned. Estimated tax is used to pay the alternative minimum tax and self-employment tax. Higher income earners may be required to pay the alternative minimum tax (AMT) in addition to the income tax.Ĭolorado individual income tax returns ( Form 0104 and any tax payment owed) for a calendar year are due to the Department of Revenue on or before the following April 15th unless an extension is granted. These forms allow taxpayers to calculate and report how much income tax has already been paid to the state of Colorado through withholding and estimated payments and how much is still due for a given tax year. Taxpayers can consult the Department of Revenue’s filing guide for instructions to complete Colorado Individual Income Tax Form 0104.Ī taxpayer’s Colorado income tax liability is calculated as follows:įederal taxable income serves as the base for Colorado income tax. Policy that changes federal taxable income will also change Colorado taxable income. To calculate the Colorado income tax, a “flat” tax rate of 4.40 percent is applied to federal taxable income after adjusting for state additions and subtractions, the largest and most common of which are listed below. Colorado income tax credits are then subtracted from this amount to arrive at the net Colorado income tax (the amount paid by a Colorado taxpayer). Individuals and some businesses pay individual income taxes through withholding or through estimated payments. Compensation for employment and earnings from certain other income sources (including pensions, bonuses, commissions, and gambling winnings) are withheld from the employee’s paycheck by his or her employer. For wages and salaries, the amount withheld is determined using Colorado form DR 1098. Source: Colorado Revised Statutes and Legislative Council Staff.

2021 or income tax brackets