Colorado State Taxes Fiscal Season 2022 – Forbes Advisor

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The state of Colorado requires you to pay taxes whether you are a resident or a non-resident who receives income from a Colorado source. The state income tax rate is 4.5% and the sales tax rate is 2.9% to 15%.

The State of Colorado offers tax deductions and credits to reduce your tax payable, including a standard deduction, itemized deduction, earned income tax credit, child care credit, and dependents and a tax credit for university access.

Colorado income tax brackets and rates

Colorado has a flat tax rate of 4.5% for 2021, which means everyone pays the same state income tax regardless of their income.

Colorado Income Tax Deductions

Charitable contribution deduction

If you take the standard deduction on your federal and Colorado income tax returns, you may be able to deduct the value of your charitable contributions. Contributions must be made to religious organizations, non-profit charitable or educational organizations, or non-profit hospitals and medical research organizations.

Contributions of clothing and household items are eligible, but only if they are in good (or best) used condition or if they are valued over $ 500 based on an appraisal.

To determine how much you can deduct on your Colorado tax return, subtract $ 500 from your total contributions. The result is the amount you can deduct.

Deduction for forest fire mitigation measures

If you own land in Colorado, you can claim a subtraction on your Colorado tax return for the steps you take to mitigate wildfires. Eligible expenses may include payments to contractors, the cost of equipment, or the cost of renting a vehicle. You can deduct 50% of what you paid, up to a maximum of $ 2,500.

Deduction of the contribution to the state education program

Taxpayers can deduct contributions made through CollegeInvest 529 education savings plans. The contributory taxpayer need not be related to the owner or beneficiary of the plan.

Colorado State Income Tax Credits

Earned Income Tax Credit: The Colorado EITC

Colorado residents can claim the Earned Income Tax Credit (EITC) if you apply for the federal EITC. Taxpayers who do not have a Social Security number (or who have a spouse or dependent who does not have an SSN) can also apply for the credit, although you may not have been eligible for it. the federal EITC.

The federal EITC income limit ranges from $ 21,430 to $ 57,414 depending on how you are filing and the number of children or dependents you are claiming. The maximum amount of federal EITC you can claim on your 2021 tax return is $ 6,728.

Colorado’s EITC is equal to 10% of the federal EITC you are entitled to based on your income. So if you qualify for $ 3,000 federally, you can claim $ 300 through the Colorado EITC.

Child care expense credit

If you qualify for a federal child care expense credit, you can also claim a child care expense credit on your Colorado tax return. The credit is equal to 50% of the federal child care credit you claimed for the same year. To be eligible, your federal AGI must be less than $ 60,000.

The child care expense credit is refundable, which means that if the credit exceeds your tax payable, you will receive a refund.

If your federal AGI is less than $ 25,000, you may be eligible for a low-income child care expense credit. You are only eligible if you did not claim the federal child care credit because you did not have to pay federal income tax. The maximum credit for eligible taxpayers is $ 500 for one child or $ 1,000 for two or more children.

Child care contribution credit

If you make a contribution to an eligible child care center or to a program that trains child care providers, you can claim an income tax credit of 50% of your contribution. You can claim a maximum of $ 100,000 per tax year.

The credit is not refundable.

Long-term care insurance credit

If you purchase or make payments on a long term care insurance policy for yourself or your spouse, you can claim a tax credit of up to 25% of what you paid (with a maximum of $ 150 per police).

However, there are income limits for this credit. If you are a single taxpayer, your federal taxable income must be less than $ 50,000. If you are filing jointly and have a policy for a spouse, the federal taxable income limit is also $ 50,000. If you are filing jointly and have two policies or one policy that covers both partners, the federal taxable income limit is $ 100,000.

This credit is not refundable.

Credit for innovative motor vehicles and trucks

Taxpayers who buy an electric or hybrid car or truck are entitled to a tax credit. The owner does not have to be a Colorado resident, but the vehicle must be new and must be Colorado titled and licensed.

The credit value is $ 2,500 for passenger vehicles and increases to $ 10,000 for heavy trucks over 26,000 lbs. For leased passenger vehicles, the credit is $ 1,500.

The credit is refundable.

Do I Pay Colorado Income Tax?

You must file a Colorado income tax return if you receive Colorado income and need to file a federal income tax return. Full-time residents, part-time residents with Colorado income, and non-residents with Colorado income must report.

Residence status

You are considered a part-time resident if you live in Colorado for part of the year. If you live in Colorado part-time, you will use Schedule DR 0104PN to determine the income you need to report on your state income tax return.

Sales tax and sales tax rate

Colorado charges sales taxes of 2.9% to 15%.

Property taxes and property tax rates

Property tax rates are set by each county.

Capital gains taxes

Colorado allows taxpayers to subtract certain capital gains from their tax returns. These gains must be included in the taxpayer’s federal taxable income, and the gain must be realized on real estate. Other restrictions apply.

Inheritance and inheritance tax and exemption from inheritance and inheritance tax

Colorado does not have an estate or inheritance tax.

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