Colorado charges a flat 4.4% income tax on your federal taxable income, one of the simplest state taxes in the country, and TABOR refunds sometimes hand part of it back.
Because Colorado piggybacks on your federal taxable income, the same deductions that cut your federal bill also cut your Colorado bill. Here is how the flat rate works and why your effective rate can dip in surplus years. See your exact take-home with the free Colorado paycheck calculator.
How Colorado's income tax works
Colorado takes your federal taxable income (wages after pre-tax 401(k), HSA, health premiums, and the federal standard deduction) and applies a flat 4.4% to it. There is no separate Colorado standard deduction and no local income tax, so the calculation is unusually clean.
Colorado's TABOR (Taxpayer's Bill of Rights) caps state revenue and refunds the surplus, which in recent years has temporarily lowered the effective income-tax rate (to as low as 4.25%) or sent flat refund checks. The statutory rate is 4.4%, so we use that as the baseline.
Your take-home on a $65,000 salary in Colorado
Here is how a $65,000 salary breaks down for a single filer, using 2025 federal and FICA figures alongside Colorado's a flat 4.4% income tax.
| Item | Annual |
|---|---|
| Federal income tax | $5,246 |
| FICA (Social Security + Medicare) | $4,973 |
| Colorado income tax | $2,200 |
| Take-home pay | $52,582 |
| Percent of gross kept | 80.9% |
On a $65,000 salary a single filer owes about $2,200 in Colorado income tax and keeps roughly $52,582, or 80.9% of gross. That take-home goes furthest outside the Denver-Boulder corridor, where housing costs have climbed well above the national average and can erode the advantage of the low flat rate. Compare with Arizona.
TABOR refunds and the federal-taxable-income base
Two things make Colorado distinctive. First, it starts from federal taxable income rather than its own deduction scheme, so maxing federal pre-tax accounts directly shrinks your Colorado tax. Second, TABOR means that in surplus years you may get money back, as a lower effective rate or a refund, so your real Colorado tax can land below the 4.4% headline.
Colorado offers a retirement-income subtraction (larger at 65 and older) and has trimmed how much Social Security it taxes, so retirees often pay less than the flat rate implies.
How to keep more of your Colorado paycheck
Since Colorado taxes your federal taxable income, every dollar you move into a traditional 401(k) or HSA cuts your federal and Colorado tax at the same time (and the HSA skips FICA). It is one of the most direct deduction-to-savings links of any state.