Yes, Social Security is taxed in Colorado, but most retirees pay nothing on it. The state applies its flat 4.4% income tax to all income, Social Security included, and then lets you subtract most or all of those benefits back out through age-based exemptions.1Department of Revenue – Taxation. Individual Income Tax Guide What you actually owe depends on your age at year-end, your income, and how much of your benefits the IRS taxed in the first place.
What Colorado Can Tax
Colorado only taxes the portion of your Social Security that the federal government taxes. If none of your benefits are federally taxable, Colorado has nothing to work with either.
The number that matters is Line 6b on your federal Form 1040, which shows the taxable portion of your benefits. That figure flows onto your Colorado return as a starting point, and the state subtraction rules then determine how much of it you get to remove.2Internal Revenue Service. Publication 915 (2025), Social Security and Equivalent Railroad Retirement Benefits
Colorado Exemptions by Age
Your age on December 31 of the tax year drives everything. The subtraction covers Social Security retirement, SSDI, survivor benefits, pensions, and annuity income as a combined bucket.
Age 65 and Older
This group gets the best deal. If the Social Security benefits included in your federal taxable income exceed $24,000, you can subtract the full amount on your Colorado return, no income cap.3Department of Revenue – Taxation. Individual Income Tax – Information for Retirees For practical purposes, Social Security is tax-free at the state level once you hit 65.
If your federally taxed Social Security is under $24,000, you can still subtract up to $24,000 in combined retirement income, which lumps together Social Security, pensions, and annuity distributions.3Department of Revenue – Taxation. Individual Income Tax – Information for Retirees
Ages 55 to 64
Starting in 2025, this age group can subtract the full amount of federally taxed Social Security if adjusted gross income stays at or below $75,000 for single filers or $95,000 for joint filers.3Department of Revenue – Taxation. Individual Income Tax – Information for Retirees That’s a real break for people who took benefits early, or who receive SSDI or survivor benefits before reaching 65.
Above those AGI thresholds, the full exemption disappears and you fall back to a $20,000 cap on combined retirement income. Social Security, pensions, and annuities all share that $20,000, so you can’t stack them.3Department of Revenue – Taxation. Individual Income Tax – Information for Retirees
Under Age 55
People under 55 collecting Social Security are typically SSDI or survivor beneficiaries. The subtraction caps at $20,000 across all retirement income combined.3Department of Revenue – Taxation. Individual Income Tax – Information for Retirees If your federally taxable Social Security sits under that cap and you have no pension, the subtraction may still cover the whole benefit. Once a pension enters the picture, the $20,000 has to stretch to cover it too.
Claiming the Subtraction
The subtraction goes on Form DR 0104AD, the Subtractions from Income Schedule, which you file alongside the main Colorado return (DR 0104).4Department of Revenue – Taxation. DR 0104AD – Subtractions from Income Schedule The primary taxpayer’s Social Security subtraction goes on Line 3; a spouse’s belongs on Line 5.5Colorado Department of Revenue. DR 0104AD – Subtractions from Income Schedule
You’ll use your SSA-1099, mailed each January, for the benefit totals. The federal taxable amount on Form 1040 Line 6b is the figure Colorado starts from.
Withholding and Estimated Payments
Here’s a wrinkle worth knowing. The Social Security Administration can withhold federal income tax from your monthly check at 7%, 10%, 12%, or 22%, but it does not withhold Colorado state tax at all.6Social Security Administration. Request to Withhold Taxes Any Colorado liability has to come from somewhere else.
If the state subtraction wipes out your Social Security tax entirely, you’re done. If you still owe Colorado tax, usually because a pension pushes you past the applicable cap, quarterly estimated payments are the fix. Colorado’s estimated deadlines are April 15, June 15, September 15, and January 15 of the following year.7Department of Revenue – Taxation. Individual Income Tax – Estimated Payments You can pay online through Revenue Online or mail a check with the DR 0104EP voucher.
A practical shortcut: when you finish your prior-year return, look at what you actually owed Colorado. If it was zero, don’t bother with estimates. If it wasn’t, divide that number by four and schedule the payments. Automatic payments through Revenue Online remove the risk of a missed quarter.