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Expand Deduction for Retirement Benefits

Concerning an expansion of the state income tax subtraction for retirement benefits to allow an individual to subtract all such benefits from federal taxable income for the purpose of calculating state taxable income.

HB26-1062 2026 Regular Session Postponed Indefinitely Fiscal Policy & Taxes

Cost estimates

At the first note read
$0
FACT February 4, 2026
At the last note read
$0
FACT August 11, 2026
What it actually cost
not published
No Colorado source reports spending for one bill

Every figure here is an estimate by Legislative Council Staff on the date shown, about the version of the bill in front of them that day. It is not a cost.

The appropriation

The note states no appropriation is required.

An appropriation is money the legislature sets aside. It is not money spent.

The appropriation field, read from the note: No appropriation was required.

Bill summary

Current law allows any individual to deduct amounts, up to certain caps based on the individual's age, received as pensions or annuities from any source, to the extent included in federal adjusted gross income.

Notwithstanding the caps on the deduction for amounts received as pensions or annuities from other sources, current law allows any individual who is 65 years old or older at the close of a taxable year to subtract the total amount of social security benefits that the individual received from the individual's federal taxable income, to the extent those benefits were included in federal taxable income, when determining the individual's state taxable income. This subtraction is also allowed to any individual who is 55 years old or older and has an adjusted gross income for the applicable tax year that is less than or equal to $75,000 if filing individually or $95,000 if filing jointly.

For income tax years commencing on or after January 1, 2027, the bill removes all caps on the deduction for amounts received as pensions and annuities and allows any individual who is 55 years old or older, regardless of income, to subtract the total amount that the individual received as pension or annuity income from the individual's federal taxable income, to the extent that income was included in federal taxable income, when determining the individual's state taxable income.

FACT Bill summary by Colorado Legislative Council Staff, read 2026-09-23. Printed as published, word for word. Source: leg.colorado.gov (opens in a new tab)