Colorado does not tax Social Security benefits

Colorado exempts all Social Security income from state income tax. If Social Security is your only income source, you owe nothing to Colorado. If you receive Social Security plus other income, only the non-Social Security portion is subject to Colorado's state tax.

This exemption applies to retirement benefits, survivor benefits, and disability benefits (SSDI). It does not matter whether you worked in Colorado, another state, or multiple states — the exemption covers anyone receiving Social Security who lives in Colorado.

The federal government may still tax your Social Security depending on your combined income (Social Security plus wages, pensions, interest, and dividends). Colorado's exemption only removes the state portion of the tax burden.

Key Takeaways

  • Colorado does not tax Social Security retirement, survivor, or disability benefits at the state level.
  • If you have other income besides Social Security, only that other income counts toward Colorado state taxes.
  • The federal government may still tax your Social Security based on your total combined income, separate from Colorado's rules.
  • You do not need to report Social Security income on your Colorado state tax return.

How Colorado's exemption works with other retirement income

Social Security is treated differently from pensions, 401(k) withdrawals, and IRA distributions. If you receive a pension or withdraw from a retirement account, Colorado taxes that income. Social Security does not count toward your Colorado taxable income, even if you have substantial other retirement income.

Example: You receive $2,000 per month in Social Security and $1,500 per month from a pension. Colorado taxes only the $1,500 pension income. The $2,000 Social Security is completely exempt.

This separation matters because it can lower your overall Colorado tax bill. You may owe federal tax on the combined amount, but Colorado only looks at the non-Social Security portion.

Federal taxation of Social Security is separate from Colorado

Even though Colorado does not tax Social Security, the federal government may. Whether your Social Security is taxable at the federal level depends on your combined income — a calculation that includes Social Security plus all other income sources.

The IRS uses a formula based on "combined income," which is your adjusted gross income plus nontaxable interest plus half your Social Security benefits. If your combined income exceeds certain thresholds, up to 50% or 85% of your Social Security becomes taxable at the federal level.

For 2024, the thresholds are $25,000 for single filers and $32,000 for married couples filing jointly. These thresholds have not changed since 1984, so many more people are affected now than when the rule began. You will need to file a federal return and calculate this separately from your Colorado return.

What you need to report on your Colorado tax return

You do not report Social Security income on your Colorado state return. When you file, you will receive a Form SSA-1099 from Social Security showing your annual benefits. You do not enter this amount on your Colorado return.

If you have other income — wages, self-employment income, pensions, interest, dividends, or rental income — you report only those amounts. Colorado's tax forms will ask for your income sources, but Social Security is not one of them.

If you are filing a federal return because of other income or because federal taxation of your Social Security applies, you will use the SSA-1099 for that federal calculation. The Colorado return remains separate and does not include Social Security at all.

Residency and the Colorado exemption

You must be a Colorado resident to benefit from this exemption on your state return. Colorado taxes residents on all income earned anywhere in the world, but it exempts Social Security for those residents. If you moved to Colorado after retiring, the exemption still applies to you.

If you are a nonresident who worked in Colorado and receives Social Security, you do not file a Colorado state return at all — nonresidents are not taxed on Social Security income in Colorado. The exemption is automatic; you do not need to claim it or provide proof.

Frequently Asked Questions

Do I have to file a Colorado tax return if Social Security is my only income?

No. If Social Security is your only income, you have no Colorado tax filing requirement. Colorado does not tax Social Security, so there is no income to report. You may still want to file a federal return depending on your combined income and whether federal taxation of Social Security applies to you.

Will Colorado tax my survivor benefits or disability benefits?

No. Colorado exempts all types of Social Security benefits — retirement, survivor, and disability (SSDI). The exemption does not distinguish between benefit types. If you receive SSDI or survivor benefits, Colorado does not tax them.

What if I moved to Colorado from another state?

The exemption applies as soon as you become a Colorado resident. You do not have to have worked in Colorado or paid Colorado taxes before. Your previous state's tax rules no longer apply once you establish Colorado residency.

Does the Colorado exemption help if the federal government taxes my Social Security?

Yes, but only partially. Federal taxation and Colorado taxation are separate. If the IRS taxes your Social Security, you still owe federal tax on that amount. But you will not owe Colorado state tax on it. This reduces your total tax burden compared to states that tax Social Security.

How do I report my Social Security income to Colorado?

You do not report it. Simply exclude Social Security from your Colorado return and report only other income sources. If you are unsure whether you need to file, contact the Colorado Department of Revenue or a tax professional to confirm your filing requirement based on your other income.