Colorado Retirement Taxes 2026: SB25-136 Facts, Caps, Rates

2026 edition · statute-cited · part of Clear Money Guide’s 51-state retirement tax series. This guide covers state taxes on retirement income and estate transfers; property and sales taxes vary by county and are outside its scope.

Updated July 24, 2026. Quick answer: For a Social-Security-centered retiree, yes: Coloradans 65 and older subtract 100% of federally taxed Social Security, those 55–64 subtract 100% if AGI is at or below $75,000 (single) / $95,000 (joint), and everything else — pensions, 401(k) and IRA withdrawals — runs through a $20,000 (age 55–64) or $24,000 (65+) per-person subtraction before being taxed at a flat 4.4%. And the rumor making the rounds is false: SB25-136, the bill to remove those caps, did not pass — the caps are fully in force for 2026.

The SB25-136 correction (what changed for 2026: nothing)

Advisory sites and AI-generated summaries have been claiming that “starting in 2026, SB25-136 removes Colorado’s pension caps.” The bill’s actual status on the legislature’s own site: postponed indefinitely by the Senate State, Veterans & Military Affairs Committee on February 27, 2025. The $20,000/$24,000 subtraction caps under C.R.S. §39-22-104(4)(f)–(g) remain fully in force for tax year 2026. Two other stale figures to ignore: the pre-Proposition-121 rates of 4.55%/4.63% still quoted around the web, and the 4.25% rate — that was a 2024-only temporary TABOR reduction. The 2026 baseline rate is 4.40%.

How Colorado taxes retirement income (statute-cited)

Income tax	Flat 4.4% (2026 baseline)
Social Security	65+: subtract 100% of federally taxed benefits. 55–64: subtract 100% if AGI ≤ $75,000 single / $95,000 joint (TY2025+); otherwise SS counts within the $20,000 subtraction cap
Pension / 401(k) / IRA	Per-person subtraction up to $20,000 (55–64) or $24,000 (65+), covering pensions, 401(k)/IRA distributions and taxable SS within the cap; amounts above are taxed at 4.4% (C.R.S. §39-22-104(4)(f)–(g))
Military retirement	Under 55: subtraction up to $15,000 (TY2022–2028, C.R.S. §39-22-104(4)(y)); at 55+ the regular pension subtraction applies
Estate / inheritance tax	None

Probate and the CPI-indexed affidavit

Colorado is a Uniform Probate Code state: personal-representative and attorney compensation is “reasonable” (C.R.S. §15-12-719) with no percentage schedule — a structural cost advantage over percentage-fee states. The small-estate lane: collection of personal property by affidavit (C.R.S. §15-12-1201), indexed to inflation by year of death — $86,000 for 2025 deaths per the judicial branch’s official JDF 999 form (rev. April 2026; the figure adjusts annually). Personal property only, a 10-day wait, and no court filing required. Context: probate cost by state · small-estate limits by state.

The verdict for 2026

Colorado lands in the friendly-with-caps tier: a 65+ retiree living on Social Security plus moderate withdrawals often owes little, and there is no estate or inheritance tax and no percentage probate schedule. The caps are the honest limitation — a large 401(k) withdrawal above $24,000 is taxed at 4.4%, real money but modest next to California’s 13.3% or Oregon’s 9.9%. Anyone told the caps disappeared for 2026 should re-run their projection: they didn’t.

Colorado vs. common alternatives

State	Social Security	Pension / 401(k) / IRA	Estate tax	Inheritance tax
Colorado	Not taxed at 65+; 55–64 AGI-tested	$20,000 (55–64) / $24,000 (65+) subtraction caps	None	None
Arizona	Not taxed	Taxed at flat 2.5%; $2,500 gov-pension subtraction	None	None
Nevada	Not taxed	Not taxed (no income tax)	None	None
Texas	Not taxed	Not taxed (no income tax)	None	None

Comparison rows summarize general rules; see our 51-state retirement tax table for statute-cited detail.

Considering a Roth conversion? The converted amount is taxed as ordinary income in the year you convert, and Colorado may treat it differently from the retirement income above — see how all 51 jurisdictions tax Roth conversions.

Finding a financial advisor in Colorado

Per the SEC’s July 2026 Investment Adviser roster, Colorado has 351 SEC-registered advisory firms (#11 nationally) managing $1.31 trillion (#15 by AUM). Full breakdown: Colorado advisor statistics. Reviewing fee structures: fee-drag calculator.

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Thinking about moving?

Four taxes change when you move state in retirement, not one: income tax on withdrawals, state estate tax, state inheritance tax, and what probate costs your heirs. Corridor comparisons involving Colorado:

Leaving Colorado? See leaving Colorado in retirement.

Compare any two states with the retirement tax comparison tool, or browse all corridors at the relocation hub.

What probate costs in Colorado

Colorado sets probate compensation by a “reasonable fee” standard with no percentage schedule, so anyone quoting a firm figure is estimating. And the small-estate shortcut of $80,000 does not clear a solely owned house on its own, which is the detail most guidance omits. Full detail with the governing statute, the court filing fee and the threshold: Colorado probate cost. To price a specific estate, use the probate cost calculator.

Cite or share this guide

Suggested citation: Clear Money Guide, “Colorado Retirement Taxes (2026 edition),” statute-cited; clearmoneyguide.com/colorado-retirement-taxes/. Free to cite with attribution and a link. Data verified July 23–24, 2026 against state statutes, session laws, and revenue-department guidance.

Is Colorado a Good State to Retire In for Taxes? (2026: The Pension Caps Did Not Go Away)