Updated October 16, 2026. Quick answer: Colorado lets people 55 or older subtract pension and annuity income, generally up to $20,000 a year or $24,000 at 65 or older (“The subtraction is generally limited to $20,000 each year”), but the Department of Revenue documents read do not name 403(b) or 457(b) plans.
State retirement-income forms, line by line: Colorado DR 0104AD.
Colorado at a glance
| Item | What the documents say |
|---|---|
| How the state treats 403(b) and 457(b) withdrawals | The documents read do not say |
| Do the state’s documents name these plans? | The documents read name neither 403(b) nor 457(b) plans |
| Retirement exclusion or credit | Pension and annuity subtraction, generally $20,000 a year, or $24,000 at 65 or older |
| Public-employee pension rule | The pension and annuity subtraction covers income from an employee-employer relationship, which the documents do not limit to public employers; a separate subtraction exists for certain Colorado PERA and Denver Public Schools Retirement System benefits, though most of those benefits do not qualify for it |
| Rate in the documents read | Flat 4.4% |
| Changed for 2026? | The 2025 documents read describe no 2026 change |
What the Colorado documents say
The Department of Revenue’s pension and annuity subtraction guidance says “The subtraction is generally allowed only to individuals age 55 or older” with one exception for death-benefit income. It defines pensions and annuities as periodic payments, made at regular intervals over a period greater than one year, that come from an employee-employer relationship, service in the uniformed services, or earlier deductible contributions to a retirement plan. It names IRA, SEP and SIMPLE plans separately and says distributions from an IRA or self-employed retirement plan that are premature for federal purposes do not qualify. It also describes a separate subtraction for certain benefits from the Colorado Public Employees Retirement Association and the Denver Public Schools Retirement System.
The 2025 Form 104 booklet gives the rate: “The income tax rate is currently 4.4%”
Withholding and federal tax
Whether a state withholds is a separate rule: see state withholding on retirement withdrawals. Federal rules: 403(b) withdrawal rules and 457(b) withdrawal rules. The IRS says pension and annuity payments from a qualified employer plan have “all or some portion of the amounts you receive may be taxable”.
What the documents do not say
- The documents read never name 403(b) or 457(b) plans, so they do not say whether a withdrawal from one is a qualifying pension or annuity for the subtraction.
- Colorado’s own FAQ page could not be retrieved, so the answer rests on the subtraction guidance and the Form 104 booklet.
Common mistakes
- Assuming Colorado’s rule for a 401(k) or IRA also covers a 403(b) or 457(b): read whether its documents name the plan.
Related: whether Colorado taxes 401(k) and IRA withdrawals, Colorado retirement taxes, whether Colorado taxes pensions, 403(b) withdrawal rules, 457(b) withdrawal rules, and state withholding on retirement withdrawals.
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Answer againSources
- Income Tax Topics: Social Security, Pensions, and Annuities (Revised January 2025): https://tax.colorado.gov/sites/tax/files/documents/ITT_Social_Security_Pensions_and_Annuities_Jan_2025.pdf
- 2025 Colorado Individual Income Tax Filing Booklet (DR 0104 Book): https://tax.colorado.gov/sites/tax/files/documents/Book104_2025.pdf
- IRS Tax Topic 410, Pensions and annuities: https://www.irs.gov/taxtopics/tc410
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.