Updated September 5, 2026. Quick answer: Colorado does not exempt any pension category outright; nearly all retirement income, public and private pensions, federal civil service pensions, and IRA/401(k) distributions, is federally taxable first and then draws on one shared age-based subtraction capped at $20,000 for filers 55 to 64 and $24,000 for filers 65 and older, while military retirees under 55 instead use a separate subtraction reported to be capped at $15,000.
Confidence note: medium. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Colorado taxes retirement income generally.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Public pensions are federal taxable income first, then may be offset by Colorado’s pension and annuity subtraction under 39-22-104(4)(f), C.R.S., capped at $20,000 for taxpayers age 55 to 64 and $24,000 for taxpayers 65 and older. The regulation text (as mirrored by Cornell Law School’s Legal Information Institute, fetched this session) does not give government pensions any larger or separate allowance. |
|---|---|
| Private (employer) pensions | Private employer pensions receive identical treatment to public pensions under the same $20,000 (ages 55-64) or $24,000 (age 65+) subtraction, provided the benefit is paid periodically based on prior personal service or an employer-employee relationship. |
| Federal government pensions (FERS/CSRS) | Federal civil service pensions (FERS/CSRS) qualify for the same age-based pension and annuity subtraction as other pensions; the regulation does not describe a distinct rule for federal civilian retirement income. |
| Military retirement pay | Colorado is reported to allow a separate military retirement benefits subtraction of up to $15,000 for retired servicemembers under age 55 under 39-22-104(4)(y), C.R.S.; servicemembers 55 or older instead use the regular pension and annuity subtraction. Colorado’s own tax.colorado.gov guidance pages returned access errors on every attempt this session, so this figure rests on a Colorado legislative fiscal-note document (bytes retrieved but not text-renderable by this session’s tool) rather than a directly rendered Department of Revenue page, and should be treated as needing a follow-up check against the current-year DOR publication. |
| IRA and 401(k)/403(b) distributions | IRA distributions, distributions from self-employed retirement accounts, and matured privately purchased annuities qualify for the same age-based pension and annuity subtraction as pensions. Premature IRA or self-employed-plan distributions subject to the federal 10 percent penalty do not qualify, but premature distributions from a traditional employer-sponsored 401(k) can still qualify; Roth IRA distributions are excluded from the calculation entirely because they are not federally taxable. |
| General retirement-income exclusion | There is no separate general retirement-income exclusion beyond the pension and annuity subtraction described above; Social Security benefits are folded into related subtraction rules rather than taxed on their own, with a full Social Security subtraction reported for filers 65 and older since tax year 2022, extended to filers 55 to 64 below certain income thresholds starting tax year 2025. This detail could not be confirmed against a directly rendered Colorado Department of Revenue page this session. |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of a pension or IRA withdrawal to take this year, whether a Roth conversion makes sense before or after a move, and how state tax interacts with the rest of your plan, but that does not replace the numbers in your own return.
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Social Security
Colorado folds Social Security into its retirement-income subtraction rather than taxing it as a separate category, with a full exemption reported for most older filers; see the sibling Social Security page for exact age and income rules. Social Security has its own rules in every state; see the full breakdown in how Colorado taxes retirement income generally.
Statute and sources
Governing citation: 39-22-104(4)(f), C.R.S. (pension and annuity subtraction); 39-22-104(4)(y), C.R.S. (military retirement benefits subtraction).
- Cornell Law School LII, Code of Colorado Regulations, Rule 39-22-104(4)(f), Pension and Annuity Subtraction
- Colorado Legislative Council Staff, Tax Expenditure Evaluation: Military Retirement Benefits Deduction (PDF retrieved but not text-renderable this session)
Read September 5, 2026.
Related: how Colorado taxes retirement income generally · does Colorado tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.