Updated October 5, 2026. Quick answer: Yes. Colorado taxes trust income at a flat 4.4% for 2025, and the Department of Revenue states that “A resident trust is any trust which is administered in Colorado.” A nonresident trust with Colorado source income also files.
How Colorado treats trust income
| Item | What the documents say |
|---|---|
| Treatment | Colorado taxes the income of resident trusts and estates, and of nonresident ones with Colorado source income, through the DR 0105 return. The source says: “A nonresident estate or trust with income from Colorado sources” must file if it is required to file a federal return or has a Colorado tax liability. |
| Who counts as a resident trust | Residency turns on where the trust is administered, and the documents read state no settlor or beneficiary domicile test. The source says: “”Resident trust” means a trust which is administered in this state.” The statute defines a nonresident trust as any other trust. |
| Rate on trust income | The 2025 DR 0105 instructions apply a single rate to Colorado taxable income, and the 2024 statute compilation prints the same rate in words as four and forty one-hundredths percent. The source says: “Multiply the amount on line 11 by 4.4%” to calculate the Colorado normal tax of the estate or trust. |
| Distribution deduction | A resident trust starts from its federal taxable income, and the instructions apportion the distribution deduction for a nonresident trust on Schedule E and tie the Schedules A and B page to any income distribution deduction claimed for federal tax. The source says: “The distribution deduction and the exemption deduction shall be allowed” on line 2 of the Colorado column in the ratio of federal distributable net income from Colorado sources. |
| Nonresident trusts | A nonresident trust is taxed on a share of its tax apportioned to Colorado source income, computed on Schedule E. The source says: “shall be apportioned in the ratio of the Colorado-source federal taxable income” to the total federal taxable income, both modified as provided in the statute. |
| Return to file | Resident and nonresident trusts file Form DR 0105, and the instructions recommend electronic filing through Revenue Online at Colorado.gov/RevenueOnline. |
| Due date | The return and any payment are due on the fifteenth day of the fourth month after year end, which is April 15 for calendar year filers. The source says: “no extension is available for payment.” A six month automatic extension applies to filing only. |
| Nonresident beneficiary withholding | The instructions direct fiduciaries to compute 4.4% of each nonresident beneficiary’s Colorado source income as an amount withheld from the distribution. The source says: “This is the amount to be withheld from the distribution” to the beneficiary and paid to Colorado as estimated tax on Form 104BEP. |
A $10,000 example
A trust with $10,000 of taxable income that it keeps, rather than distributes, is taxed at 4.4%, computed as $10,000 x 4.4% = $440, before any deduction or exemption the state allows. Federal tax on the trust’s income still applies.
Income the trust passes out to a beneficiary is handled as the distribution deduction row above describes.
What changes in 2026
The latest documents read print no 2026 change to how trust income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The federal brackets a trust faces are laid out in trust tax brackets versus individual brackets, and capital gains that a trust keeps are covered in capital gains stay in the trust. The IRS explains the federal return in the About Form 1041 page.
Related: how Colorado taxes retirement income, whether Colorado taxes pensions, what a living trust costs in Colorado, and federal trust tax brackets.
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Answer againSources
- DR 0105 Colorado Fiduciary Income Tax Return and Filing Guide, 2025 (Colorado Department of Revenue): https://tax.colorado.gov/sites/tax/files/documents/DR0105_2025.pdf
- Colorado Revised Statutes 2024, Title 39 (Colorado Office of Legislative Legal Services): https://leg.colorado.gov/sites/default/files/images/olls/crs2024-title-39.pdf
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.