2018 Colorado Revised Statutes
Title 39 - Taxation
Specific Taxes
Article 22 - Income Tax
Part 1 - General
§ 39-22-104. Income tax imposed on individuals, estates, and trusts - single rate - legislative declaration - definitions - repeal
(1) Subject to subsection (2) of this section, with respect to taxable years commencing on or after January 1, 1987, but prior to January 1, 1999, a tax of five percent is imposed on the federal taxable income, as determined pursuant to section 63 of the internal revenue code, of every individual, estate, and trust.
(1.5) Subject to subsection (2) of this section, with respect to taxable years commencing on or after January 1, 1999, but prior to January 1, 2000, a tax of four and three-quarters percent is imposed on the federal taxable income, as determined pursuant to section 63 of the internal revenue code, of every individual, estate, and trust.
(1.7) Except as otherwise provided in section 39-22-627, subject to subsection (2) of this section, with respect to taxable years commencing on or after January 1, 2000, a tax of four and sixty-three one hundredths percent is imposed on the federal taxable income, as determined pursuant to section 63 of the internal revenue code, of every individual, estate, and trust.
(2) Prior to the application of the rate of tax prescribed in subsection (1), (1.5), or (1.7) of this section, the federal taxable income shall be modified as provided in subsections (3) and (4) of this section.
(3) There shall be added to the federal taxable income:
(a) Any federal net operating loss deduction carried over from a taxable year beginning prior to January 1, 1987;
(b) An amount equal to the interest income which is excluded from gross income for federal income tax purposes pursuant to section 103 (a) of the internal revenue code less amortization of premium on obligations of any state or any political subdivision thereof, other than interest income on obligations of the state of Colorado or any political subdivision thereof which are issued on or after May 1, 1980, and other than interest income on obligations of the state of Colorado or any political subdivision thereof which were issued prior to May 1, 1980, to the extent that such interest is specifically exempt from income taxation under the laws of the state of Colorado authorizing the issuance of such obligations. The amount of such interest shall be the net amount after reduction by the amount of the deductions related thereto which are required by the internal revenue code to be allocated to such classes of interest.
(c) Repealed.
(d)
(I) For income tax years beginning on and after January 1, 1992, for those taxpayers who deduct state income taxes pursuant to section 164 (a)(3) of the internal revenue code, an amount equal to the deduction claimed; except that such amount shall be limited to the amount required to reduce the federal itemized amount computed under section 161 of the internal revenue code to the amount of the standard deduction allowable under section 63 (c) of the internal revenue code.
(II) For income tax years beginning on or after January 1, 2000, for two individuals whose federal taxable income is determined on a joint federal return and who deduct state income taxes pursuant to section 164 (a)(3) of the internal revenue code, an amount equal to the deduction claimed; except that such amount shall be limited to the amount required to reduce the federal itemized amount computed under section 161 of the internal revenue code to an amount equal to double the amount of the basic standard deduction allowable under section 63 (c)(2) of the internal revenue code in the case of an individual federal return for an individual who is not the head of a household plus any additional standard deduction allowable under section 63 (c)(3) of the internal revenue code, if applicable.
(e)
(I) Any expenses incurred by a taxpayer with respect to expenditures made at, or payments made to, a club licensed pursuant to section 44-3-418 that has a policy to restrict membership on the basis of sex, sexual orientation, marital status, race, creed, religion, color, ancestry, or national origin. Any such club shall provide on each receipt furnished to a taxpayer a printed statement as follows:
The expenditures covered by this receipt are
nondeductible for state income tax purposes.
(II) The general assembly finds, determines, and declares that the people of the state of Colorado desire to promote and achieve tax equity and fairness among all the state's citizens and further desire to conform to the public policy of nondiscrimination. The general assembly further declares that the provisions of this paragraph (e) are enacted for these reasons and for no other purpose.
(f) Any amount withdrawn from a medical savings account pursuant to section 39-22-504.7 (3)(b)(II) or (3)(b)(III);
(g) For the income tax years commencing on or after January 1, 2000, an amount equal to the charitable contribution deduction allowed by section 170 of the internal revenue code to the extent such deduction includes a contribution of real property to a charitable organization for a conservation purpose for which an income tax credit is claimed pursuant to section 39-22-522;
(h) Repealed.
(i) An amount equal to a business expense for labor services that is deducted pursuant to section 162 (a)(1) of the internal revenue code but that is prohibited from being claimed as a deductible business expense for state income tax purposes pursuant to section 39-22-529;
(j) For income tax years commencing on or after January 1, 2015, but before January 1, 2020, an amount equal to the charitable contribution deduction allowed by section 170 of the internal revenue code to the extent such deduction includes a food contribution during the tax year to a hunger-relief charitable organization for which an income tax credit is claimed pursuant to section 39-22-536;
(k) The amount recaptured in accordance with section 39-22-4705 (2).
(4) There shall be subtracted from federal taxable income:
(a) An amount equal to any interest income on obligations of the United States and its possessions to the extent included in federal taxable income;
(a.5) For income tax years commencing on and after January 1, 1990, an amount equal to any interest income earned on Colorado investment deposits issued by qualified financial institutions pursuant to article 37 of title 11, C.R.S., as that article existed prior to its repeal on July 1, 2004, to the extent included in federal taxable income, but not to exceed twenty thousand dollars in any taxable year;
(b) To the extent included in federal adjusted gross income, the portion of any gain or loss from the sale or other disposition of property having a higher adjusted basis for Colorado income tax purposes than for federal income tax purposes on the date such property was sold or disposed of in a transaction in which gain or loss was recognized for purposes of federal income tax that does not exceed such difference in basis;
(c) The amount necessary to prevent the taxation under this article of any annuity or other amount of income or gain which was properly included in income or gain and was taxed under the laws of this state for a prior tax year, to the taxpayer, or to a decedent by reason of whose death the taxpayer acquired the right to receive the income or gain, or to a trust or estate from which the taxpayer received the income or gain;
(d) The net operating loss deduction allowed under section 39-22-504 to the extent carried over from a taxable year beginning prior to January 1, 1987;
(e) The amount of any refund or credit for overpayment of income taxes imposed by this state or any other taxing jurisdiction to the extent included in gross income for federal income tax purposes but not previously allowed as a deduction for Colorado income tax purposes;
(f)
(I) For income tax years commencing on or after January 1, 1989, amounts received as pensions or annuities from any source by any individual who is fifty-five years of age or older at the close of the taxable year, to the extent included in federal adjusted gross income;
(II) For income tax years commencing on or after January 1, 1989, amounts received as pensions or annuities from any source by any individual who is less than fifty-five years of age at the close of the taxable year if such benefits are received because of the death of the person originally entitled to receive such benefits and only to the extent such benefits are included in federal adjusted gross income;
(III) For income tax years commencing on or after January 1, 1989, amounts subtracted under this paragraph (f) shall not exceed twenty thousand dollars per tax year; except that, for income tax years commencing on or after January 1, 2000, amounts subtracted under subparagraph (I) of this paragraph (f) shall not exceed twenty-four thousand dollars per tax year for any individual who is sixty-five years of age or older at the close of the taxable year. For the purpose of determining the exclusion allowed by this paragraph (f), in the case of a joint return, social security benefits included in federal taxable income shall be apportioned in a ratio of the gross social security benefits of each taxpayer to the total gross social security benefits of both taxpayers. For the purposes of this paragraph (f), "pensions and annuities" means retirement benefits that are periodic payments attributable to personal services performed by an individual prior to his or her retirement from employment and that arise from an employer-employee relationship, from service in the uniformed services of the United States, or from contributions to a retirement plan which are deductible for federal income tax purposes. "Pensions and annuities" includes distributions from individual retirement arrangements and self-employed retirement accounts to the extent that such distributions are not deemed to be premature distributions for federal income tax purposes, amounts received from fully matured privately purchased annuities, social security benefits, and amounts paid from any such sources by reason of permanent disability or death of the person entitled to receive the benefits.
(g) Repealed.
(h) Any amount contributed to a medical savings account by an employer pursuant to section 39-22-504.7 (2)(e), to the extent such amount is not claimed as a deduction on the taxpayer's federal tax return;
(i)
(I) For income tax years commencing on or after January 1, 1998, an amount equal to the portion attributable to interest and other income of a distribution under a qualified state tuition program that is distributed for the purpose of meeting qualified higher education expenses of a designated beneficiary, to the extent such amount is included in federal taxable income;
(II) For income tax years commencing on or after January 1, 2001, an amount equal to all payments or contributions made during the taxable year under an advance payment contract, to a savings trust account, or otherwise in connection with a qualified state tuition program established by collegeinvest created in section 23-3.1-203, C.R.S., or to a qualified state tuition program that is affiliated with an educational institution in the state and that is established and maintained pursuant to section 529 of the internal revenue code or any successor section;
(III) No exclusion shall be allowed pursuant to this paragraph (i) to the extent that such payments or contributions are excluded from the taxpayer's federal taxable income for the taxable year. Any exclusion taken under this paragraph (i) shall be subject to recapture in the taxable year or years in which any distribution, refund, or any other withdrawal is made pursuant to an advance payment contract, from a savings trust account, or otherwise in connection with a qualified state tuition program for any reason other than:
(A) To pay qualified higher education expenses;
(B) As a result of the beneficiary's death or disability; or
(C) As a result of receiving a scholarship and as long as the aggregate amount of distributions, refunds, or withdrawals made pursuant to this sub-subparagraph (C) do not exceed the amount of the scholarship provided during such tax year.
(IV) As used in this paragraph (i), "designated beneficiary" means a designated beneficiary as defined in section 529 (e)(1) of the internal revenue code, "qualified state tuition program" means a qualified state tuition program as defined in section 529 (b) of the internal revenue code, and "qualified higher education expenses" means qualified higher education expenses as defined in section 529 (e)(3) of the internal revenue code.
(j) For income tax years commencing on or after January 1, 2000, for two individuals whose federal taxable income is determined on a joint federal return and who claim the basic standard deduction allowable under section 63 (c)(2) of the internal revenue code, an amount equal to the difference between an amount equal to double the amount of the basic standard deduction allowable under section 63 (c)(2) of the internal revenue code in the case of an individual federal return for an individual who is not the head of a household and the amount of the basic standard deduction allowable under section 63 (c)(2) of the internal revenue code in the case of a joint federal return;
(k) For income tax years commencing on or after January 1, 2000, for two individuals whose federal taxable income is determined on a joint federal return and who claim itemized deductions in an amount that is greater than the amount of the basic standard deduction allowable under section 63 (c)(2) of the internal revenue code plus any additional standard deduction allowable under section 63 (c)(3) of the internal revenue code, if applicable, in the case of a joint federal return, but less than double the amount of the basic standard deduction allowable under section 63 (c)(2) of the internal revenue code plus any additional standard deduction allowable under section 63 (c)(3) of the internal revenue code, if applicable, in the case of an individual federal return for an individual who is not the head of a household, an amount equal to the difference between an amount equal to double the amount of such basic standard deduction allowable in the case of an individual federal return for an individual who is not the head of a household plus any additional standard deduction allowable to either individual and the amount of the itemized deductions claimed by the resident individuals;
(l) and (l.5) Repealed.
(m)
(I) Except as provided in subparagraph (VII) of this paragraph (m), for any income tax year commencing on or after January 1, 2001, for any individual who claims the basic standard deduction allowed under section 63 (c)(2) of the internal revenue code on the individual's federal return and, therefore, cannot claim an itemized deduction for charitable contributions pursuant to section 170 of the internal revenue code, an amount equal to the amount of any deduction based upon the aggregate amount of charitable contributions in excess of five hundred dollars that the individual could have claimed pursuant to section 170 of the internal revenue code if the individual had not claimed the basic standard deduction.
(II) Any state income tax modification allowed pursuant to the provisions of subparagraph (I) of this paragraph (m) shall be published in rules promulgated by the executive director in accordance with article 4 of title 24, C.R.S., and shall be included in income tax forms for that taxable year.
(III) to (VI) Repealed.
(VII) For any income tax year commencing on or after January 1, 2015, but before January 1, 2020, any individual who claims an income tax credit allowed in section 39-22-536 may not claim the deduction set forth in this paragraph (m) for the food contribution to the hunger-relief charitable organization.
(n) Repealed.
(n.5)
(I)
(A) For income tax years commencing on or after January 1, 2014, but prior to January 1, 2017, and for income tax years commencing on or after January 1, 2020, but prior to January 1, 2025, an amount equal to fifty percent of a landowner's costs incurred in performing wildfire mitigation measures in that income tax year on his or her property located within the state; except that the amount of the deduction claimed in an income tax year shall not exceed two thousand five hundred dollars or the total amount of the landowner's federal taxable income for the income tax year for which the deduction is claimed, whichever is less.
(A.5) For income tax years commencing on or after January 1, 2017, but prior to January 1, 2020, an amount equal to one hundred percent of a landowner's costs incurred in performing wildfire mitigation measures in that income tax year on his or her property located within the state; except that the amount of the deduction claimed in an income tax year shall not exceed two thousand five hundred dollars or the total amount of the landowner's federal taxable income for the income tax year for which the deduction is claimed, whichever is less.
(B) In the case of two taxpayers filing a joint return, the amount subtracted from federal taxable income shall not exceed two thousand five hundred dollars in any taxable year. In the case of two taxpayers who may legally file a joint return but actually file separate returns, only one of the taxpayers may claim the deduction specified in this paragraph (n.5).
(C) In the case of real property owned as tenants in common, the deduction allowed pursuant to this paragraph (n.5) shall only be allowed to one of the individuals of the ownership group.
(II) A landowner who performs wildfire mitigation measures on his or her real property located within the state may claim the deduction authorized by this paragraph (n.5) if the wildfire mitigation measures are performed in a wildland-urban interface area.
(III) For purposes of this paragraph (n.5):
(A) "Colorado state forest service" means the Colorado state forest service identified in section 23-31-302, C.R.S.
(B) "Costs" means any actual out-of-pocket expense incurred and paid by the landowner, documented by receipt, for performing wildfire mitigation measures. "Costs" do not include any inspection or certification fees, in-kind contributions, donations, incentives, or cost sharing associated with performing wildfire mitigation measures. "Costs" do not include expenses paid by the landowner from any grants awarded to the landowner for performing wildfire mitigation measures.
(C) "Landowner" means any owner of record of private land located within the state, including any easement, right-of-way, or estate in the land, and includes the heirs, successors, and assigns of such land, and shall not include any partnership, S corporation, or other similar entity that owns private land as an entity.
(D) "Wildfire mitigation measures" means the creation of a defensible space around structures; the establishment of fuel breaks; the thinning of woody vegetation for the primary purpose of reducing risk to structures from wildland fire; or the secondary treatment of woody fuels by lopping and scattering, piling, chipping, removing from the site, or prescribed burning; so long as such activities meet or exceed any Colorado state forest service standards or any other applicable state rules.
(IV) This paragraph (n.5) is repealed, effective January 1, 2026.
(o) For income tax years commencing on or after January 1, 2011, an amount equal to any amount received as employer matching contributions to an adult learner's individual trust account or savings account made pursuant to part 3 of article 3.1 of title 23, C.R.S.;
(p) For income tax years commencing on or after January 1, 2014, any amount received as a grant from the military family relief fund created in section 28-3-1502, C.R.S., to the extent that it is included in federal taxable income;
(q) For income tax years commencing on or after January 1, 2013, an amount equal to any amount received as compensation for an exonerated person pursuant to section 13-65-103, C.R.S., on or after January 1, 2014, except as to those portions of the judgment awarded as attorney fees for bringing a claim under such section;
(r) For income tax years commencing on or after January 1, 2014, if a taxpayer is licensed under the "Colorado Medical Marijuana Code", article 11 of title 44, an amount equal to any expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed by section 280E of the internal revenue code because marijuana is a controlled substance under federal law;
(s) For income tax years commencing on or after January 1, 2014, if a taxpayer is licensed under the "Colorado Retail Marijuana Code", article 12 of title 44, an amount equal to any expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed by section 280E of the federal internal revenue code because marijuana is a controlled substance under federal law;
(t)
(I) For income tax years commencing on or after January 1, 2015, compensation that would be subject to withholding under section 39-22-604, received by a nonresident individual for performing disaster-related work in the state during a disaster period.
(II) For purposes of this paragraph (t):
(A) "Declared state disaster emergency" means a disaster or emergency event for which the governor has issued an executive order declaring a disaster emergency.
(B) "Disaster period" means a period that begins with the day of the governor's executive order declaring a state disaster emergency and that extends for a period of sixty calendar days after the expiration of the governor's executive order.
(C) "Disaster-related work" means repairing, renovating, installing, building, or rendering services that relate to infrastructure that has been damaged, impaired, or destroyed by a declared state disaster emergency or providing emergency medical, firefighting, law enforcement, hazardous material, search and rescue, or other emergency service related to a declared state disaster emergency.
(D) "Infrastructure" means property and equipment owned or used by communications networks, gas and electric utilities, water pipelines, and public roads and bridges and related support facilities that service multiple customers or citizens, including but not limited to real and personal property such as buildings, offices, lines, poles, pipes, structures, and equipment.
(u) For income tax years commencing on or after January 1, 2016, an amount equal to any compensation received for active duty service in the armed forces of the United States by an individual who has reacquired residency in the state pursuant to section 39-22-110.5, to the extent that the compensation is included in federal taxable income;
(v)
(I) The general assembly hereby finds and declares that:
(A) The state is seeing a continued trend of aging farmers and ranchers;
(B) The current average age of a family farm or ranch operator in Colorado is fifty-nine;
(C) There is a national and local focus on the benefits of local foods, and at the same time a new generation of farmer is emerging, but the beginning farmers or ranchers are having trouble finding land to lease; and
(D) The income tax deduction allowed in this paragraph (v) is intended to be an incentive for aging farmers or ranchers to lease their agricultural assets to beginning farmers or ranchers in order to give the beginners a chance to get started in the industry.
(II) For income tax years beginning on or after January 1, 2017, but before January 1, 2020, if a qualified taxpayer enters into a qualified lease with an eligible beginning farmer or rancher, an amount specified in a deduction certificate issued by the Colorado agricultural development authority that is equal to twenty percent of the lease payments received from an eligible beginning farmer or rancher as specified in the qualified lease, not to exceed the qualified taxpayer's income and not to exceed the amount specified in subparagraph (III) of this paragraph (v).
(III) The Colorado agricultural development authority may issue more than one deduction certificate to each qualified taxpayer if such qualified taxpayer enters into more than one qualified lease with more than one eligible beginning farmer or rancher; except that the total amount specified in all deduction certificates issued to a qualified taxpayer may not exceed twenty-five thousand dollars per income tax year for a maximum of three income tax years, and except that the Colorado agricultural development authority shall not issue more than the number of deduction certificates per income tax year set forth in section 35-75-107 (1)(u), C.R.S.
(IV) For purposes of this paragraph (v):
(A) "Agricultural asset" means land, crops, livestock and livestock facilities, farm equipment and machinery, grain storage, or irrigation equipment.
(B) "Colorado agricultural development authority" means the Colorado agricultural development authority created in section 35-75-104, C.R.S.
(C) "Deduction certificate" means a certificate issued by the Colorado agricultural development authority certifying that a qualified taxpayer qualifies for the income tax deduction authorized in this section and specifying the amount of the deduction allowed.
(D) "Eligible beginning farmer or rancher" means a farmer or rancher residing in the state who has a net worth of less than two million dollars, will provide the majority of the daily physical labor and management on the qualified taxpayer's agricultural asset or will use the qualified taxpayer's agricultural asset the majority of the time, has plans to farm or ranch full-time, has not been engaged in farming or ranching for more than ten years, has farming or ranching experience or education, and has participated in a financial management educational program approved by the Colorado agricultural development authority.
(E) "Qualified lease" means a lease entered into between a qualified taxpayer and an eligible beginning farmer or rancher for the qualified taxpayer's agricultural asset that is approved by the Colorado agricultural development authority and has a duration of at least three years.
(F) "Qualified taxpayer" means a taxpayer, including a partnership, S corporation, or other similar pass-through entity, who owns an agricultural asset located in the state.
(V) To claim the deduction allowed in this paragraph (v), the qualified taxpayer shall attach a copy of the deduction certificate issued by the Colorado agricultural development authority to the taxpayer's return. No tax deduction is allowed under this paragraph (v) unless the taxpayer provides the copy of the deduction certificate.
(VI) The Colorado agricultural development authority shall, in a sufficiently timely manner to allow the department of revenue to process returns claiming the deduction allowed by this section, provide the department of revenue with an electronicreport of the qualified taxpayers receiving a deduction certificate as allowed in this section for the preceding calendar year that includes the following information:
(A) The qualified taxpayer's name;
(B) The qualified taxpayer's social security number; and
(C) The amount of the deduction allowed in this section.
(VII) This paragraph (v) is repealed, effective December 31, 2023.
(w)
(I) For income tax years commencing on or after January 1, 2017, to the extent included in federal taxable income and as permitted under part 47 of this article, an amount equal to any interest and other income earned on the investment of the money in a first-time home buyer savings account during the taxable year.
(II) Any exclusion taken under subparagraph (I) of this paragraph (w) is subject to recapture under paragraph (k) of subsection (3) of this section as specified in section 39-22-4705.
(x)
(I) Except as otherwise provided in subsection (4)(x)(II) of this section, for income tax years commencing on or after January 1, 2018, all income earned, to the extent included in federal taxable income except as otherwise provided in subsection (4)(x)(IV) of this section, as a direct result of winning a medal while competing for the United States of America at the Olympic games.
(II) The subtraction provided for in subsection (4)(x)(I) of this section does not apply to a taxpayer whose federal adjusted gross income for the income tax year in which the taxpayer has income earned as a direct result of winning a medal, as determined prior to application of this subsection (4)(x), exceeds one million dollars or, if the taxpayer's filing status is married filing separately, exceeds five hundred thousand dollars.
(III) As used in this subsection (4)(x):
(A) "Income earned as a direct result of winning a medal" includes both the monetary value of the medal itself and any monetary award given for winning the medal by the United States Olympic committee or any sport-specific national governing body or Paralympic sport organization but does not include endorsement income or nonmonetary benefits.
(B) "Olympic games" means the summer and winter Olympic games and the summer and winter Paralympic games.
(IV) The monetary value of any medal won while competing for the United States of America at either the summer or winter Olympic games or the summer or winter Paralympic games shall be subtracted from federal taxable income regardless of whether or not said monetary value is included in federal taxable income.
(y)
(I) For income tax years commencing on or after January 1, 2019, but prior to January 1, 2024, an amount equal to a qualified individual's military retirement benefits included in federal adjusted gross income, but not to exceed the following amounts:
(A) Four thousand five hundred dollars for income tax years commencing on or after January 1, 2019, but prior to January 1, 2020;
(B) Seven thousand five hundred dollars for income tax years commencing on or after January 1, 2020, but prior to January 1, 2021;
(C) Ten thousand dollars for income tax years commencing on or after January 1, 2021, but before January 1, 2022; or
(D) Fifteen thousand dollars for income tax years commencing on or after January 1, 2022, but before January 1, 2024.
(II) As used in this subsection (4)(y):
(A) "Military retirement benefits" means any retirement benefits received as a result of the individual's service in the armed forces of the United States.
(B) "Qualified individual" means an individual who is under fifty-five years of age at the close of the taxable year.
(5) Any person who is required by the terms of this article to file a return whose only activities in Colorado consist of making sales, who does not own or rent real estate within the state of Colorado, and whose annual gross sales in or into this state amount to not more than one hundred thousand dollars may elect to pay a tax of one-half of one percent of his annual gross receipts derived from sales in or into Colorado in lieu of paying an income tax.
