summary
Introduced
02/05/2025
02/05/2025
In Committee
02/05/2025
02/05/2025
Crossed Over
Passed
Dead
02/27/2025
02/27/2025
Introduced Session
2025 Regular Session
Bill Summary
Current law allows any individual to deduct amounts, up to certain caps based on the individual's age, received as pensions or annuities from any source, to the extent included in federal adjusted gross income. Notwithstanding the caps on the deduction for amounts received as pensions or annuities from other sources, current law allows any individual who is 65 years of age or older at the close of a taxable year to subtract the total amount of social security benefits that the individual received from the individual's federal taxable income, to the extent those benefits were included in federal taxable income, when determining the individual's state taxable income. Beginning January 1, 2025, this subtraction is also allowed to any individual who is 55 years of age or older and has an adjusted gross income for the applicable tax year that is less than or equal to $75,000 if filing individually or $95,000 if filing jointly. For income tax years commencing on or after January 1, 2026, the bill removes all caps on the deduction for amounts received as pensions and annuities and allows any individual, regardless of age or income, to subtract the total amount that the individual received as pension or annuity income from the individual's federal taxable income, to the extent that income was included in federal taxable income, when determining the individual's state taxable income.
AI Summary
This bill modifies Colorado's state income tax regulations regarding pension and annuity deductions, expanding tax relief for retirees. Currently, individuals 65 and older can subtract their total social security benefits from taxable income, and starting January 1, 2025, this will be extended to individuals 55 and older with adjusted gross incomes under $75,000 (for individual filers) or $95,000 (for joint filers). Beginning January 1, 2026, the bill removes all previous caps on pension and annuity deductions, allowing any individual 55 or older to subtract the full amount of pension or annuity income from their federal taxable income when calculating state taxable income. The bill defines "pensions and annuities" broadly, including retirement benefits from employer-employee relationships, military service, retirement plans, individual retirement arrangements, social security benefits, and disability or death payments. The legislation also requires the Department of Revenue and State Auditor to track and measure the effectiveness of these tax expenditures by monitoring the total amount of pension and annuity benefits subtracted from taxable income. The bill will take effect after the standard 90-day legislative period, with a potential referendum vote in November 2026 if challenged.
Committee Categories
Military Affairs and Security
Sponsors (2)
Last Action
Senate Committee on State, Veterans, & Military Affairs Postpone Indefinitely (on 02/27/2025)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://leg.colorado.gov/bills/sb25-136 |
| Fiscal Note FN2 | https://leg.colorado.gov/sites/default/files/documents/2025A/bills/fn/2025a_sb136_f1.pdf |
| Fiscal Note FN1 | https://leg.colorado.gov/sites/default/files/documents/2025A/bills/fn/2025a_sb136_00.pdf |
| BillText | https://leg.colorado.gov/sites/default/files/documents/2025A/bills/2025a_136_01.pdf |
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