Colorado state tax basis is the Federal Adjusted Gross Income (AGI). So you can prepare state tax return only after preparing your federal income taxes. You need to carryforward the Federal AGI to your state tax form. This amount is adjusted for the state income additions, tax deductions, tax credits and state exemptions to figure out the state taxable income. Colorado follow the Joint filing system for married filing joint taxpayers and the incomes of both spouses are added together and taxed as a single amount. The major differences between the tax treatement of various taxes by Fedeal and State Taxes are given below.

Interest/Divident Income: Interest and Divident income from U.S. government bonds are exempt from State Taxes.

Rent Income: Same as federal.

Capital Gain: Capital gain from certain Colorado sources is exempt if held for specified periods.

Unemployment Income: Same as federal

Social Security Benefits: If aged 55-64, up to $20,000/person of federally taxable benefits excluded; up to $24,000/person if 65 or older. Maximum amounts are combined limits for pension income and federally taxed social security.

State Bond Interest: Taxable except Colorado obligations.

Health Savings Accounts: Same as federal.

Disability: Same as federal.

Lottery: Same as federal.

Federal Income Tax: Not deductible.

Other Taxes: Exclusions for contributions to Colorado qualified state tuition programs and for contributions to, and interest earned on, medical savings accounts.

Check other state tax links below.