The Colorado Department of Revenue is updating Form DR 1098, Colorado Withholding Worksheet for Employers, for Tax Year 2027. The state income tax withholding formula may be impacted by the outcome of measures on the Colorado ballot this year. Therefore, the Department has prepared two draft versions of the updated form, Draft A and Draft B, to address these possible impacts. The Department will publish the final version of the form later this year.
The draft forms include the following updates:
- The default allowances now include an amount for an expected federal filing status of head of household.
- Several line numbers are adjusted in order to make a separate section for applying the tax rate.
- After applying the tax rate, two new lines are inserted to account for updates to Form DR 0004 that separate an employee’s tax credit allowances from their deduction allowances.
- Draft B includes a different tax calculation to account for graduated tax rates.
The Department will make another announcement when the final version of the form is released and ready for use. For additional information and resources regarding Colorado withholding, go to Tax.Colorado.gov/Withholding-Tax.