Individual Income Tax | Information for Retirees

Retirement Pension or Annuity Subtraction

Qualifications

Colorado allows a pension/annuity subtraction for:

• Taxpayers who are at least 55 years of age as of the last day of the tax year
• Beneficiaries of any age (such as a widowed spouse or orphan child) who are receiving a pension or annuity because of the death of the person who earned the pension

Subtraction Amounts

• Qualified taxpayers who are under age 65 as of the last day of the tax year can subtract the smaller of $20,000 or the taxable pension/annuity income included in federal taxable income.
• Taxpayers who are 65 years of age or older as of the last day of the tax year can subtract the smaller of $24,000 or the taxable pension/annuity income included in federal taxable income.
  • Note: For taxpayers aged 65 or older, there is an exception to this limitation for tax years 2022 and later. If the taxpayer's social security benefits included in their federal taxable income exceed $24,000, they can subtract the full amount of those social security benefits on their Colorado return. For tax year 2022 there are separate lines on form DR 0104AD specifically for the subtraction of social security benefits. 

Qualifying taxpayers may claim the subtraction for social security benefits, pensions, or annuities on lines 3-6 of the 2022 Subtractions from Income Schedule (DR 0104AD).

For more information, review the Income Tax Topics: Social Security, Pensions, and Annuities guidance publication.