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Individual Income Tax | Information for Retirees

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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.

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Retired Military Servicemembers

If a retired servicemember is under 55 years of age at the end of the tax year, they may claim a subtraction for military retirement benefits included in their federal taxable income. The subtraction for tax year 2022 is limited to $15,000 and can be claimed on lines 7 or 8 of the 2022 Subtractions from Income Schedule (DR 0104AD).

If a retired servicemember is 55 years of age or older at the end of the tax year, they do not qualify for the military retirement subtraction, but they may claim the subtraction described earlier on this page for social security benefits, pensions, and annuities included in their federal taxable income. 

For more information on these subtractions, visit the Retired Servicemembers web page and review the guidance publication Income Tax Topics: Military Servicemembers.

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Retired Railroad Employees

Federal law exempts railroad retirement benefits from state income taxes. The railroad retirement benefits subtraction is allowed on line 14 of the 2022 Subtractions from Income Schedule (DR 0104AD) for any railroad retirement benefits reported on Form RRB-1099 or Form RRB-1099-R and included in a taxpayer’s federal taxable income. For more information, review Income Tax Topics: Social Security, Pensions, and Annuities.