Colorado Expands Tax Exemption on Social Security Income

Posted on 06/21/24 by Natalie Missakian

En español | More Coloradans will soon be exempt from paying state tax on their Social Security income, thanks to AARP-backed legislation signed into law by Gov. Jared Polis this month.

Currently, only residents 65 and older are fully exempt from the tax. The new law expands that exemption to people 55 to 64 who have an adjusted gross income of $75,000 or less for a single filer or $95,000 for a couple filing jointly, starting with the 2025 tax year.

Under the law, eligible taxpayers will be able to deduct all of their Social Security income from their state taxable income when they file their taxes.

The change in age eligibility means many Coloradans who are receiving benefits at a younger age because of a disability or the death of a spouse can take advantage of the tax break.

“AARP Colorado applauds the bipartisan effort at the legislature and is thrilled that more older Coloradans will benefit from alleviating this tax burden,” said Karen Moldovan, AARP Colorado’s advocacy director.

Moldovan, who joined Polis for a bill-signing ceremony June 6, called the measure “another step forward in improving Colorado’s Social Security taxation landscape.”

Colorado is one of just nine states that will tax some or all Social Security income in 2024. AARP fought for a 2021 law that eliminated the tax for residents 65 and older. AARP will continue to press lawmakers to repeal the tax for all residents, Moldovan said, noting the burden it places on retirees.

AARP has successfully pushed to eliminate the tax in a growing list of states in recent years. Thanks in part to our efforts, Kansas repealed its tax on Social Security income this month, following West Virginia, which passed a law in March to phase out its tax by 2026. AARP also advocated for repeals that took effect this year in Missouri and Nebraska.

Keep up with AARP’s tax coverage and learn more about taxes in Colorado.

Natalie Missakian covers federal and state policy and writes AARP’s Fighting for You Every Day blog. She previously worked as a reporter for the New Haven Register and daily newspapers in Ohio. She has also written for the AARP Bulletin, the Hartford Business Journal and other publications.

Also of Interest:

13 States That Won't Tax Your Retirement Distributions
Tax Audit Triggers You Should Not Ignore
7 Tax Breaks for Retirees

This story is provided by AARP Colorado. Visit the AARP Colorado page for more news, events, and programs affecting retirement, health care, and more.

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