Colorado LLC State Income Tax — 4.4% Flat Rate Guide

Colorado imposes a flat 4.4% state income tax on all taxable income, including LLC pass-through income reported by members. This page explains how the state income tax applies specifically to Colorado LLCs. For the complete tax picture, see our full Colorado LLC tax guide. For formation information, see how to form a Colorado LLC.

Colorado's Flat Income Tax Rate

Colorado's income tax rate is 4.4% as of tax year 2024 and forward. This rate was reduced from 4.55% by Proposition 121, approved by voters in November 2022, effective for the 2024 tax year.

Key characteristics:

• Flat rate — no brackets, no progressive scale
• Same 4.4% whether your LLC earns $10,000 or $10,000,000
• Applies equally to all filing statuses (single, married, etc.)
• Starts with federal taxable income, then applies Colorado adjustments

How It Applies to Colorado LLCs

Single-member LLC (disregarded entity):

• Your LLC's net income flows to Schedule C on your federal return
• Colorado taxes this income at 4.4% on your personal return (Form DR 0104)
• No separate LLC-level state filing required

Multi-member LLC (partnership):

• LLC files Colorado Form DR 0106 (Colorado Partnership Return)
• Each member receives a Colorado K-1 showing their allocated share
• Members report their share on individual Form DR 0104
• Tax: 4.4% on their allocated LLC income

LLC with S-corp election:

• LLC files Colorado S-corporation return
• Pass-through income taxed at 4.4% on each shareholder-member's return
• Reasonable salary is subject to Colorado income tax withholding

LLC with C-corp election:

• LLC pays Colorado corporate income tax at 4.4% at the entity level (Form DR 0112)
• Dividends distributed to members are taxed again on their personal returns at 4.4%

Colorado Income Tax vs Other States

Colorado's 4.4% flat rate is moderate — lower than California's top rate but higher than states with no income tax. The flat structure means you know exactly what percentage the state takes regardless of how much your LLC earns.

Colorado-Specific Deductions and Credits

Colorado starts with federal taxable income and allows certain subtractions:

• State income tax refund subtraction — If you received a Colorado refund and reported it federally, you can subtract it
• 529 plan contribution deduction — Up to $20,000 per taxpayer for contributions to a Colorado 529 (CollegeInvest)
• TABOR refund — Colorado's Taxpayer Bill of Rights sometimes results in refunds when state revenue exceeds limits
• Enterprise Zone credits — For businesses operating in designated economically distressed areas (investment credits, hiring credits, training credits)
• Advanced Industry Investment Tax Credit — For LLCs in aerospace, bioscience, electronics, energy, or IT
• Child care contribution credit — For LLCs that provide child care or contribute to child care facilities

Filing Requirements

Who must file:

• All Colorado residents with gross income above the federal filing threshold
• Non-residents with Colorado-source LLC income
• Part-year residents with Colorado-source income

Due date: April 15 (same as federal; extended to October 15 with valid extension)

Forms:

• Individuals: Form DR 0104 (Colorado Individual Income Tax Return)
• Partnerships/multi-member LLCs: Form DR 0106 (Colorado Partnership Return)
• S-corporations: Form DR 0106 or appropriate S-corp return
• C-corporations: Form DR 0112

Filing portal: Colorado Department of Revenue at colorado.gov/tax or Revenue Online (colorado.gov/revenueonline)

Quarterly Estimated Payments

If your LLC income will result in owing $1,000+ in Colorado tax, you must make quarterly estimated payments using Form DR 0104EP. See our quarterly estimated tax guide for due dates and calculation methods.

Non-Resident Members

If your Colorado LLC has members who live in other states:

• They owe Colorado income tax on their share of Colorado-source LLC income
• They file Colorado Form DR 0104 as non-residents
• Colorado participates in reciprocal agreements with some states to avoid double taxation
• Members may claim a credit on their home state return for taxes paid to Colorado

FAQ

What is Colorado's income tax rate for 2025-2026?

4.4% flat. This rate took effect for tax year 2024 and remains in effect unless voters approve a further change.

Do I still owe Colorado income tax if my LLC loses money?

No. If your LLC has a net loss, there's no Colorado income tax on that negative amount. The loss may carry forward to offset future Colorado income (following federal NOL rules).

How does Colorado's flat tax compare for high earners?

Favorably. A Colorado LLC member earning $500,000 pays the same 4.4% as someone earning $50,000. In California, that same $500,000 would face a 9.3% rate (potentially up to 13.3% over $1M). Colorado's flat rate benefits higher earners significantly.

Does Colorado tax capital gains differently?

No. Capital gains are included in federal taxable income and taxed at the same 4.4% flat Colorado rate. There's no separate capital gains rate in Colorado.

Is there a local income tax in addition to the state tax?

No. Unlike some states (Indiana charges county income tax, Ohio has municipal income taxes), Colorado does not impose local income taxes on top of the state rate. The 4.4% is the complete state/local income tax burden.