States / Colorado
CO state income tax · checked October 14, 2026
Does Colorado tax tips and overtime?
Colorado doesn’t tax the tips you deduct federally. Overtime is different: starting in 2026 you add the federal overtime deduction back.
| Colorado return | Tips | Overtime |
|---|---|---|
| 2025 | Not taxed (follows federal) | Not taxed (follows federal) |
| 2026 | Not taxed (follows federal) | Taxed |
The details
Colorado starts from federal taxable income, so the federal tips and overtime deductions flowed through on 2025 returns.
HB 25-1296 requires the federal overtime deduction to be added back starting with tax year 2026, so overtime is taxable in Colorado from 2026. There is no add-back for tips.
The federal deductions apply either way. See who qualifies for no tax on tips, how the overtime deduction works, and where both go on Schedule 1-A.
States with the same 2026 treatment
All 50 states and D.C. · California · Connecticut
Questions
Does Colorado tax tips in 2026?
For 2026, Colorado doesn’t tax the qualified tips you deduct on your federal return.
Does Colorado tax overtime in 2026?
For 2026, Colorado taxes overtime in full.
What about my 2025 Colorado return?
For 2025, Colorado doesn’t tax the qualified tips you deduct on your federal return. For 2025, Colorado doesn’t tax the qualified overtime you deduct on your federal return.
Does the federal deduction still apply?
Yes. Whatever your state does, you can still claim the federal deductions on Schedule 1-A if you qualify: up to $25,000 of qualified tips per return and up to $12,500 of qualified overtime ($25,000 joint), phasing down above $150,000 of MAGI ($300,000 joint).