California vs Colorado: Taxes & Take-Home Pay 2026

California vs Colorado: flat tax on a federal base

Colorado charges a flat 4.40% on Colorado taxable income, which starts from federal taxable income. That means the federal standard deduction ($16,100 single, $32,200 joint) works as Colorado’s standard deduction. California’s own standard deduction is only $5,900, and its rates run to 13.3%.

The result is a Colorado bill well below California’s at most incomes. A single filer reaches California’s 9.3% bracket at $75,197 of taxable income, more than double Colorado’s flat rate on every dollar above it.

Worked example: married couple, two children, $130,000

Joint return, standard deductions, no pre-tax deductions. State credits for children are not included.

• Colorado taxable income equals federal taxable income: $97,800 × 4.40% = $4,303.
• The family keeps -$421 more a year in Colorado.
• A pre-tax 401(k) contribution lowers federal taxable income and therefore Colorado tax too; the same is true in California.

FAMLI vs SDI, and Denver’s head tax

Colorado’s paid leave program, FAMLI, lets employers deduct up to half of the premium from pay: 0.44% of wages up to $184,500. California’s SDI is 1.3% with no cap. At $130,000 that is $572 against $1,690.

Colorado has no percentage-based local income tax, but Denver charges an Occupational Privilege Tax of $5.75 a month to employees who earn at least $500 a month there, and a few nearby cities have smaller flat amounts.

Sales tax: low state rate, high local rates

Colorado’s 2.9% state rate is the lowest of any state with a sales tax, but local governments add an average of 4.99%. The average combined rate is 7.89%, compared with 9.03% in California. Denver’s combined rate is 9.15%, close to San Jose’s 10.0%.

Retirees: Colorado’s pension and Social Security subtractions

California taxes pensions and IRA withdrawals in full and exempts Social Security. Colorado lets taxpayers aged 55 to 64 subtract up to $20,000 of pension and annuity income, a category that includes PERA benefits, IRA distributions, tax-deferred savings plans and Social Security, and those 65 and older up to $24,000 each. Taxpayers 65 and older, and those 55 to 64 with AGI of no more than $75,000 (single) or $95,000 (joint), can instead subtract all of their federally taxable Social Security if that is larger.

Example: a 60-year-old single retiree draws $40,000 from an IRA. In Colorado, $20,000 is subtracted and the federal standard deduction covers most of the rest, leaving Colorado tax of $172. California taxes the full $40,000: $548. For a married couple both over 65, each spouse’s $24,000 subtraction applies separately, so $48,000 of pension income split evenly can be fully sheltered.

A 2026 bill to remove the cap entirely for everyone 55 and over (HB 26-1062) was postponed indefinitely in February 2026, so the caps above still apply.

How the gap changes with income

Colorado’s single rate means its tax rises in a straight line, while California’s climbs through brackets. Single filers, standard deductions:

The year you move to Colorado

In the move year file California Form 540NR and Colorado Form DR 0104 with Schedule DR 0104PN, which prorates Colorado tax by the share of income received while a Colorado resident or from Colorado sources.

Remote workers who keep a California employer: wages for days you physically work in Colorado are not California-source, so California withholding and SDI should stop once payroll has your Colorado work address. If your employer pays the full FAMLI premium itself, nothing is deducted for FAMLI and your take-home is $572 a year higher than the table shows at $130,000.