Colorado vs Texas: Taxes & Take-Home Pay 2026

Why people weigh Denver against Austin, Dallas and Houston

The short answer is that Texas has no personal income tax and Colorado charges a flat 4.40%, so a Texas paycheck is always bigger for the same salary. The longer answer is that the gap is narrower than the headline suggests once you add property tax, which Texas leans on far more heavily than Colorado.

Both states draw the same kind of mover: tech, energy and healthcare workers, remote employees choosing where to live, and retirees. Colorado's tax is simple and modest; Texas shifts the bill from wages to homes and purchases. Which one costs you less depends on whether you rent or own, how expensive a house you buy and how much of your income comes from a paycheck versus a pension.

Income tax: one flat rate against none

Colorado's return (Form DR 0104) starts from federal taxable income, so the federal standard deduction of $16,100 single or $32,200 joint works as the Colorado deduction too. Everything left is taxed at 4.40%. There are no brackets and no state personal exemptions.

Texas has nothing to compare. Its constitution requires voter approval before a personal income tax could be created, and there is no state return to file. A Texan's only income tax is federal.

Colorado's rate can also change from year to year. The Taxpayer's Bill of Rights (TABOR) caps state revenue, and in years when revenue exceeds the cap the state refunds the surplus, sometimes through a temporary rate cut. Our calculator uses the standard 4.40% and does not count TABOR refunds, so in a refund year a Colorado resident does slightly better than shown.

Worked example: a family of four on $140,000

Take a married couple with two children and $140,000 of wages. In Colorado their federal taxable income is $107,800, so Colorado income tax is $4,743. FAMLI, Colorado's paid family and medical leave premium, adds up to $616 if the employer passes on the maximum employee share of 0.44%. Their total state cost is $5,359 a year, or $447 a month.

In Texas the same family pays $0 of state income and payroll tax. Federal tax and FICA are identical in both states, so the whole $5,359 is the Colorado premium on wages. Before Colorado credits, such as the state child tax credit or earned income credit, it is about 3.83% of gross pay.

Whether Texas still wins depends on the house. A family that buys in a Texas suburb with a combined property tax rate well above Colorado's can hand most or all of that saving back to the county, school district and other local taxing units.

Property tax: where Texas collects instead

Texas funds schools and local government largely through property tax, and its effective rates are among the highest in the country. Colorado's residential property taxes are comparatively low. That reversal matters most for homeowners with expensive houses and modest incomes, such as retirees.

Texas softens the bill with homestead exemptions. School districts must exempt $140,000 of the value of a residence homestead, and homeowners who are 65 or older or disabled get a further $60,000 off school taxes. On a home appraised at $400,000, school tax is charged on $260,000, or $200,000 for a qualifying senior. Cities, counties and special districts set their own rates and exemptions on top.

• Apply for the homestead exemption with your county appraisal district as soon as the Texas home is your principal residence; it is not automatic.
• Compare the total tax rate on the specific property, not a state average. Rates differ sharply between neighbouring Texas districts.
• Renters pay property tax indirectly through rent, so the income tax saving is closer to a pure gain for them.

Sales tax, local taxes and payroll programs

Sales tax looks similar on average: 7.89% in Colorado versus 8.20% in Texas. The structure differs. Colorado's state rate is only 2.90%, but cities and counties (including home-rule cities that collect their own tax) add an average 4.99%, and the combined rate can reach 12.00%. Texas charges 6.25% state tax and caps local add-ons at 2.00%, so no Texas rate exceeds 8.25%. Groceries are exempt from Colorado's state sales tax, though some Colorado cities tax them.

Neither state has a percentage city wage tax. A few Colorado cities charge a flat occupational privilege tax instead; Denver's employee share is $5.75 a month. Texas has no employee-paid state payroll programs, while Colorado employees may pay up to 0.44% of wages for FAMLI, capped at $184,500 of wages in 2026.

Retirees: Colorado is gentler than its rate suggests

Colorado gives retirees large subtractions, which narrows the gap with Texas for people living on pensions and Social Security.

• The Colorado subtraction covers PERA benefits, private pensions, IRA and 401(k) withdrawals and annuities.
• A 66-year-old in Colorado with Social Security and up to $24,000 of pension or IRA income generally owes no Colorado tax on that income. Above $24,000, the excess is taxed at 4.40%.
• For a retiree who owns a valuable home, Texas property tax can easily exceed the Colorado income tax on modest retirement income, even after the extra senior homestead exemption.

Moving between Colorado and Texas mid-year

The year you move, Colorado taxes only the part of your income tied to Colorado. You file the regular DR 0104 with Form DR 0104PN, which prorates the tax by the share of income that was Colorado-source or received while you lived there. Texas has no return to file.

Example: a single worker earning $120,000 a year who moves from Denver to Austin on July 1 would owe roughly half of a full year's Colorado tax, about $2,286 instead of $4,572, assuming the salary was earned evenly. Moving the other way works the same: Colorado taxes income from the day you become a resident.

Colorado returns for 2026 are due April 15, 2027, with an automatic six-month extension if at least 90% of the tax is paid by April 15. If you keep working remotely for a Colorado employer after moving to Texas, ask payroll to stop Colorado withholding once you are working from Texas; wages for work done outside Colorado by a nonresident are generally not Colorado-source.