What are the Income Law
Requirements in the State of Colorado?
If you happen to be in the United States, you will find that some states calculate the tax an individual has to pay based on their income bracket, which is also the case with the federal government. However, Colorado is not among them. Colorado is part of the majority of states in the country that levies a blanket income tax, called a "flat" tax on all earning citizens irrespective of their income. It becomes important to note here that states that do not collect income tax usually make up for this deficit in state funding using other taxes.
Income Tax in Colorado
Colorado imposes a 4.63% tax on all federal income, no matter the individual’s income level. You are required to file a tax return in Colorado if you happened to be a fulltime/part-time resident of Colorado and earning from a Colorado source during the financial year.
Income tax can be filed electronically or mailed by printing out a form and attaching necessary documentation. It is recommended that a person complete filing their federal tax return before they go on to file their income tax return. One may always choose to seek the help of a tax law attorney if they are unclear about the procedure.
Sales Tax in Colorado
A 2.9% state sales tax is levied by Colorado on retail sales. Counties and cities often charge an additional rate to the base rate decided by the state. In the taxing jurisdictions under Colorado where the state oversees the collection, most goods are taxable while most services are not. Other taxing jurisdictions are free to devise their regulations about which goods and services they want to have sales tax charged upon.
Personal Business Property and Real-Estate Property Taxes
Both personal business property and real-estate property are taxable in the State of Colorado.
Personal business property refers to any item or equipment that is used to generate income for your business. Think furniture, computers, fax machines, so on and so forth.
How is your property tax determined? Good question. The county assessor assesses the value of your property by using current market cost as the reference or the earnings you make from said property. The tax slab is then determined on a percentage of the real-estate's actual value. The county assessor mails the declaration, and the county treasurer is given the responsibility of collecting the property tax bill.
A rebate is offered for property taxes to Colorado residents by the State when paid directly or via rent that makes the disabled, elderly and low-income taxpayers eligible for receiving the benefits.
Estate and Inheritance Tax in Colorado
As of now, it is uncertain whether the State of Colorado collects an Estate Tax or not. It does, however, collect an income tax on trusts and estates, i.e., Fiduciary Income Tax – calculated at a flat 4.63%. Any estate/trust administered in Colorado is considered as a resident estate/trust. Non-resident estates/trusts which aren’t administered in the state is required to file a return if they happen to have a Colorado source of income.
There is no gift tax in place for property which has been transferred as a gift in Colorado before Jan 1, 1980.
Colorado was the first state in the US to allow its citizens to redirect its tax returns to a charitable fund of their choice from amongst the options on offer.
The state has no provision for an intangible personal property tax.
Hopefully, this article helped you learn all you wanted to know about taxation in the State of Colorado. Now, be a good citizen and pay your taxes on time!