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Legislative Year: 2021 Change
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Bill Detail: HB21-1113

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Title Income Tax Deduction For Mil Retirement Benefits
Status House Committee on State, Civic, Military, & Veterans Affairs Postpone Indefinitely (03/18/2021)
Bill Subjects
  • Fiscal Policy & Taxes
House Sponsors M. Bradfield (R)
Senate Sponsors
House Committee State, Civic, Military and Veterans Affairs
Senate Committee
Date Introduced 02/16/2021
Summary

The starting point for determining state income tax liability is
federal taxable income. This number is adjusted for additions and
subtractions (deductions) that are used to determine Colorado taxable
income, which amount is multiplied by the state's income tax rate.
Income earned from pensions or annuities, including military
retirement benefits, can be considered income for purposes of the state's

income tax. In Colorado, current law provides an income tax deduction
that subtracts from federal taxable income amounts received from
pensions or annuities for individuals who are 55 years or older. For
individuals who are 55 to 64, that benefit is capped at $20,000 per income
tax year. For individuals who are 65 or older, that benefit is capped at
$24,000 per income tax year. This existing benefit applies to pensions or
annuities received, among other things, from service in the uniformed
services of the United States. The bill does not change this current tax
benefit.
In 2018, the general assembly enacted a separate temporary
income tax deduction through the income tax year commencing on or
after January 1, 2023, that subtracts from federal taxable income amounts
received from military retirement benefits for individuals who are under
55 years old. This additional deduction for military retirements benefits
is currently capped as follows:
  • $7,500 for the income tax year commencing on or after
January 1, 2020, but before January 1, 2021;
  • $10,000 for the income tax year commencing on or after
January 1, 2021, but before January 1, 2022; and
  • $15,000 for income tax years commencing on or after
January 1, 2022, but before January 1, 2024.
The bill makes modifications to the existing tax deduction for
military retirement benefits for individuals who are under 55 years old by:
  • Extending the number of years the temporary income tax
deduction is available by 10 years; and
  • Increasing the maximum benefit to $20,000 for income tax
years commencing January 1, 2023, and for each income
tax year thereafter.

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Fiscal Notes Fiscal Notes (07/20/2021) (most recent)  
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