HB 18-1060

House Bill 18-1060, which has been signed into law, allows military retirees under the age of 55 with retirement benefits less than $40,000 to claim a tax deduction on their Colorado state income taxes. For the years 2019 and beyond, these individuals can deduct up to 25% or 50% of their military retirement benefits, capping at $10,000 depending on the year. This bill aims to provide financial relief to younger military retirees by reducing their state tax burden. The Department of Revenue will track how many people use this deduction and if they are new to filing taxes in Colorado.

Official 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 4.63% income tax rate. The bill allows an individual who is under 55 years old and whose military retirement benefits are less than $40,000 to claim a deduction in the following amount: For the 2019 income tax year, 25% of the individual's military retirement benefits; For the 2020 income tax year, 50% of the individual's military retirement benefits or $10,000, whichever is less; and For the 2021 and 2022 income tax years, the individual's military retirement benefits or $10,000, whichever is less. The bill also requires the department of revenue, as part of its tax profile and expenditure report, to estimate the number of individuals who claim the new deduction for the 2019 income tax year, and of those, the number who are first-time filers in the state. (Note: This summary applies to the reengrossed version of this bill as introduced in the second house.) , Read More

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