SB 26-56

Senate Bill 26-56 changes how Colorado calculates state income taxes for people who receive overtime pay. Currently, when calculating federal taxes, some workers exclude their overtime pay from their taxable income. This bill says that for the year 2026 only, those workers don't need to include their excluded overtime pay when figuring out their Colorado state income tax. The bill has been signed into law, meaning it will go into effect as planned and affect taxpayers in the 2026 tax year.

Official Summary

The bill modifies the requirement that a taxpayer add the amount of any overtime compensation excluded or deducted from the taxpayer's federal gross income back to the taxpayer's federal taxable income for purposes of calculating state income tax liability to apply only in the 2026 income tax year.(Note: This summary applies to this bill as introduced.)

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