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State conformity · CO

Colorado — qualified-tips deduction conformity

Decoupled from the qualified-overtime deduction; the qualified-tips deduction continues to flow through.[1]
Policy state — Last verified2026-05-07Federal cap source

Personalized calculation

What this means for Colorado workers

This state has decoupled from the qualified-overtime federal deduction but kept the qualified-tips deduction. Workers must add back the qualified-overtime portion on their state return; the qualified-tips portion continues to flow through to state taxable income.

Last verified: 2026-05-07Colorado DOR / legislation source →

Statute-cited expansion

Federal source

The federal deductions sit at 26 USC §224 (qualified tips) and §225 (qualified overtime). State conformity is keyed to whether the state uses federal AGI (or federal taxable income) as the starting point for state taxable income, and whether the state has affirmatively decoupled from §224 / §225 for state tax purposes.

  • 26 USC §224(b)(1)$25,000 federal qualified-tips cap.
  • 26 USC §225(b)(1)$12,500 single / $25,000 MFJ federal qualified-overtime cap.

Actionable artifact

Next step

  1. Run the decoder with your numbers.

    The decoder shows the federal AGI reduction. Compare against the Colorado state-return path described above. /decode →

  2. Read the Colorado DOR source.

    https://leg.colorado.gov/bills/hb25-1296

  3. See all 50 states.

    /state-conformity →