What Is the Colorado Springs Income Tax Rate?
Understand your tax obligations as a Colorado Springs resident. Learn about the state's flat tax and how it fits into your complete federal and local tax profile.
Residents of Colorado Springs are not subject to a city-specific income tax. While some municipalities in the state levy their own local income taxes, often called occupational privilege taxes, Colorado Springs is not one of them. The absence of a municipal income tax simplifies the local tax landscape for those living and working within the city.
Colorado State Income Tax
Although there is no city income tax, residents of Colorado Springs are required to pay state income tax. Colorado employs a flat tax system, which means a single tax rate is applied to all residents’ income, regardless of how much they earn. For the 2024 tax year, the rate is 4.25 percent. This rate is applied to an individual’s federal taxable income, which is their gross income minus any allowable deductions, with some specific state-level adjustments.
The flat tax structure is different from a progressive system where tax rates increase as income rises. For example, individuals who are 65 and older may be able to deduct up to $24,000 of pension and annuity income from their state taxable income. This simplifies tax calculations compared to jurisdictions with multiple income brackets.
Other Local Taxes in Colorado Springs
While income is not taxed at the city level, other transactions are. The most significant local tax is the sales tax. When making a purchase in Colorado Springs, the total combined sales tax rate is 8.20%. This total is a combination of several different rates: the 2.9% state sales tax, a 1.23% El Paso County tax, a 1.00% Pikes Peak Rural Transit Authority (PPRTA) tax, and the 3.07% city-specific sales tax.
Another local tax that residents and property owners encounter is property tax, which is based on the assessed value of real estate. These taxes are managed at the county level by the El Paso County Assessor and contribute to funding local schools, fire departments, and other public services.
Federal Income Tax Obligations
In addition to state obligations, all residents of Colorado Springs must pay federal income tax. The United States uses a progressive tax system, which is different from Colorado’s flat tax. In a progressive system, tax rates increase as a taxpayer’s income rises, meaning higher earners pay a larger percentage of their income in taxes.
The federal system is structured with several income brackets, each with its own corresponding tax rate. For example, a portion of a person’s income falls into one bracket and is taxed at that rate, while income above that amount falls into the next bracket and is taxed at a higher rate.