Colorado Capital Gains Tax Rate (2026)
Colorado capital gains tax overview
Colorado has a flat 4.4% income tax rate. No preferential long-term capital gains rate.
Federal + Colorado combined rates
Your total capital gains tax bill includes both layers — federal and state. Here is what a Colorado investor pays in 2026 for long-term gains:
| Federal Long-Term Rate | Colorado State Rate | Combined Rate | Plus NIIT (if applicable) |
|---|---|---|---|
| 0% | 4.40% | 4.40% | 8.2% |
| 15% | 4.40% | 19.4% | 23.2% |
| 20% | 4.40% | 24.4% | 28.2% |
The NIIT (Net Investment Income Tax) adds an extra 3.8% for taxpayers whose MAGI exceeds $200,000 (single) or $250,000 (married filing jointly). It is a federal tax only — Colorado does not have an equivalent.
How Colorado compares to other states
Colorado's top rate of 4.40% places it in the lower-middle tier of state capital gains taxation. For comparison:
- Zero-tax states (FL, TX, NV, etc.): 0% — total with 15% federal = 15%
- Low-rate states (AZ, IN, PA): 2.5–3.1% — total with 15% federal = 17.5–18.1%
- Colorado: 4.40% — total with 15% federal = 19.4%
- High-rate states (NY, NJ): 10.75–10.9% — total with 15% federal = ~26%
- California: 13.3% — total with 15% federal = 28.3%
Tax-reduction strategies for Colorado residents
With a top state rate of 4.40%, minimizing capital gains tax is particularly important in Colorado. Key strategies:
- Hold over 1 year for long-term federal rates (0/15/20%). Colorado does not offer a preferential state rate, but federal savings alone are often 7–17%.
- Tax-loss harvesting: Offset your gains with losses realized in the same year. A $20,000 loss offsets $20,000 of gains dollar-for-dollar, saving up to 24% ($4,880) on that $20,000 at top rates.
- 0% bracket planning: In lower-income years (retirement, sabbatical, between jobs), realize gains at the federal 0% rate. You still owe Colorado state tax, but eliminating the federal component is significant.
- Donate appreciated stock directly to charity or a donor-advised fund to avoid capital gains tax entirely while generating a charitable deduction for the full fair market value.
- Installment sales: If selling a business or real estate, structuring as an installment sale spreads the gain over multiple years, potentially keeping each year's gain in a lower bracket.
Detailed Colorado capital gains tax rules
Tax history and legal basis
Colorado taxes capital gains as ordinary income at a flat rate. The state moved to a flat tax structure in 1987.
Exemptions and special treatment
Colorado offers a capital gains subtraction for gains from the sale of qualifying Colorado real property, livestock, or tangible business assets. The exclusion is limited and has specific holding period requirements. General stock market gains do not qualify.
Filing requirements
File Form 104 (resident). Colorado starts with federal taxable income and makes state-specific adjustments. The flat rate makes calculation straightforward. Filing deadline is April 15.
Recent changes and legislative updates
Colorado's flat rate dropped to 4.4% in 2024 (from 4.55% in 2023). Proposition 121, passed by voters in 2022, mandated this reduction. If state revenues exceed TABOR (Taxpayer Bill of Rights) limits, additional refunds are issued to taxpayers.
Worked example: $50,000 capital gain in Colorado
Here's exactly what a Colorado resident would owe on a $50,000 long-term capital gain with $80,000 in other income (single filer, 2026):
| Component | Amount | Notes |
|---|---|---|
| Capital gain | $50,000 | Long-term (held over 1 year) |
| Federal tax (15%) | −$7,500 | Based on $80,000 ordinary income + gain |
| Colorado state tax (4.4%) | −$2,200 | Applied to the full gain amount |
| Total tax owed | −$9,700 | Federal + state combined |
| You keep | $40,300 | 80.6% of your gain |
After both federal and Colorado state tax, you keep $40,300 of your original $50,000 gain. The effective combined rate is 19.4%.
Frequently asked questions — Colorado
Does Colorado tax short-term and long-term gains differently?
No — Colorado taxes both short-term and long-term capital gains as ordinary income at the same rates as wages. There is no state-level preferential rate for patience. The federal system, however, taxes long-term gains at 0/15/20% vs. up to 37% for short-term — a significant difference that applies regardless of state.
Do I need to file a Colorado tax return if I only have capital gains?
If you have capital gains income and meet Colorado's filing threshold, you are required to file a Colorado state income tax return. The threshold is typically similar to the standard deduction amount — check the CO Department of Revenue for the current year's filing requirements.
What if I moved to Colorado mid-year?
If you moved to Colorado during the year, you are a part-year resident. Colorado generally taxes capital gains realized while you were a Colorado resident. Gains realized before you moved may be taxable by your prior state. Keep detailed records of when each sale occurred relative to your move date.