Colorado Individual Income Tax

Colorado Cash Back was a one-time accelerated refund program created by the Colorado legislature in 2022 to return a large state revenue surplus to taxpayers faster than the standard TABOR refund schedule. Under the Taxpayer's Bill of Rights (TABOR), Colorado must refund revenue collected above a constitutional spending cap, but the method and timing can vary by legislative action. The 2022 program issued flat-dollar checks rather than the percentage-of-income refunds used in the ordinary six-tier TABOR mechanism, making the payment equal for most qualifying taxpayers regardless of income. Understanding this history helps Colorado taxpayers recognize how TABOR refunds can take different forms in different years.

Colorado allows residents to subtract contributions made to a CollegeInvest 529 account from their Colorado taxable income. The subtraction applies per beneficiary, and the annual limit is indexed each year based on average tuition and room and board costs rather than a fixed statutory dollar amount. Any amount you cannot use in the current year may be carried forward to future tax years. You claim the subtraction on your Colorado individual income tax return using Schedule DR 0104AD. This article covers who qualifies, how the indexed limit works, and the basic steps to claim the subtraction.