Does ColoradoTax Tips & Overtime After the OBBBA?
Colorado conforms to the federal deductionfor the federal OBBBA tip and overtime deductions. Here's what that means for your paycheck.
Compiled by Sharon Ben-Moshe · Conformity data verified August 1, 2026
Quick answer
Colorado has a state income tax (about 4.4% used for estimates) and currently conforms to the federal deduction. That means your tips and overtime are exempt at the state level too.
Tips deduction
Conformed
Overtime deduction
Not conformed
Details for Colorado
Colorado's tax base starts from federal taxable income, so the tips deduction flows through automatically. HB25-1296 requires taxpayers to add the federal overtime deduction back to Colorado income starting with tax year 2026.
Last verified August 1, 2026.
How OBBBA tips & overtime work in Colorado
The OBBBA is a federal deduction: eligible workers can deduct up to $25,000 of tips and $12,500 of overtime premium ($25,000 if married filing jointly) from federal taxable income through 2028. Whether Colorado follows suit depends on state conformity. FICA (Social Security and Medicare) applies everywhere. Learn more about the tip deduction and the overtime deduction.
How this is sourced: Colorado's conformity status is tracked against state legislation and primary IRS guidance, and re-verified as the law changes. See our methodology and sources.