When determining state income tax liability, a taxpayer starts with
federal taxable income. That number is adjusted for additions and subtractions (deductions) that are used to determine Colorado taxable income, which is then multiplied by the state's income tax rate.
For income tax years commencing before January 1, 2024, current
law allows individuals younger than 55 years of age to deduct from federal taxable income certain amounts received from military retirement benefits. The bill extends the deduction to income tax years commencing before January 1, 2034.
The bill also adds a statutory legislative declaration to comply with
an existing statutory requirement that any bill that extends a tax expenditure include a statutory legislative declaration.
