Colorado tips tax calculator and $3.02 tip credit
Colorado starts its return from federal taxable income, so qualified tips you deduct on Schedule 1-A are already out of the Colorado base — and the 2025 instructions list no add-back for them.
Why Colorado keeps the deduction
Line 1 of the DR 0104 is federal taxable income from Form 1040 line 15. Colorado then adds back specific federal items it rejects — state income tax, the qualified business income deduction for higher earners (made permanent in the August 2025 special session by HB25B-1001), and part of the standard deduction above $300,000 of AGI. Qualified tips are not on that list, so for most tipped workers they come off at Colorado’s 4.4% rate. The 2026 Colorado form had not been published when we checked; we found no new add-back.
Colorado figures
| Cash wage / minimum | $12.14 / $15.16 |
|---|---|
| In force | July 1, 2026 – December 31, 2026 |
| Next change | January 1, 2027: $12.69 / $15.71 |
| Tipped threshold | More than $30 a month in tips |
| Tips on the 2025 return | state allows the federal tips amount. The DR 0104 begins with federal taxable income, which is already reduced by the tips deduction, and the 2025 additions list contains no tips add-back. Source: Colorado Department of Revenue |
| Tips on the 2026 return | state allows the federal tips amount. Colorado keeps rolling conformity; we found no 2026 add-back for tips. The 2026 Colorado form was not yet published when we checked. Source: Colorado Department of Revenue |
Tipped wage and local rates
Colorado limits the tip credit to $3.02 an hour, so the cash wage rises with each inflation adjustment. CDLE announced that the state minimum goes from $15.16 to $15.71 on January 1, 2027 — a 3.6% increase — with $12.69 for tipped workers. Denver’s local minimum will be $19.84 in 2027, and CDLE publishes the local rates and tip credits for other cities with higher minimums.
A Boulder bartender who files jointly
A married bartender with $26,000 of tips and $70,000 of household wages hits the $25,000 cap: the federal deduction is $25,000, saving $3,000. Colorado follows federal taxable income, worth about $1,100 more at 4.4%. On the wage side, 35 hours at a $12.14 cash wage already pay $425, so no make-up is due.
Check a Colorado workweek
Where these figures come from
- Colorado Department of Revenue · Colorado Department of Labor and Employment, Division of Labor Standards and Statistics
- 2025 Colorado Individual Income Tax Filing Guide (Book 104, DR 0104) (2025-10-29)
- Minimum Wages for Tipped Employees (table by state) (2026-07-01)
- Colorado Minimum Wage will Increase to $15.71/hour in 2027 (2026)
Federal rules: how the deduction works. Nearby: Wyoming, Nebraska, Kansas, Oklahoma, New Mexico, Arizona, Utah.
Figures verified against primary sources on