Capital Gains Tax in Colorado (2026)
Colorado has no special capital gains rate — the state taxes your gain as ordinary income at a flat 4.40%, stacked on top of the federal 0/15/20% tax and the 3.8% NIIT. Run the combined number below.
Reviewed & updated · 2026 tax-year figures · Federal + Colorado state
Colorado does not have a preferential long-term capital gains rate. Under C.R.S. §39-22-104, both short- and long-term gains are taxed as ordinary income at a flat 4.40% — no brackets, no holding-period distinction. That state tax is added on top of the federal capital gains tax (0/15/20% long-term under IRC §1(h)) and the 3.8% NIIT (§1411). A top-bracket Coloradan can face a combined rate near 28.2% on a long-term gain.
Net proceeds $178,150$21,850
Show our work federal + CO, step by step
Estimates only, for the 2026 tax year. Not tax advice. The Colorado individual income tax rate of 4.40% is fixed by statute (C.R.S. §39-22-104) and is not inflation-indexed; federal bracket thresholds and standard deductions are projected 2026 amounts, marked est. and owner-verifiable against the final IRS release.
How does Colorado tax capital gains?
Colorado is one of the states that gives capital gains no break at all. Under C.R.S. §39-22-104, a capital gain is simply part of your Colorado net income and is taxed at the same single flat rate as wages — 4.40% for individuals. There is no equivalent of the federal 0/15/20% long-term schedule, no graduated brackets, and no distinction between short-term and long-term at the state level. Whether you held the asset a week or a decade, Colorado taxes the whole gain at 4.40%.
Because the rate is flat, the arithmetic is unusually clean: your Colorado tax on a gain is exactly 4.40% of the gain. The marginal rate and the effective rate on that gain are identical — there is no bracket to straddle. Colorado’s single rate is a long-standing fixture — the state has taxed income at one flat rate since 1987, and it starts from your federal taxable income, so most federal adjustments and the §121 home-sale exclusion already flow through before Colorado applies its rate. TABOR refund mechanics can temporarily nudge the number down (it was 4.25% for 2023 before returning to 4.40%), but 4.40% is the 2026 statutory figure — applied to a Denver RSU sale, a mountain-town second-home sale, or a crypto disposition alike.
How does Colorado stack on top of federal?
The two systems run in parallel and the amounts are added — Colorado does not replace or absorb the federal tax. For a long-term gain, you owe:
- Federal: 0%, 15%, or 20% depending on where the gain stacks on your taxable income, under IRC §1(h);
- Federal NIIT: an extra 3.8% on net investment income once MAGI passes $200,000 (single) / $250,000 (joint), under IRC §1411; and
- Colorado: a flat 4.40% on the full gain under C.R.S. §39-22-104.
Add those together and a top-bracket Coloradan with a long-term gain can pay roughly 20% + 3.8% + 4.40% ≈ 28.2%. A short-term gain is worse, because the federal side jumps to ordinary rates (up to 37%) instead of 20% — while Colorado stays at 4.40% either way. The calculator above computes each layer separately and shows you the exact bands.
What is the 2026 Colorado income-tax rate?
Colorado applies a single flat individual income tax rate — there is no bracket schedule to reproduce. For comparison against states that do use brackets, here is how Colorado lines up.
| Colorado individual income tax | Rate |
|---|---|
| All taxable net income (flat) · C.R.S. §39-22-104 | 4.40% |
| Short-term capital gain | 4.40% |
| Long-term capital gain | 4.40% |
| Local / municipal income tax on gains | None |
| Additional tax over $1,000,000 | None |
How this calculator works & where the numbers come from
No black box. The federal side uses the same unit-tested engine as our main calculator: net gain = proceeds − basis; classify by holding period; for long-term gains, subtract the standard deduction and stack the gain across the 0/15/20% bands per IRC §1(h); add 3.8% NIIT where modified AGI crosses the §1411 threshold; short-term gains are computed as the true marginal difference in ordinary tax. The Colorado side takes the same taxable gain (after any §121 exclusion, since Colorado begins from federal AGI) and multiplies it by the flat 4.40% rate under C.R.S. §39-22-104 — no brackets, so the marginal and effective state rates on the gain are identical. The two results are summed.
CHECK
Primary sources (linked, not just named)
- C.R.S. §39-22-104 — imposition & rate of tax
- Colorado Dept. of Revenue — individual income tax
- Colorado Department of Revenue
- 26 U.S.C. §1(h) — federal capital gains rates
- 26 U.S.C. §1411 — 3.8% NIIT
- 26 U.S.C. §121 — home-sale exclusion
- IRS Topic No. 409 — Capital Gains and Losses
- IRS Publication 550 — Investment Income
Colorado capital gains tax, answered
Does Colorado have a separate capital gains tax rate?
No. Colorado has no preferential capital gains rate. Under C.R.S. §39-22-104, a capital gain — short-term or long-term — is taxed as ordinary income at the state's single flat rate of 4.40%. There are no brackets, and the federal short/long distinction does not exist at the Colorado level.
How much is capital gains tax in Colorado for 2026?
Your Colorado tax equals 4.40% of the gain, added to the federal capital gains tax. Federally, a long-term gain is taxed at 0/15/20% (IRC §1(h)) plus 3.8% NIIT for high earners. A mid-income Coloradan might pay roughly 15% federal + 4.40% state; a top earner can pay near 20% + 3.8% + 4.40% ≈ 28.2% combined. Use the calculator above for your exact figure.
How does Colorado capital gains tax stack on top of federal?
They are computed separately and summed. The federal side taxes long-term gains at 0/15/20% and adds 3.8% NIIT for high earners; short-term gains are ordinary income. Colorado ignores the holding period and taxes the entire gain at a flat 4.40%. Your total tax is federal + NIIT + Colorado.
Is the Colorado flat tax really the same on every dollar of gain?
Yes. C.R.S. §39-22-104 sets a single flat rate of 4.40% with no brackets, so every dollar of taxable capital gain is taxed at 4.40% — the marginal rate and the effective rate on the gain are identical. Colorado does apply a small per-person exemption allowance against total net income, but it does not change the 4.40% rate applied to the gain at the margin.
Does the 3.8% federal NIIT apply to Colorado residents?
Yes — the NIIT is federal and applies in every state. Once modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly), the 3.8% surtax under IRC §1411 hits the lesser of your net investment income or the amount over the threshold. It is added to your federal capital gains tax and is entirely separate from Colorado state tax.
Does Colorado conform to the $250k/$500k home-sale exclusion?
Yes. Colorado begins from federal adjusted gross income, so the IRC §121 exclusion of up to $250,000 of gain ($500,000 married filing jointly) on a primary residence is already removed before Colorado applies its flat 4.40% rate. Only gain above the exclusion flows into Colorado net income and is taxed. See our home-sale hub for the mechanics.
Compare Colorado with other state hubs
Colorado’s flat 4.40% sits just below the middle of the pack. It is far lighter than California, which taxes gains as ordinary income up to 13.3%, and heavier than the no-income-tax states like Texas and Florida, where the state adds nothing at all. New York lands above Colorado with graduated rates that top out over 10%. Every state page combines the same unit-tested federal engine with that state's own rules, so you always see the full combined number, not just half of it. The main Capital Gains Tax Calculator lets you fold any state's rate into your federal receipt.