Key figures
Colorado accounting
2026, with sources
A flat tax on federal income
Colorado taxes C corporations at a flat 4.4%, the same rate as individuals, starting from federal taxable income. Conformity is rolling: when Congress changes the Internal Revenue Code, Colorado picks it up unless the legislature acts. In the 2025 special session it did, decoupling from the federal deduction for foreign-derived deduction eligible income for tax years beginning on or after January 1, 2026, and removing GILTI references from its statute.
TABOR, the state’s revenue limit, can temporarily cut the income tax rate in a year when state revenue runs over the cap. The rate for a given year is set in the Department of Revenue’s forms for that year, not in advance.
Apportionment and combined reporting
Colorado apportions business income on a single sales factor and sources services and SaaS to where the customer receives the benefit, so Colorado customers bring income into Colorado whether or not anyone works there. Affiliated C corporations that meet Colorado’s tests file a combined report.
For the provision, Colorado is usually a single rate applied to apportioned federal income, with deferred items following the federal ones closely because the base is the federal base.
The federal baseline
This page covers what Colorado adds. The federal rules underneath it apply here too.
Common questions
Does Colorado follow the federal Section 174 rules?
Generally yes. Colorado starts from federal taxable income and picks up federal amendments automatically, so the federal treatment of research costs flows into the Colorado return unless the legislature decouples. The 2025 special session decoupled from the FDDEI deduction and made the QBI addback permanent; check the Legislative Council’s annual report on federal changes for anything newer.
Do we file one return for the group?
Only if the affiliates meet Colorado’s tests for a combined report. A Delaware parent with one operating subsidiary usually files one combined Colorado return covering both.
Accounting next door
- WYWyoming accountingWyoming has no corporate, gross receipts or individual income tax; the only state-level levy on a corporation is the annual report license tax — $60 or $0.0002 per dollar of Wyoming assets.
- NENebraska accountingNebraska taxes corporate income at a flat 4.55% for 2026, falling each year, with single-sales-factor apportionment, market sourcing and combined reporting.
- KSKansas accountingKansas taxes corporations at 3.5% plus a 3% surtax above $50,000, and apportions by three factors until single sales factor arrives in 2027.
- OKOklahoma accountingOklahoma taxes corporations at a flat 4%, apportions by three equal factors, repealed its franchise tax after 2023, and wants Form 512 30 days after the federal due date.
- NMNew Mexico accountingA flat 5.9% corporate income tax from 2025, a $50 franchise tax per corporation, worldwide combined reporting by default and a three-factor apportionment formula.
- AZArizona accountingA 4.9% corporate income tax with a $50 minimum, on an Internal Revenue Code frozen at a fixed date the legislature moves each year — to January 1, 2026 as of June 2026.
- UTUtah accountingUtah’s corporate franchise and income tax is 4.45% of net income for 2026, with a $100 minimum, apportioned on sales for most companies.
Founder guides on this
- US GAAPUS GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
- FundraisingAudit-ready books before your Series AInvestors, lenders and auditors ask for the same things: accrual statements, reconciled accounts and support for every balance. How to be ready first.
More of the Colorado guide
- ReceivablesReceivables and sales tax in ColoradoSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in ColoradoPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in ColoradoWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in ColoradoRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in ColoradoCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.