Colorado allows for a military retirement subtraction of up to $15,000 or your full retirement income, whichever is less. To qualify for the military retirement subtraction, you must be 54 or younger at the end of the tax year.
If you do not qualify for the military retirement subtraction, Colorado also offers a Pension and Annuity subtraction for taxpayers who meet specific qualifications. You'll be able to read more about this subtraction here.
How do I exclude the income?
The program will not automatically apply the exclusion for the pension/annuity based on your age. You will need to manually make the entry by following these steps:
- State Section
- Edit Colorado Return
- Subtractions from Income
- Military Retirement Benefits (under age 55)