Crossing a state line into or out of Colorado

Colorado taxes its residents on income earned anywhere, and taxes non-residents on work done inside it. Which return you file depends on which direction you commute.

Colorado borders 6 states. They fall into 2 different situations, and which one applies decides whether you file one return or two.

Where you file a nonresident return and claim a credit

Colorado has no agreement with Kansas, Nebraska, New Mexico, Oklahoma and Utah. Work in one of these and you file a nonresident return there, report the same income again to Colorado, and claim a credit for what you already paid. The credit is capped at your Colorado liability, so you are not taxed twice, the combined bill lands at roughly the higher of the two rates. On $70,000, Kansas costs the most at $3,600 and Nebraska the least at $2,884, $716 between them.

Work state	Its tax	Colorado after credit	Total	Rate that governs
Kansas	$3,600	$0	$3,600	Kansas
Nebraska	$2,884	$0	$2,884	Nebraska
New Mexico	$3,140	$0	$3,140	New Mexico
Oklahoma	$3,115	$0	$3,115	Oklahoma
Utah	$3,150	$0	$3,150	Utah

Where the work state takes nothing

Wyoming levies no personal income tax, so there is no return to file there and no credit to claim. But Colorado still taxes the wages as a resident. The catch is withholding: an employer in Wyoming has no state income tax to withhold, so nothing is taken out for Colorado either. The liability is real and nothing is being set aside against it, which usually means Colorado estimated payments.

What Colorado itself takes across a salary range

A single filer, taking the standard deduction. This is the figure every arrangement above is measured against, the tax Colorado charges a resident, whether the work happened inside the state or over a line:

Wages	Colorado tax	Effective rate
$45,000	$1,800	4.00%
$70,000	$2,800	4.00%
$120,000	$4,800	4.00%

Coming the other way: living in a no-income-tax state, working in Colorado

Wyoming border Colorado and levy no personal income tax of their own. A resident of Wyoming who works in Colorado has the simplest arrangement on this page and the least room to improve it: Colorado taxes the wages earned inside it, $2,800 on $70,000, there is no home-state return, and so there is nothing to claim a credit against. Living across a border that charges nothing does not reduce the Colorado bill by a cent.

Reciprocity cannot help either, even where Colorado has agreements: reciprocity shifts the income to the home state's return, and a state with no income tax has no return to shift it to.

What Colorado charges as your home state

Colorado applies a single 4% rate to taxable income for 2026, so every extra dollar of wages is taxed at the same state rate.

Colorado is one of the twelve states that still taxes Social Security benefits, which matters if you are drawing benefits alongside wages.

State income tax on wages only, 2026 rates. Not tax advice, what this does and doesn't cover.