TAXES 20-25, Colorado State Income Tax Withholding

Published: September 11, 2020
Effective: Pay Period 17, 2020

Summary

The income tax withholding formula for the State of Colorado includes the following changes:

The annual deduction based on number of exemptions claimed has been replaced with a fixed annual deduction based on marital status.
The Single and Married income tax withholdings has been replaced with a flat 4.63 percent tax on taxable wages.

No action on the part of the employee or the personnel office is necessary.

Tax Formula

State Abbreviation:	CO
State Tax Withholding State Code:	08
Acceptable Exemption Form:	W-4 (see the Additional Information section)
Basis for Withholding:	Federal Filing Status
Acceptable Exemption Data:	S/M, prior to 2020 Federal Form W-4 MS/MJ/HH, for 2020 Federal Form W-4
TSP Deferred:	Yes
Special Coding:	The S, MS, and HH marital statuses will be treated as Single. The M and MJ marital statuses will be treated as Married.
Additional Information:	A State tax certificate is not required since the Federal Marital Status is used in the computation of the State formula. Employees who have not previously submitted a 2020 Federal Form W-4 but have submitted a prior to 2020 Federal Form W-4, will default to the prior to 2020 Federal Form W-4 submission. Employees who have not previously submitted a prior to 2020 W-4 and have not submitted a new 2020 Federal Form W-4 will default to Single.

Withholding Formula (Effective Pay Period 17, 2020)

Subtract the nontaxable biweekly Thrift Savings Plan contribution from the gross biweekly wages.
Subtract the nontaxable biweekly Federal Employees Health Benefits Plan payment(s) (includes dental and vision insurance program and Flexible Spending Account — health care and dependent care deductions) from the amount computed in step 1.
Add the taxable biweekly fringe benefits (e.g., taxable life insurance) to the amount computed in step 2 to obtain the adjusted gross biweekly wages.
Multiply the adjusted gross biweekly wages by the number of pay dates in the tax year to obtain the gross annual wages.
Calculate the Exempt Amount based on the employee's marital status by applying the following guideline and subtract this amount from the gross annual wages to compute the taxable income:

Marital Status

Exempt Amount

Married or Married Filing Jointly

$8,000

All other marital statuses

$4,000
Multiply the taxable wages in step 5 by 4.63 percent to determine the annual tax amount.
Divide the annual Colorado tax withholding calculated in step 6 by the number of pay dates in the tax year and round to the nearest dollar to obtain the biweekly Colorado tax withholding.
Add any additional amount or percentage elected by the employee to the pay period tax calculated in the above step and round to the nearest dollar to determine the amount of tax to be withheld for this pay period.

Marital Status	Exempt Amount
Married or Married Filing Jointly	$8,000
All other marital statuses	$4,000

Resources

To view the updated tax formula, go to the HR and Payroll Clients page from the MyNFC drop-down menu on the National Finance Center (NFC) Home page. Select the Publications tab and select U.S. Income Tax Formulas from the Publications menu to launch the tax map. Select the desired State from the map provided for the formula.

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