TAXES 21-16, Colorado State Income Tax Withholding

Published: March 26, 2021
Effective: Pay Period 05, 2021

Summary

The tax rate on wages paid to all filers when using the annual withholding formula for the State of Colorado has changed from 4.63 percent to 4.55 percent.

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, or later 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, or later 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 2020, or later Federal Form W-4 will default to Single.

Withholding Formula (Effective Pay Period 05, 2021)

  1. Subtract the nontaxable biweekly Thrift Savings Plan contribution from the gross biweekly wages.
  2. 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.
  3. 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.
  4. Multiply the adjusted gross biweekly wages by the number of pay dates in the tax year to obtain the gross annual wages.
  5. 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
  6. Multiply the taxable wages in step 5 by 4.55 percent to determine the annual tax amount.
  7. 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.
  8. 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.

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.

Previous Tax Bulletin

Inquiries

For questions about NFC processing, authorized Servicing Personnel Office representatives should contact the NFC Contact Center at 1-855-NFC-4GOV (1-855-632-4468) or via the customer service portal at ServiceNow Portal for Federated Users and at ServiceNow Portal for Non-Federated Users.