CO SB136

Removes all caps on the state income tax subtraction for pension and annuity income beginning January 1, 2026, allowing individuals age 55 and older to subtract the full amount from federal taxable income regardless of income level

Current law caps the subtraction at $20,000 for individuals ages 55-64 and $24,000 for those 65 and older, with exceptions for Social Security benefits

Applies to retirement benefits including employer pensions, military service pensions, IRA distributions, self-employed retirement accounts, Social Security benefits, and privately purchased annuities

Requires the Department of Revenue to collect data for the State Auditor to measure the effectiveness of the expanded tax subtraction

Takes effect 90 days after the legislative session ends, unless subject to a referendum petition in which case it would go to voters in November 2026