Colorado DOR Clarifies Income Tax Subtraction for U.S. Government Interest Income

The Colorado Department of Revenue (DOR) issued revised guidance regarding the state’s income tax subtraction for U.S. government interest income. The guidance clarifies that taxpayers may subtract interest income from U.S. Treasury securities, federal agency obligations (including those issued by entities such as the Federal Deposit Insurance Corporation and the Tennessee Valley Authority), and income from mutual funds that invest in these exempt government obligations. [Colo. Dep’t of Revenue, Income Tax Topics: U.S. Government Interest, 05/01/26]

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