Colorado Detours From Federal Overtime Tax Exemption

Colorado ensured that overtime pay would continue to remain taxable for state income tax purposes in a bill signed May 16 by Gov. Jared Polis (D).

HB 1296 provides that any overtime compensation that is excluded from a taxpayer’s federal gross income must still be counted when determining state taxable income.

The bill establishes a departure from federal law incorporated in Pub. L. 119-21, commonly referred to as the One Big Beautiful Bill Act, which was signed into law July 4. Among the provisions of the OBBBA is the “no tax on overtime” exemption, which allows for the premium portion ...