What is the Colorado PTET rate?

Colorado's PTET rate is 4.40% flat. [PLACEHOLDER: state DOR cite] — CO flat individual rate is 4.40% for tax year 2024; 2026 rate to be re-pinned against tax.colorado.gov/income-tax-topics-salt-parity-act before publication.

Is the Colorado owner credit refundable?

Colorado's PTET owner credit is refundable.

Does Colorado PTET affect composite-return filing?

Forced-out. Per tax.colorado.gov SALT Parity guidance: an electing PTE may NOT file a composite return for nonresident partners/shareholders for the year of the election; nonresident agreement (DR 0107) also not required. See the composite-vs-PTET page for the full matrix.

Colorado · CO

Colorado Pass-Through Entity Tax (PTET)

Colorado's PTET regime is one of the 37+ state workarounds to the federal SALT cap (IRC §164(b)(6)). The election is annual, statute-pinned below, and interacts with composite filing and §199A QBI in state-specific ways.

Statute: Colo. Rev. Stat. § 39-22-340 et seq. (SALT Parity Act); HB 21-1327
State DOR portal: https://tax.colorado.gov/SALT-parity-act-election
Election deadline: Election made on Form DR 0106 (partnership/S corp return) or in advance on Form DR 1705 (SALT Parity Act Election) or DR 0106EP (estimated payment with election).
Election form: Form DR 0106 (return); Form DR 1705 (advance election); Form DR 0106EP (estimated payments)
Entity-level rate: 4.40% — [PLACEHOLDER: state DOR cite] — CO flat individual rate is 4.40% for tax year 2024; 2026 rate to be re-pinned against tax.colorado.gov/income-tax-topics-salt-parity-act before publication.
Eligible entities: s-corp, partnership, llc-as-s, llc-as-partnership
Owner credit: refundable
Composite interaction: forced-out — Per tax.colorado.gov SALT Parity guidance: an electing PTE may NOT file a composite return for nonresident partners/shareholders for the year of the election; nonresident agreement (DR 0107) also not required.
§199A QBI base reduction: Yes — Reduces federal flow-through income (Notice 2020-75).
Last verified: 2026-05-11

Source: tax.colorado.gov/SALT-parity-act-election + DR 0106EP 2026 instructions.

IRC §164(b)(6)Notice 2020-75 IRC §199A

Reference computation

For a Colorado pass-through entity with $500,000 of qualified net income allocated to this state, at a 37% federal marginal bracket, the entity-level PTET and federal-deduction math is:

Colorado — reference example

QBI allocation·CO rate= Entity-level tax

$500,000×4%=$22,000

Colo. Rev. Stat. § 39-22-340 et seq. (SALT Parity Act); HB 21-1327

Entity tax·Federal bracket= Federal deduction (gross)

$22,000×37%=$8,140

At a 37% federal bracket, the entity-level deduction saves $8,140 in federal tax. Net of §199A QBI offset (~20% × bracket × entity tax = $1,628), aggregate benefit is approximately $6,512.

IRS Notice 2020-75

Run the picker pre-filled for Colorado

Election walkthrough

Verify eligibility. Colorado accepts: s-corp, partnership, llc-as-s, llc-as-partnership. Disregarded entities excluded.
Check the deadline. Election made on Form DR 0106 (partnership/S corp return) or in advance on Form DR 1705 (SALT Parity Act Election) or DR 0106EP (estimated payment with election). Originally available for tax years 2022 through 2025; election now extended (verify 2026 status against tax.colorado.gov).
Compute the entity-level tax. Apply the 4.40% rate to qualified net income.
Pay and file. Use Form DR 0106 (return); Form DR 1705 (advance election); Form DR 0106EP (estimated payments). Quarterly estimates may be required.
Owners claim the state credit. refundable credit on the personal state return.
Verify composite interaction. Composite interaction: forced-out. See composite vs PTET.
Run the federal §199A QBI math. PTET reduces the QBI base proportionally; net the federal SALT-arbitrage against the §199A offset.

Colorado PTET — common questions

Annual deadline reminder

State PTET law revises annually. Colorado's data was last verified on 2026-05-11. Re-confirm with the state DOR primary source before electing or filing. Last full-site review: 2026-05-12.

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Reference computation

For a Colorado pass-through entity with $500,000 of qualified net income allocated to this state, at a 37% federal marginal bracket, the entity-level PTET and federal-deduction math is:

Entity tax·Federal bracket= Federal deduction (gross)

$22,000×37%=$8,140

At a 37% federal bracket, the entity-level deduction saves $8,140 in federal tax. Net of §199A QBI offset (~20% × bracket × entity tax = $1,628), aggregate benefit is approximately $6,512.

IRS Notice 2020-75

Election walkthrough

Verify eligibility. Colorado accepts: s-corp, partnership, llc-as-s, llc-as-partnership. Disregarded entities excluded.

Check the deadline. Election made on Form DR 0106 (partnership/S corp return) or in advance on Form DR 1705 (SALT Parity Act Election) or DR 0106EP (estimated payment with election). Originally available for tax years 2022 through 2025; election now extended (verify 2026 status against tax.colorado.gov).

Compute the entity-level tax. Apply the 4.40% rate to qualified net income.

Pay and file. Use Form DR 0106 (return); Form DR 1705 (advance election); Form DR 0106EP (estimated payments). Quarterly estimates may be required.

Owners claim the state credit. refundable credit on the personal state return.

Verify composite interaction. Composite interaction: forced-out. See composite vs PTET.

Run the federal §199A QBI math. PTET reduces the QBI base proportionally; net the federal SALT-arbitrage against the §199A offset.

Colorado PTET — common questions