| Tax year 2026 | Tips | Overtime |
|---|---|---|
| Federal return (Schedule 1-A) | Deductible up to $25,000 | Premium deductible up to $12,500 ($25,000 joint) |
| Colorado state return | deductible on the state return | still taxed by the state |
Colorado allows the tips deduction but adds overtime back from 2026.
The federal deduction still applies in Colorado
Whatever Colorado does, you can still claim the federal deductions on Schedule 1-A if you qualify. For example, in 2026:
- A single server with $40,000 of income and $15,000 of qualified tips saves about $1,730 of federal income tax.
- A single hourly worker with $60,000 of income and $4,000 of overtime premium saves about $480.
Social Security and Medicare still apply to tips and overtime in every state.
What to do
- Estimate your federal savings with the tips calculator or overtime calculator (your state is already selected).
- Check the official rules at the Colorado tax agency before you file your state return.
- See all 50 states.
Other states: California, Texas, Florida, New York, Illinois, Georgia, Arizona, Nevada, New Jersey, North Carolina, Pennsylvania.
Common questions
Does Colorado tax tips in 2026?
Tips are deductible on the Colorado return for 2026.
Does Colorado tax overtime in 2026?
Yes. Overtime is still taxed on the Colorado return.
Can I still claim the federal deduction if I live in Colorado?
Yes. The federal tips and overtime deductions apply in every state, on Schedule 1-A of your federal return.
Sources
- Colorado state tax agency
- Tools Berry: Which states still tax tips in 2026 (updated Oct. 2, 2026)
- AP / PBS NewsHour: State tax returns and the tips and overtime breaks (Apr. 13, 2026)
- Clockspot: No tax on overtime by state (May 25, 2026)
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