Colorado vs Texas Taxes: Complete Comparison
Colorado vs Texas Taxes 2026: Complete Comparison
Colorado and Texas both attract tech workers, outdoor enthusiasts, and those fleeing high-tax states. But which has better taxes? Texas has no income tax. Colorado has a 4.4% flat tax. Let's break it down.
Quick Comparison
| Tax Category | Colorado | Texas | Winner |
|---|---|---|---|
| Income Tax | 4.4% flat | 0% | ⭐ Texas |
| Sales Tax | 7.77% avg | 8.20% avg | ⭐ Colorado |
| Property Tax | 0.51% | 1.60% | ⭐ Colorado |
| Total Tax Burden | 9.7% | 8.6% | ⭐ Texas |
| Outdoor Access | Mountains! | Flat | ⭐ Colorado (non-tax) |
Bottom Line: Texas wins on total tax burden (income tax advantage). Colorado wins on property tax and outdoor lifestyle.
Total Federal Tax
$16,712
Effective Tax Rate
16.71%
Your Tax Bracket
22%
Marginal tax rate on next dollar earned
Tax Breakdown by Bracket
2026 Tax Brackets (Single)
Income Tax: $4,400/year Difference
Colorado: 4.4% Flat
Simple flat tax on all income:
- $75K = $3,300
- $100K = $4,400
- $150K = $6,600
- $200K = $8,800
Texas: 0%
NO STATE INCOME TAX
Savings: CO → TX
| Income | CO Tax | TX Tax | TX Saves |
|---|---|---|---|
| $75K | $3,300 | $0 | $3,300 |
| $100K | $4,400 | $0 | $4,400 |
| $150K | $6,600 | $0 | $6,600 |
| $200K | $8,800 | $0 | $8,800 |
| $250K | $11,000 | $0 | $11,000 |
30-year career at $150K: $198,000 saved
Take Standard Deduction
$47,500
Standard deduction of $47,500 exceeds itemized deductions by $22,500
Standard Deduction
$47,500
Itemized Deductions
$25,000
Your total deductible expenses
🎉 NEW 2026 Senior Deduction (OBBBA)
$12,000 additional deduction for taxpayers 65+
Deduction Breakdown
2026 Standard Deduction Amounts
- • Single: $16,100
- • Married Filing Jointly: $32,200
- • Head of Household: $24,150
- • Single: $2,050 per condition
- • Married: $1,650 per person, per condition
- • $6,000 per taxpayer age 65+
- • Phases out at $75K (single) / $150K (married)
- • 6% reduction per dollar over threshold
💡 Optimization Tips
• You're benefiting from the NEW 2026 senior deduction - a valuable OBBBA provision
Property Tax: Colorado Wins Big
This is Colorado's advantage.
Colorado: 0.51%
- $500K home = $2,550/year
- Among lowest in the nation
Texas: 1.60%
- $500K home = $8,000/year (with homestead exemption)
- Among highest rates (makes up for no income tax)
Property Tax Difference
Texas pays $5,450/year MORE on a $500K home!
This can offset income tax savings for homeowners.
The Break-Even Analysis
Single person earning $100K:
- Income tax saved in TX: $4,400
- Property tax extra in TX ($500K home): $5,450
- Net: Colorado wins by $1,050
However: Equivalent home in Denver costs more than Austin/Dallas
Adjusted for home prices:
- $600K Denver home = $500K Austin home (equivalent)
- CO property tax: $3,060
- TX property tax: $9,000
- TX pays $5,940 more on equivalent property
Income tax saved: $4,400
Property tax extra: $5,940
Net: Still favors CO by $1,540 for homeowners
For renters or low-value homeowners: Texas wins decisively
Over-Withholding
$15,600
You're giving the IRS an interest-free loan. Expect a refund.
Estimated Tax Owed
$0
Total Withholding
$15,600
Recommended Action
Tax Calculation Breakdown
Payment Schedule
💡 Withholding Tips
• You're over-withholding by $15,600/year. Consider reducing to increase take-home pay
• Submit new W-4 form to your employer to adjust withholding by $600/paycheck
Sales Tax: Close Race
Colorado
Average: 7.77%
- State: 2.9%
- Local: varies
- Denver: 8.81%
Texas
Average: 8.20%
- State: 6.25%
- Local: up to 2%
- Austin/Dallas: 8.25%
Similar—CO slightly lower
Real-World Scenarios
Scenario 1: Tech Worker (Renting)
Income: $140,000
Rents apartment
Denver:
- Income: $6,160
- Sales: $3,108
- Total: $9,268
Austin:
- Income: $0
- Sales: $3,300
- Total: $3,300
TX saves: $5,968/year 🎉
Scenario 2: Family (Homeowners)
Income: $180,000
$650K home in CO, $550K in TX
Colorado:
- Income: $7,920
- Property: $3,315
- Sales: $3,330
- Total: $14,565
Texas:
- Income: $0
- Property: $9,900
- Sales: $3,410
- Total: $13,310
TX saves: $1,255/year 🎉
Total Child Tax Credit
$4,400
Refundable Portion
$0
Credit Breakdown
Refundable vs. Non-Refundable Credit
2026 Child Tax Credit Parameters
Credit Amounts
- • Per qualifying child (under 17): $2,200
- • Per other dependent (17+): $500
- • Refundable portion limit: $1,700/child
Phase-Out Thresholds
- • Single: $200,000
- • Married Filing Jointly: $400,000
- • Reduction: $50 per $1,000 over threshold
💡 Optimization Tips
• Your income is well below phase-out threshold - you're receiving full credit
Scenario 3: Retiree (Expensive Home)
Income: $75,000 (retirement)
$750K paid-off home
Colorado:
- Income: $3,300
- Property: $3,825
- Sales: $2,722
- Total: $9,847
Texas:
- Income: $0
- Property: $13,500
- Sales: $2,788
- Total: $16,288
CO saves: $6,441/year 🎉
For retirees with expensive homes, Colorado wins!
Which State Wins?
Texas Better For:
✅ High earners who rent (huge income tax savings)
✅ Young professionals (building wealth)
✅ Remote workers without home
✅ Business owners
✅ Those prioritizing take-home pay
✅ Heat tolerators (TX summers brutal)
Colorado Better For:
✅ Homeowners with expensive property
✅ Retirees with paid-off homes
✅ Outdoor enthusiasts (skiing, hiking, mountains!)
✅ Those who hate extreme heat
✅ Four-season lovers
✅ Lower/moderate earners with homes
Special Considerations
The Outdoor Factor (Non-Tax): Colorado offers world-class outdoor recreation:
- 300+ days of sunshine
- Rocky Mountains access
- Skiing, hiking, climbing
- Mile-high city lifestyle
Texas offers:
- Flat terrain (limited outdoor variety)
- Very hot summers (100°F+ for months)
- Good job markets
- Lower cost of living
Many choose CO despite tax disadvantage for lifestyle.
Home Prices:
- Denver metro: $650K median
- Austin metro: $550K median
- Dallas metro: $400K median
Tax-adjusted cost of living is close between CO and TX.
Your QBI Deduction (Section 199A)
$20,000
20% of your qualified business income
Estimated Tax Savings
$4,800
Based on your marginal tax bracket
QBI Deduction Breakdown
2026 QBI Deduction Parameters
Income Thresholds (2026)
- • Single/HoH: $201,775 threshold
- • Married Joint: $403,500 threshold
- • Phase-in range: $75,000 (single) / $150,000 (married)
Deduction Rules
- • Standard deduction: 20% of QBI
- • Limited to 20% of taxable income
- • W-2 wage limit may apply above threshold
- • SSTB restrictions for high earners
💡 Optimization Strategies
• Your income is below the threshold - no wage or SSTB limitations apply. Focus on maximizing QBI.
FAQ
Q: Which is better for tech workers?
Depends: Renters favor TX (income tax). Homeowners favor CO (property tax). Career earnings potential similar in both (Denver, Austin, Dallas all have tech hubs).
Q: Cost of living overall?
Texas slightly cheaper (10-15%), mainly housing. But CO property taxes are so low they partially offset.
Q: Which has better weather?
Subjective!
- CO: 300 days of sun, four seasons, cold winters, mild summers (at altitude)
- TX: Hot, humid summers (100-110°F), mild winters
Q: Job market?
- CO: Denver tech hub, tourism, outdoor industry
- TX: Larger, more diverse (Austin, Dallas, Houston all major)
Q: Marijuana?
Legal recreationally in CO, not in TX. Factor for some.
Q: Water issues?
Both states have long-term water concerns. CO has droughts, TX has growing population straining supply.
Conclusion
The winner depends on your situation:
Renters/Young Professionals: Texas saves $4,000-10,000/year
Homeowners: Often a wash or CO wins slightly
Retirees with expensive homes: Colorado wins by $5,000+/year
Beyond taxes, Colorado offers superior outdoor lifestyle (mountains, skiing, hiking). Texas offers no income tax and strong job markets.
Financial winner varies. Lifestyle winner is personal preference.
Calculate Your Scenario:
Total Federal Tax
$16,712
Effective Tax Rate
16.71%
Your Tax Bracket
22%
Marginal tax rate on next dollar earned
Tax Breakdown by Bracket
2026 Tax Brackets (Single)
Take Standard Deduction
$47,500
Standard deduction of $47,500 exceeds itemized deductions by $22,500
Standard Deduction
$47,500
Itemized Deductions
$25,000
Your total deductible expenses
🎉 NEW 2026 Senior Deduction (OBBBA)
$12,000 additional deduction for taxpayers 65+
Deduction Breakdown
2026 Standard Deduction Amounts
- • Single: $16,100
- • Married Filing Jointly: $32,200
- • Head of Household: $24,150
- • Single: $2,050 per condition
- • Married: $1,650 per person, per condition
- • $6,000 per taxpayer age 65+
- • Phases out at $75K (single) / $150K (married)
- • 6% reduction per dollar over threshold
💡 Optimization Tips
• You're benefiting from the NEW 2026 senior deduction - a valuable OBBBA provision
Over-Withholding
$15,600
You're giving the IRS an interest-free loan. Expect a refund.
Estimated Tax Owed
$0
Total Withholding
$15,600
Recommended Action
Tax Calculation Breakdown
Payment Schedule
💡 Withholding Tips
• You're over-withholding by $15,600/year. Consider reducing to increase take-home pay
• Submit new W-4 form to your employer to adjust withholding by $600/paycheck
Your Earned Income Tax Credit
$4,250
Credit being phased out
EITC Credit Breakdown
Income Analysis
2026 EITC Parameters
Maximum Credits (2026)
- • No children: $664
- • 1 child: $4,427
- • 2 children: $7,316
- • 3+ children: $8,231
Key Requirements
- • Must have earned income
- • Investment income limit: $11,950
- • Must file tax return (even if not required)
- • Valid Social Security number required
💡 Optimization Tips
• Your credit is being reduced by $177.378 due to phaseout
• Consider tax-deferred retirement contributions to reduce AGI and increase EITC
AMT Owed
$0
Total Tax Liability
$65,000
AMT Calculation Breakdown
2026 AMT Parameters
- • Single: $90,100
- • Married Joint: $140,200
- • Single: $500,000
- • Married Joint: $1,000,000
- • Phaseout rate: 50% (increased from 25%)
- • 26% on first $244,500
- • 28% on excess over $244,500
Last Updated: Jan 2, 2026
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