The starting point for determining state income tax liability is federal taxable income. Federal taxable income is adjusted for additions and subtractions (deductions) that are used to determine Colorado taxable income, which amount is multiplied by the state's income tax rate of 4.55%.
For the next 7 income tax years, the bill allows an individual to claim a deduction for qualifying out-of-pocket medical expenses, if the expenses are not:
- Claimed as a deduction on the taxpayer's federal income tax return;
- Paid or reimbursed from a medical savings account; or
- Paid or reimbursed by the taxpayer's insurance company.
(Note: This summary applies to this bill as introduced.)