Federal tax
PERA benefits are taxable (contributions were tax-deferred). A part may be nontaxable if you made after-tax contributions (before July 1, 1984 under the PERA structure) or used after-tax money to buy service; PERA uses the IRS Simplified Method. Retirement Process p. 10, Taxes on PERA Benefits; Your PERA Benefits p. 2
Colorado's pension exclusion
Colorado excludes pension income (PERA, Social Security, certain other pensions, IRA and tax-deferred plan distributions) up to $20,000 a year per person at ages 55-64, $24,000 at 65+ (age on Dec. 31); survivor benefit recipients qualify regardless of age. A one-time extra exclusion applies for contributions made July 1, 1984 - Dec. 31, 1986 (PERA structure). Taxes on PERA Benefits p. 3, Colorado State Income Tax; Contributions Between 1984 and 1986
| Age on Dec. 31 | You can subtract | Survivor benefit |
|---|---|---|
| 54 | — | $20,000 * |
| 55 | $20,000 | $20,000 |
| 60 | $20,000 | $20,000 |
| 64 | $20,000 | $20,000 |
| 65 | $24,000 | $24,000 |
| 70 | $24,000 | $24,000 |
* Survivors qualify at any age; the booklet gives no separate amount under 55. Taxes on PERA Benefits p. 3, Colorado State Income Tax; Contributions Between 1984 and 1986
Colorado's pension exclusion covers survivor benefits at any age, but PERA's tax booklet gives amounts only for ages 55 and up.
What we use: We show $20,000 for a survivor under 55.
Taxes on PERA Benefits p. 3, Colorado State Income TaxWithholding
PERA withholds Colorado tax only if you ask, and does not withhold for any other state. Taxes on PERA Benefits p. 3; Retirement Process p. 10
This is general information from PERA's tax booklet, not tax advice. A tax professional or the Colorado Department of Revenue can answer questions about your return.
From the sources
- PERA benefits are taxable income because your contributions weren't taxed when you made them. Part of your benefit may be tax-free if you made after-tax contributions, such as before July 1, 1984, or used after-tax money to buy service.Retirement Process p. 10, Taxes on PERA Benefits
- Colorado excludes up to $20,000 a year of pension income per person at ages 55 to 64, and $24,000 at 65 and over, based on your age on December 31. Survivor benefit recipients qualify at any age. The limit covers PERA, Social Security, other pensions and IRA payments combined.Taxes on PERA Benefits p. 3, Colorado State Income Tax
- PERA withholds Colorado income tax only if you ask, and doesn't withhold for any other state.Taxes on PERA Benefits p. 3
Questions
Is my Colorado PERA pension taxable?
Yes, for federal income tax, because your contributions weren't taxed when you made them. A part may be tax-free if you made after-tax contributions or used after-tax money to buy service.
Does Colorado tax PERA benefits?
Colorado lets you subtract up to $20,000 a year of pension income at ages 55 to 64, and $24,000 at 65 and over (your age on December 31). That limit covers PERA, Social Security, other pensions and IRA payments together.
Will PERA withhold state tax?
Only Colorado tax, and only if you ask. PERA doesn't withhold for any other state.
Source: Your PERA Benefits: A Summary of the Colorado PERA Defined Benefit Plan, Revised April 2026, p. 2. Also: Retirement Process p. 10; Taxes on PERA Benefits p. 3. Last reviewed .