Colorado · Section 179 Expensing
Section 179 Expensing in Colorado (2026)
Immediately expense up to $2.56M in qualifying 2026 business equipment purchases. Colorado has a flat 4.4% income tax, so a Colorado filer's combined marginal rate on the next dollar at $82,254 of income is about 26.4% (22% federal + 4.4% CO).
2026 savings example for Colorado
Planning estimate for a single filer earning $82,254 (Colorado median household income in LevyIO's state dataset) who removes $5,000 from taxable income. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; CO tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$1,320
Federal savings
$1,100
$9,266 → $8,166 · 22% bracket
CO state savings
$220
$2,959 → $2,739 · 4.4% marginal
Combined marginal rate
26.4%
≈ $264 saved per $1,000 deducted
Statutory maximum for this item in LevyIO's dataset: $2,560,000.
Federal × Colorado marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The CO column is the state marginal rate at the midpoint of each range. The last column is the tax saved per $1,000 deducted at that combined rate.
| Federal bracket | Gross income (single) | CO marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 4.4% | 14.4% | $144 |
| 12% | $28,500 - $66,500 | 4.4% | 16.4% | $164 |
| 22% | $66,500 - $121,800 | 4.4% | 26.4% | $264 |
| 24% | $121,800 - $217,875 | 4.4% | 28.4% | $284 |
| 32% | $217,875 - $272,325 | 4.4% | 36.4% | $364 |
| 35% | $272,325 - $656,700 | 4.4% | 39.4% | $394 |
| 37% | Over $656,700 | 4.4% | 41.4% | $414 |
Eligibility & forms
Businesses purchasing qualifying equipment
- Tangible personal property
- Used in business >50%
- Purchased and placed in service same year
- $4.09M phaseout threshold for 2026
Federal forms: Form 4562
Colorado filing notes
Federal deductions automatically apply. Watch for TABOR refund checks (taxable federally). Colorado offers retirement income subtractions for 55+ and generous renewable energy credits.
Common mistakes: Exceeding income limitation; Not meeting placed-in-service date.
Frequently asked questions
How much can the Section 179 Expensing save a Colorado taxpayer in 2026?
In LevyIO's example, a single filer with $82,254 of income (the Colorado median household income in our state dataset) who removes $5,000 from taxable income saves about $1,100 in 2026 federal tax (22% marginal bracket) plus about $220 in Colorado tax (4.4% state marginal rate), roughly $1,320 combined. It is a planning estimate computed from the 2026 IRS brackets and LevyIO's CO bracket data, not a survey figure.
What is the Colorado income tax rate for 2026?
Colorado has a flat 4.4% income tax. The CO standard deduction in LevyIO's dataset is $15,000 single / $30,000 married. Flat 4.4%. Uses federal taxable income. TABOR mandates refunds when revenue exceeds limits.
Who qualifies for the Section 179 Expensing in Colorado?
Businesses purchasing qualifying equipment. The federal rules are the same in every state; the requirements are: Tangible personal property; Used in business >50%; Purchased and placed in service same year; $4.09M phaseout threshold for 2026. Colorado filers should confirm on the CO return whether the state follows the federal treatment.
Which forms do I file to claim the Section 179 Expensing?
Federal: Form 4562. Colorado: check the Colorado Department of Revenue instructions for the matching state schedule. Common mistakes: Exceeding income limitation; Not meeting placed-in-service date.
Section 179 Expensing in other states
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.