State Overtime Compensation Income Tax

Second Regular Session Seventy-fifth General Assembly STATE OF COLORADO INTRODUCED SENATE BILL 26-056 LLS NO. 26-0526.01 Alison Killen x4350 SENATE SPONSORSHIP Kirkmeyer, HOUSE SPONSORSHIP Caldwell, Senate Committees House Committees State, Veterans, & Military Affairs A BILL FOR AN ACT CONCERNING MODIFYING THE STATE INCOME TAX ON OVERTIME COMPENSATION TO APPLY ONLY IN THE 2026 INCOME TAX YEAR.

Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.) The bill modifies the requirement that a taxpayer add the amount of any overtime compensation excluded or deducted from the taxpayer's federal gross income back to the taxpayer's federal taxable income for purposes of calculating state income tax liability to apply only in the 2026 income tax year.

Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.

Capital letters or bold & italic numbers indicate new material to be added to existing law. Dashes through the words or numbers indicate deletions from existing law.

Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, 39-22-104, amend (3)(u) as follows:

39-22-104. Income tax imposed on individuals, estates, and trusts - single rate - report - tax preference performance statement - legislative declaration - definitions - repeal.

(3) There shall be added to the federal taxable income:

(u) (I) FOR THE 2026 INCOME TAX YEAR ONLY, the amount of any overtime compensation excluded or deducted from federal gross income.

(II) THIS SUBSECTION (3)(u) IS REPEALED, EFFECTIVE DECEMBER

SECTION 2. Act subject to petition - effective date. (1) This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 12, 2026, if adjournment sine die is on May 13, 2026); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.