Colorado 1099 taxes: a 2026 guide for the self-employed
Keeper StaffKeeper is a delightfully smart tax filing software that's especially useful for people with 1099 contracting and freelance income. Our blog breaks down IRS guidance with real-world examples and analysis by tax professionals — empowering taxpayers to save money and take control of their finances.
Krislyn ChanKrislyn is Chief Growth Officer at Keeper. At Keeper, she strives to make expert-level tax strategies that used to require a traditional CPA accessible to all. Prior to Keeper, she was at Curology, where she helped bring custom, prescription-grade skincare out of the dermatologist's office to millions of faces.
Key takeaways
- 1099 income in Colorado is subject to three taxes: 15.3% federal self-employment tax, 10% to 37% federal income tax, and a flat 4.4% Colorado income tax.
- Set aside 25–30% of your profit in a high-yield savings account, so the money earns interest until your tax payments are due. For a single filer with no other income, total tax runs from 20.4% of profit at $40,000 to 29.7% at $200,000.
- Colorado taxes the same income the IRS does. It starts from your federal taxable income, so the federal standard deduction and the QBI deduction lower your Colorado tax too.
- Colorado’s penalty bar is lower than the IRS’s. If you expect to owe more than $1,000, paying 70% of this year’s tax through quarterly estimated tax payments avoids a penalty, not 90%.
- No local income tax. A few Denver-area cities charge a small monthly occupational privilege tax instead.
How much tax do 1099 workers pay in Colorado?
These tables show estimated 2026 tax on self-employment profit, the amount left after business expenses. They assume this is your only income, you take the standard deduction, and you have no kids or tax credits.
Single filer, 2026
| 1099 profit | Total tax | % of profit | Self-employment tax | Federal income tax | Colorado income tax |
|---|---|---|---|---|---|
| $40,000 | $8,169 | 20.4% | $5,652 | $1,775 | $742 |
| $60,000 | $13,433 | 22.4% | $8,478 | $3,559 | $1,396 |
| $80,000 | $18,698 | 23.4% | $11,304 | $5,344 | $2,050 |
| $100,000 | $25,069 | 25.1% | $14,130 | $8,235 | $2,705 |
| $150,000 | $41,948 | 28.0% | $21,194 | $16,413 | $4,340 |
| $200,000 | $59,407 | 29.7% | $28,234 | $25,196 | $5,976 |
Married filing jointly, one self-employed spouse, 2026
| 1099 profit | Total tax | % of profit | Self-employment tax | Federal income tax | Colorado income tax |
|---|---|---|---|---|---|
| $40,000 | $6,225 | 15.6% | $5,652 | $398 | $175 |
| $60,000 | $11,192 | 18.7% | $8,478 | $1,885 | $829 |
| $80,000 | $16,337 | 20.4% | $11,304 | $3,550 | $1,484 |
| $100,000 | $21,602 | 21.6% | $14,130 | $5,335 | $2,138 |
| $150,000 | $34,763 | 23.2% | $21,194 | $9,795 | $3,774 |
| $200,000 | $50,116 | 25.1% | $28,234 | $16,472 | $5,410 |
How Colorado taxes 1099 income
If you’re a freelancer, independent contractor, gig worker, or solo business owner in Colorado, your net profit (1099 income minus business expenses) is taxed three ways:
- Federal self-employment tax: 15.3% on most of your profit (92.35% of it). That’s 12.4% for Social Security, on earnings up to $184,500 in 2026, plus 2.9% for Medicare with no cap. It replaces the payroll taxes an employer would split with you. Estimate it with the self-employment tax calculator.
- Federal income tax: 10% to 37% on what’s left after three deductions: the $16,100 standard deduction ($32,200 married filing jointly), half of your self-employment tax, and the 20% QBI deduction.
- Colorado income tax: a flat 4.4% on that same federal taxable income. You report it on Form DR 0104.
What’s different about Colorado
- It starts from your federal taxable income. Most states start from an earlier number on your federal return and use their own, smaller deductions. Colorado takes the income the IRS taxes, after the standard deduction, half of your self-employment tax, and the QBI deduction, and applies 4.4%.
- You keep the QBI deduction. At $80,000 of profit, that’s $11,650 that Colorado doesn’t tax. Colorado only adds it back if your federal adjusted gross income is over $500,000 ($1 million married filing jointly).
- TABOR refunds can lower your bill. When state revenue goes over a limit set in the Colorado constitution, the surplus comes back to taxpayers, sometimes as a temporary rate cut below 4.4%. Whether there’s one for 2026 isn’t known until after the year ends, so this page uses 4.4%.
- No local income tax. Denver, Glendale, Greenwood Village, and Sheridan charge a small monthly occupational privilege tax of a few dollars. Aurora repealed its version in 2025.
Because Colorado’s tax starts after all the federal deductions, a self-employed person in Colorado at $80,000 pays $18,698: about $563 less than in California and $2,050 more than in Texas, which has no income tax.
Example: Colorado tax on $80,000 of 1099 income
Here’s the math for a single self-employed person in Denver with $80,000 of profit and no other income.
| Step | Amount |
|---|---|
| Self-employment tax: $80,000 × 92.35% × 15.3% | $11,304 |
| $80,000 minus half of self-employment tax | $74,348 |
| Income the IRS taxes: $74,348 minus the $16,100 standard deduction and $11,650 QBI deduction | $46,599 |
| Federal income tax | $5,344 |
| Colorado income tax: 4.4% of the same $46,599 | $2,050 |
| Total 2026 tax | $18,698 (23.4%) |
Self-employment tax is the biggest piece. Every dollar you write off as a business expense lowers all three taxes, since your self-employment tax, federal income tax, and Colorado income tax are all based on your profit after expenses.
What tax write-offs can I claim?
How to lower your Colorado 1099 tax bill
At $80,000 of profit, every $1,000 of business expenses you deduct cuts about $263 from your total tax. Common write-offs for self-employed people in Colorado include:
- Your phone and internet, for the share you use for work
- Car expenses, using a set rate per mile or your actual costs (compare the two)
- A home office, if you use part of your home regularly and only for work (estimate yours)
- Software, equipment, and supplies you buy for your business
- Health insurance premiums you pay as a self-employed person
- Retirement contributions to a SEP-IRA or Solo 401(k)
Most of these are small purchases spread across a year of bank and card statements, which is where they get missed. See the full list of tax write-offs for self-employed people.
Track and claim every eligible deduction with Keeper
Keeper scans your accounts for write-offs and files your return — with tax pros reviewing every one.
Try it freeColorado estimated tax payments
If you expect to owe more than $1,000 in Colorado tax for 2026, after withholding and credits, make estimated payments to the Colorado Department of Revenue through Revenue Online or with Form DR 0104EP. They’re due on the same dates as your federal payments, and each is a quarter of your Colorado tax:
| Payment | Share of your Colorado tax | Due date |
|---|---|---|
| 1st | 25% | April 15, 2026 |
| 2nd | 25% | June 15, 2026 |
| 3rd | 25% | September 15, 2026 |
| 4th | 25% | January 15, 2027 |
- Federal payments are separate: you pay the IRS on the same four dates with Form 1040-ES.
- To avoid a penalty for paying too little, pay at least 70% of this year’s Colorado tax or 100% of last year’s, whichever is less. If your 2025 income was over $150,000, use 110% of last year’s tax instead.
Get your payment amounts with the Colorado quarterly tax calculator.
Should you form an LLC or S corp in Colorado?
You don’t need one to work as an independent contractor. If you work for yourself without forming a business, you report 1099 income on Schedule C, part of your regular tax return, and pay the taxes above. Colorado is one of the cheapest states to set one up:
- LLCs cost $50 to form online and $25 a year for the annual report (Colorado calls it a periodic report).
- S corps can make sense once your profit is around $80,000, when the self-employment tax savings get significant. You pay yourself a reasonable salary and take the rest as profit payouts (distributions) that aren’t subject to self-employment tax.
Run the numbers for your income to see what you’d save.
Do self-employed people in Colorado charge sales tax?
Usually not. Most services, like writing, design, consulting, and bookkeeping, aren’t taxable in Colorado. Physical goods are, at a 2.9% state rate plus city, county, and district taxes that vary a lot by location. Many Colorado cities collect their own sales tax separately from the state.
7 sources
- 2026 DR 0104EP: individual estimated income tax payment form · tax.colorado.gov
- Individual income tax guide · tax.colorado.gov
- Individual income tax: estimated payments · tax.colorado.gov
- HB25B-1001: QBI deduction add-back · leg.colorado.gov
- Metro Denver occupational taxes · metrodenver.org
- IRS releases tax inflation adjustments for tax year 2026 · irs.gov
- Contribution and benefit base · ssa.gov
This article is for informational purposes only and isn’t tax, legal, or financial advice. Tax rules change and depend on your situation, so talk to a tax professional about yours.
