Colorado is a great state. We all know that at a fundamental level, with a high quality of life, high incomes, a beautiful natural landscape, and a vast number of activities and hobbies available for everyone to enjoy. While the lifestyle and recreation are beneficial, there are a couple of other perks to living in Colorado that we probably don’t have come to mind immediately when thinking about the benefits of living here. So today, we’re talking about some of the unique perks that come with living in Colorado.
Colorado Perk: FAMLI
The Colorado Paid Family and Medical Leave Insurance Act passed in 2021, providing a safety net for employee’s and employer’s emergency medical needs and maternity/paternity needs. For people who earn at least $2,500 per year that is subject to the income tax premium, qualification for FAMLI is automatic. FAMLI provides a minimum of twelve weeks of paid leave for medical care or to support the medical care of a family member with a serious medical condition, and up to sixteen weeks for those with pregnancy or childbirth complications. Qualifying events include birth, adoption, or placement through foster care; caring for a family member with a serious health condition; having a serious health condition; or a need arising out of a covered family member’s active duty service including counseling, military events and ceremonies, or attending a service member’s rest and recuperation leave mid or post-deployment. FAMILY provides a wage replacement of approximately 75% of earnings (subject to a high-income cap) before the leave period. All of this comes at a total cost of 0.9% of income in Colorado, which must be paid for at least 50% by your employer (0.45%) or up to the full 0.9% by your employer. Self-employed individuals only need to pay the employer premium (0.45%.) The law is expected to take full effect in 2023.
Colorado Perk: EPEW
The Colorado Equal Pay for Equal Work Act took effect on January 1st of 2021 and mandates that job postings that are for positions in Colorado, or remote job postings that are predominantly filled in Colorado (i.e., a remote posting by a Colorado company) must include a salary, hourly rate, or a compensation range in the job posting. This act was the result of significant advocacy in the State Capital, and ultimately was aimed at providing compensation transparency for workers, in order to enable not only a fair wage for new applicants, but to provide a baseline understanding of compensation for existing employees to compare their wages to (i.e., knowing whether your employer is hiring new people at a wage equal, higher, or lower than yours.) While there has been some pushback by national corporations, claiming that they will specifically not hire in Colorado, this is a red herring, as the law exempts national firms that are hiring remote workers on a national scale. Simultaneously, major employers including Apple, Google, Amazon, and others continue to open positions in Colorado, with eye-popping compensation levels publicly stated.
Colorado Perks: Tax-Free Retirement Income
Of all the Colorado Perks, this might be our favorite. In Colorado, retirement income from pre-tax IRAs and pension plans is tax-free at two different levels. This includes $20,000 annually for people between ages 55 and 64, and $24,000 for those 65 and older. This only applies to Colorado residents (sorry, tourists) and only to the Colorado income tax. Still, saving 4.55% on $20,000 to $24,000 of income means not paying $910-$1,092 in state income taxes, and I don’t know anyone who would complain about keeping an extra thousand dollars or so in their pocket!
Colorado Perk: Colorado Child Care Contribution Tax Credit
Colorado is a unique state in that it puts your tax dollars where its mouth is. This includes a Child Care Tax Credit for Charitable Contributions. Normally your charitable deduction without itemizing your tax return is capped at $300 for singles and heads of household and $600 for married couples. Even those who itemize are normally subject to a limit of 30% or 50% of their annual income being deductible, with excess charity rolling into future years as a future write-off. But those who donate specifically to non-profits and organizations with a focus on childcare receive a 50% state income tax credit, which unlike a deduction doesn’t reduce your income for the purpose of calculating income taxes, but directly offsets your income tax obligation dollar for dollar. For example, a Colorado family with $100,000 in taxable income (ignoring the standard deduction for a moment) would normally have a state income tax obligation of $4,550. If that same family donated $9,100 each year to a child-care charity, they would owe zero dollars in Colorado income tax. The credit is limited to donations up to $200,000 annually (a tax credit value of $9,100,) but ultimately provides an enormous amount of tax relief for those who support this particular form of good cause.
Colorado Perks: Being in Colorado
With much love to our out-of-state friends, all of these are simple HR lines and tax tweaks. Living in Colorado is its own experience, with a bountiful environment that provides both a high quality of life and high-quality opportunities. Colorado is ranked the 6th strongest economy in the United States, has lower-than-national average unemployment, and is home to some of the top universities in the country. Beyond the literal Colorado perks, it’s a literally awesome place to live.