Tax Planning for Physicians in Colorado (2026)

Physicians in Colorado face a top rate of 4.4% on top of the 37% federal bracket and payroll taxes. This guide summarizes the 2026 Colorado rules that matter most to doctors, dentists and practice owners.

Colorado income tax rates for 2026

Colorado has a flat income tax of 4.4% for 2026.

Pass-through entity tax (SALT workaround)

Yes. The state has an elective pass-through entity tax (PTET) that partnerships and S corporations can use to deduct state income tax at the entity level.

For physician practice owners, the PTET matters more in 2026 because the federal SALT deduction for individuals phases back down toward $10,000 once modified AGI passes $505,000. Read our guide to the pass-through entity tax for physicians.

Local income taxes

Denver levies an Occupational Privilege Tax of $5.75 per month on employees who earn at least $500 a month for work in Denver, plus $4.00 per month per employee from the employer; Aurora, Greenwood Village and others have similar head taxes.

Planning notes for Colorado physicians

• Colorado taxes income at a flat 4.4% and starts from federal taxable income, so most federal deductions flow straight through to the state return.
• Colorado has added an add-back for high earners' itemized or standard deductions above certain income levels in recent years, so confirm the current rule before relying on large itemized deductions.

Federal strategies that apply in every state

State tax is only part of the picture. The federal rules drive most of the savings for physicians in Colorado:

• W-2 physician tax strategies: maximize 401(k)/403(b), 457(b), HSA and the backdoor Roth.
• 1099 physician tax planning: solo 401(k), deductions and the S corporation decision.
• Practice owners: entity, compensation, cash balance plans and exit planning.
• Real estate and cost segregation for physicians with time to participate.

City guides for Colorado physicians

Local taxes and planning notes for physicians in Denver, Colorado Springs, Aurora, Fort Collins. Our planning is delivered virtually, so location does not limit access.

Guides by specialty

Surgeons · Anesthesiologists · Radiologists · Orthopedic Surgeons · Cardiologists · Dentists · Dermatologists · Emergency Physicians · Gastroenterologists · Ophthalmologists · Neurosurgeons · Plastic Surgeons · Psychiatrists · Hospitalists · Pain Management Physicians

This article is for general educational purposes and is not tax, legal or investment advice. Tax law changes often and its application depends on your facts. Figures reflect 2026 rules as published by the sources listed above. Consult a qualified professional before acting. See our editorial policy.