Colorado Military Retirement: Key Facts (2026)
✅ Major Benefits
- • Ages 55-64: Up to $20,000 exempt
- • Age 65+: Up to $24,000 exempt
- • VA disability 100% tax-free
- • Flat 4.40% tax rate (one of lowest)
- • Colorado National Guard: 100% tuition at state schools
- • All veterans: In-state tuition (GI Promise)
- • 6 major military installations
- • World-class outdoor recreation
- • Strong military community
- • Excellent VA healthcare
⚠️ Considerations
- • Under 55: No exemption (full taxation)
- • Higher cost of living (+5-15%)
- • Housing costs rising rapidly
- • Denver/Colorado Springs traffic
- • High altitude (health consideration)
- • Property taxes increasing
How Colorado Taxes Military Retirement (2026)
🎯 Colorado's Pension Subtraction Rules:
Colorado offers a pension and annuity subtraction for military retirees based on age:
-
Under age 55: NO exemption
• All military retirement is taxed at 4.40% -
Ages 55-64: Up to $20,000 exempt
• First $20,000 of pension income is tax-free
• Amount above $20,000 taxed at 4.40% -
Age 65+: Up to $24,000 exempt
• First $24,000 of pension income is tax-free
• Amount above $24,000 taxed at 4.40%
✅ VA disability compensation is 100% tax-free at all ages
Real-World Examples (2026)
Example 1: E-7, Age 42 with 20 Years (Under 55)
• Gross military retirement: $2,850/month ($34,200/year)
• 50% VA disability: $1,075/month ($12,900/year) - TAX FREE
• Colorado exemption: $0 (under age 55)
• Taxable retirement income: $34,200
• Colorado state tax: $34,200 × 4.40% = $1,505/year
At age 55, tax drops to $625/year (only $14,200 taxable)
Example 2: O-4, Age 58 with 22 Years (Ages 55-64)
• Gross military retirement: $4,100/month ($49,200/year)
• 70% VA disability: $1,800/month ($21,600/year) - TAX FREE
• Colorado exemption: $20,000 (ages 55-64)
• Taxable retirement income: $49,200 - $20,000 = $29,200
• Colorado state tax: $29,200 × 4.40% = $1,285/year
Tax savings vs. no exemption: $880/year
At age 65, tax drops to $1,109/year ($24,000 exemption)
Example 3: O-5, Age 68 with 26 Years (Age 65+)
• Gross military retirement: $5,400/month ($64,800/year)
• 100% VA disability: $3,737/month ($44,844/year) - TAX FREE
• Social Security: $2,500/month ($30,000/year) - TAX FREE (CO doesn't tax SS)
• Colorado exemption: $24,000 (age 65+)
• Taxable retirement income: $64,800 - $24,000 = $40,800
• Colorado state tax: $40,800 × 4.40% = $1,795/year
Tax savings vs. no exemption: $1,056/year
Compare to California: ~$4,200/year in state tax
Colorado vs. Neighboring States (2026)
| State | Military Retirement Tax | Tax on $50K Pension |
|---|---|---|
| Colorado | $20K exempt (55-64), $24K (65+) | $1,320 (age 55-64) $1,144 (age 65+) |
| Wyoming | No state income tax | $0 |
| New Mexico | 100% exempt | $0 |
| Kansas | 100% exempt | $0 |
| Nebraska | Partial exemption (varies) | ~$1,200-1,800 |
Note: Colorado's tax is higher than neighboring states, but quality of life and military community may justify the cost for many retirees.
🎓 Education Benefits for Veterans & Families in Colorado
Colorado offers solid education benefits for veterans and military families, with a particular focus on National Guard members. While Colorado doesn't have a comprehensive state tuition waiver like Texas, the state provides in-state tuition benefits and strong Guard education programs.
Colorado National Guard State Tuition Assistance
100% Tuition Coverage at Colorado State Schools
Colorado National Guard members can receive 100% tuition coverage at Colorado public colleges and universities through the state tuition assistance program. This benefit covers tuition costs not already covered by federal TA or GI Bill benefits.
Colorado National Guard Tuition Assistance Eligibility
| Requirement | Details |
|---|---|
| Service | Must be an active member of the Colorado National Guard |
| Institutions | All Colorado public colleges, universities, and community colleges |
| Coverage | 100% of tuition (does not cover fees, books, or room & board) |
| Academic Standing | Must maintain satisfactory academic progress |
Colorado GI Promise: In-State Tuition for All Veterans
Under the Colorado GI Promise, all veterans and dependents using federal GI Bill benefits automatically qualify for in-state tuition rates at Colorado public institutions, regardless of residency status.
Colorado GI Promise Benefits:
- In-state tuition for all veterans using GI Bill benefits
- Applies to all Colorado public colleges and universities
- No waiting period or residency requirement
- Saves $10,000-$20,000+ per year in tuition costs
- Also applies to eligible dependents using transferred GI Bill benefits
Yellow Ribbon Program Schools in Colorado
For veterans using the Post-9/11 GI Bill at private universities, the Yellow Ribbon Program can cover tuition costs above the GI Bill cap. Top Colorado participating schools include:
Top Yellow Ribbon Schools
- University of Denver - Full tuition coverage
- Colorado College - Significant funding
- Regis University - Up to full tuition
- Denver Seminary - Graduate programs
How Yellow Ribbon Works
- School contributes a portion
- VA matches the school's contribution
- Combined with GI Bill = reduced/free tuition
- Must have 100% Post-9/11 GI Bill
- Contact school's VA office to apply
Colorado State University System Veteran Services
Colorado's public university system provides strong support for veteran students:
Major Universities
- University of Colorado (Boulder, Denver, Colorado Springs) - Dedicated Veterans Services offices at each campus
- Colorado State University (Fort Collins) - Comprehensive veteran support programs
- University of Northern Colorado - Strong military-friendly programs
- Colorado School of Mines - STEM-focused with veteran services
Veteran Services Available
- Dedicated veteran counselors
- Priority registration for classes
- Veteran student lounges/centers
- Academic support and tutoring
- Career transition assistance
Colorado Community College System
Colorado has 13 community colleges across the state, all offering veteran support services and accepting GI Bill benefits. Community colleges provide affordable pathways to degrees and certifications.
Popular Colorado Community Colleges for Veterans:
- Community College of Aurora - Near Buckley Space Force Base
- Pikes Peak State College - Colorado Springs (near Fort Carson)
- Arapahoe Community College - Denver metro area
- Front Range Community College - Multiple campuses
- Red Rocks Community College - West Denver metro
- All offer in-state tuition under GI Promise
- Average tuition: $5,000-$7,000/year (in-state)
⚠️ Important Note:
Unlike Texas (Hazlewood Act) or other states with comprehensive veteran tuition waivers, Colorado does not offer a statewide free college program for all veterans. The primary state benefit is the Colorado National Guard tuition assistance. Most veterans rely on federal GI Bill benefits combined with the GI Promise (in-state tuition) to afford college in Colorado.
How to Apply for Colorado Education Benefits
Application Resources
-
Colorado National Guard Tuition Assistance:
Contact your unit's Education Services Officer or visit the Colorado National Guard education office -
Colorado Department of Military and Veterans Affairs (CDVA):
Website: dmva.colorado.gov
Phone: (303) 284-6077 -
GI Bill Benefits:
Apply at VA.gov/education -
School-Specific Veteran Services:
Contact the Veterans Services office at your chosen Colorado institution
📚 Education Bottom Line:
Colorado's education benefits are moderate compared to other states. National Guard members receive excellent state support (100% tuition), and all veterans benefit from in-state tuition through the GI Promise. However, Colorado lacks a comprehensive state-funded free college program for all veterans. Most retirees will rely on federal GI Bill benefits. If maximizing education benefits for yourself or dependents is a top priority, states like Texas (Hazlewood Act) may be more attractive.
Cost of Living in Colorado (2026)
Colorado's cost of living is 5-15% above the national average, with Denver and Boulder significantly higher than Colorado Springs or outlying areas.
Housing (Denver Metro)
- • Median home price: $650,000
- • Rent (2BR): $2,200-2,800/month
- • Condo: $400,000-550,000
Housing (Colorado Springs)
- • Median home price: $480,000
- • Rent (2BR): $1,700-2,200/month
- • More military-friendly pricing
Housing (Fort Collins/Pueblo)
- • Fort Collins: $550,000
- • Pueblo: $320,000 (most affordable)
- • Rent (2BR): $1,400-2,000/month
Other Costs
- • Gas: $3.40-4.00/gallon
- • Utilities: $150-220/month
- • Sales tax: 2.9% (state) + local
- • Property tax: 0.49% avg (moderate)
💰 Cost of Living Breakdown:
- • Denver metro: 15% above national average
- • Colorado Springs: 5% above national average (best for military retirees)
- • Fort Collins: 10% above national average
- • Pueblo: 8% BELOW national average
- • Bottom line: Higher than many states, but outdoor recreation, quality of life, and 300+ days of sunshine make it worthwhile for many
Military Presence in Colorado
Colorado has 6 major military installations, with Colorado Springs being one of the most military-dense cities in America.
Colorado Springs Area
- • U.S. Air Force Academy - Officer training, 18,000 cadets/staff
- • Peterson Space Force Base - Space Force headquarters, NORAD
- • Schriever Space Force Base - Satellite operations
- • Fort Carson - Army 4th Infantry Division (38,000 personnel)
- • Cheyenne Mountain SFS - Underground command center
Denver/Aurora Area
- • Buckley Space Force Base - Air National Guard, Space Force units
- • Denver Recruiting Battalion
- • Multiple Reserve and National Guard facilities
🎖️ Why Colorado is Great for Military Retirees:
- • Colorado Springs: Massive military retiree community - over 100,000 veterans in the area
- • Commissary & Exchange access: Fort Carson, Peterson SFB, USAFA, Buckley SFB
- • VA Healthcare: VA Eastern Colorado (Aurora/Denver), VA Southern Colorado (Colorado Springs)
- • Space Force hub: Excellent career opportunities for transitioning Space Force members
- • Outdoor recreation: World-class skiing, hiking, camping, fishing, hunting
- • 300+ days of sunshine: Despite high elevation, climate is mild and sunny
- • Military-friendly employers: Lockheed Martin, Northrop Grumman, Boeing, federal contractors
Best Colorado Cities for Military Retirees
Colorado Springs
THE military city of Colorado. Home to 5 bases, massive veteran community, excellent services.
- • Median Home Price: $480,000
- • Cost of Living: 5% above national avg
- • Military Bases: Fort Carson, Peterson, Schriever, USAFA, Cheyenne Mtn
- • VA Hospital: Southern Colorado Healthcare
Aurora (Denver Metro)
Near Buckley SFB and largest VA hospital in region. Suburban feel with urban amenities.
- • Median Home Price: $580,000
- • Cost of Living: 12% above national avg
- • Military Bases: Buckley SFB
- • VA Hospital: VA Eastern Colorado (largest in state)
Fort Collins
College town (CSU) with great quality of life. About 90 min from Buckley SFB, outdoor recreation paradise.
- • Median Home Price: $550,000
- • Cost of Living: 10% above national avg
- • Military Bases: None nearby (Denver area 90 min)
- • Great for outdoor enthusiasts
Pueblo
Most affordable Colorado city. 40 min south of Colorado Springs. Lower elevation, sunnier, budget-friendly.
- • Median Home Price: $320,000
- • Cost of Living: 8% BELOW national avg
- • Military Bases: Fort Carson (40 min north)
- • Best value in Colorado
Frequently Asked Questions
How much does Colorado tax military retirement?
It depends on your age. Under 55: full taxation at 4.40%. Ages 55-64: first $20,000 exempt, rest taxed at 4.40%. Age 65+: first $24,000 exempt, rest taxed at 4.40%.
Does Colorado tax VA disability?
No. VA disability compensation is 100% tax-free in Colorado (and all states).
Is Colorado Springs good for military retirees?
Absolutely. Colorado Springs has one of the largest military retiree populations in the country (100,000+ veterans). Five military bases, excellent VA healthcare, strong community support, and world-class outdoor recreation make it a top retirement destination.
Should I wait until 55 to move to Colorado?
If taxes are your only concern, yes - you'll save $880+ per year by waiting until 55 when the exemption kicks in. However, many younger retirees move for quality of life, military community, and career opportunities despite the higher tax burden.
What about the high altitude?
Colorado Springs sits at 6,035 feet, Denver at 5,280 feet. Most people adjust within 2-4 weeks. Drink more water, take it easy initially. If you have serious respiratory or heart conditions, consult your doctor before moving. Most military retirees adapt without issues.
Does Colorado offer free college for veterans?
Colorado does not have a statewide free college program for all veterans like Texas's Hazlewood Act. However, Colorado National Guard members receive 100% tuition coverage at state schools, and all veterans using GI Bill benefits qualify for in-state tuition rates through the Colorado GI Promise, which saves $10,000-$20,000+ per year compared to out-of-state tuition.
What is the Colorado GI Promise?
The Colorado GI Promise guarantees in-state tuition rates for all veterans and their dependents using federal GI Bill benefits at Colorado public colleges and universities, regardless of how long they've lived in Colorado. This eliminates the typical 1-year residency requirement and makes Colorado higher education significantly more affordable for military families.
Calculate Your Colorado Retirement Income
See exactly how Colorado's partial exemption affects your specific situation
Use Free Calculator →🎖️ Bottom Line for Colorado Military Retirement
Colorado isn't the cheapest state for military retirees, but it offers exceptional quality of life. The partial tax exemption ($20K-$24K based on age) reduces your burden, and the 4.40% flat rate is reasonable. Colorado Springs is a military paradise with 100,000+ veterans, five bases, excellent VA care, and unbeatable outdoor recreation. If you're under 55, you'll pay more in taxes, but many younger retirees accept this for the lifestyle and career opportunities. For those 55+, Colorado offers a sweet spot of moderate taxation, world-class amenities, and the strongest military community in the Mountain West.
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