Colorado has no estate tax and no inheritance tax either. Most Colorado families only need to consider federal tax rules, not a second layer of state tax.
Colorado didn’t always skip estate taxes. In 1927, the state created an inheritance tax, paid by people receiving property. In 1980, lawmakers swapped that for an estate tax, paid by the estate itself before assets passed to heirs.
Colorado’s estate tax was what’s called a “pick-up tax.” Instead of designing its own rate table, Colorado simply took advantage of a federal credit that used to reward states for imposing an estate tax. Colorado’s estate tax equaled that federal credit, so it didn’t increase the overall tax bill. It just redirected some revenue from the federal government to the state.
In the early 2000s, federal law (EGTRRA and later changes) phased out and then eliminated this state credit. When the credit disappeared for people who passed after December 31, 2004, Colorado’s estate tax effectively disappeared too.
Currently No Estate Tax in Colorado
Under current law, no return is required for anyone passing after that date. The state hasn’t collected meaningful estate tax revenue in years.
The state could have created a brand-new, stand-alone estate tax—some states did. Instead, lawmakers chose not to “decouple” from federal law. Combined with the state’s strong taxpayer-protection culture (think TABOR limits on new taxes), the result is simple: no active estate tax today.
What Taxes Still Matter for Coloradans?
Even without a state estate tax, larger estates may still be subject to federal estate tax. In 2026, the federal exemption is $15 million per person, with a top rate of 40% on amounts above that threshold.
Most Colorado estates fall well below those thresholds. The state also taxes income earned by estates and trusts, just like it taxes individual income. So while there’s no separate estate tax, planning still matters. Especially around income taxes, capital gains, and the federal estate tax for very large estates.
Many Colorado families focus on avoiding probate through tools like revocable living trusts. Probate in Colorado typically costs 3-7% of estate value and takes 6-9 months, even for straightforward cases.
(Read More: Learn about revocable trusts in Colorado versus Nevada and the cost of probate in Colorado.)