Summary
Colorado's ongoing federal itemized/standard deduction addback in C.R.S. 39-22-104(3)(p.7), effective for income tax years beginning on or after January 1, 2026, appears to use much lower exemption amounts than the current PolicyEngine-US parameter table.
Axiom's generated RuleSpec for rulespec-us-co encodes:
- AGI threshold: $300,000
- Single-return deduction exemption: $1,000
- Joint-return deduction exemption: $2,000
PolicyEngine-US currently has policyengine_us/parameters/gov/states/co/tax/income/additions/federal_deductions/exemption.yaml values of:
- SINGLE: $12,000 from 2023 onward
- JOINT: $16,000 from 2023 onward
and no 2026 effective-date update. co_federal_deduction_addback uses that exemption table directly, so 2026 Colorado additions, taxable income, and income tax are likely understated for affected taxpayers.
Evidence
Current PE parameter file:
JOINT:
2022-01-01: 60_000
2023-01-01: 16_000
SINGLE:
2022-01-01: 30_000
2023-01-01: 12_000
Axiom encoder PR that surfaced this while classifying CO income-tax oracle coverage:
TheAxiomFoundation/axiom-encode#475
Related generated RuleSpec PR:
TheAxiomFoundation/rulespec-us-co#15
Expected update
Review the current Colorado legal/source guidance for tax year 2026 and, if confirmed, add 2026 values to the federal deduction addback exemption parameter, with tests covering the 2026 schedule.
Summary
Colorado's ongoing federal itemized/standard deduction addback in C.R.S. 39-22-104(3)(p.7), effective for income tax years beginning on or after January 1, 2026, appears to use much lower exemption amounts than the current PolicyEngine-US parameter table.
Axiom's generated RuleSpec for
rulespec-us-coencodes:PolicyEngine-US currently has
policyengine_us/parameters/gov/states/co/tax/income/additions/federal_deductions/exemption.yamlvalues of:and no 2026 effective-date update.
co_federal_deduction_addbackuses that exemption table directly, so 2026 Colorado additions, taxable income, and income tax are likely understated for affected taxpayers.Evidence
Current PE parameter file:
Axiom encoder PR that surfaced this while classifying CO income-tax oracle coverage:
TheAxiomFoundation/axiom-encode#475
Related generated RuleSpec PR:
TheAxiomFoundation/rulespec-us-co#15
Expected update
Review the current Colorado legal/source guidance for tax year 2026 and, if confirmed, add 2026 values to the federal deduction addback exemption parameter, with tests covering the 2026 schedule.