Live in Colorado, Work in Idaho: Which State Taxes Your Paycheck?
Answer
Idaho withholds and Colorado credits. Without an agreement between them, both states are entitled to tax income earned in Idaho by a Colorado resident. The mechanism that stops you paying twice is the credit on the Colorado resident return, which is why the Idaho return has to be completed first.
Last verified
Without an agreement between Colorado and Idaho, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Idaho figure is an input to the Colorado return, so completing Colorado first means doing it twice.
A Colorado resident taxed by another state on the same income claims the credit for taxes paid to other states on Form DR 0104CR. The credit is capped at the Colorado tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
What you file
- 1Nonresident return · IdahoForm 43
File the Idaho nonresident return FIRST — you need the Idaho tax figure before you can complete Colorado.
- 2Resident return · ColoradoForm DR 0104CR
File a Colorado resident return reporting all income, then claim the credit for tax paid to Idaho. The credit is capped at what Colorado would have charged on that same income, so if Idaho taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Colorado | Idaho | |
|---|---|---|
| Taxes wages | Yes — flat | Yes — flat |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Form DR 0104 with Schedule DR 0104PN | Form 43 |
| Credit for other-state tax | Form DR 0104CR | Form 39NR |
| Nonresident safe harbour | None published | None published |
| Local income tax | Yes | No |
| Revenue department | Colorado Department of Revenue — Taxation Division | Idaho State Tax Commission |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Idaho and working in Colorado gives:Both states — credit offsets the double tax.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- Remote worker: Colorado → IdahoHome state only
- 1099 contractor: Colorado → IdahoHome state, plus the client state if you work there
- Moved mid-year: Colorado → IdahoTwo part-year returns
Other Colorado pairs
Questions people actually ask
I live in Colorado and work in Idaho. Which state takes the tax out of my paycheck?
Idaho withholds and Colorado credits. Without an agreement between them, both states are entitled to tax income earned in Idaho by a Colorado resident. The mechanism that stops you paying twice is the credit on the Colorado resident return, which is why the Idaho return has to be completed first.
Which state should my employer be withholding for?
Idaho. The wages are sourced to Idaho, so Idaho withholding is correct and there is no Colorado withholding to set up.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. Colorado gives residents a credit for tax paid to Idaho on the same income, claimed on Form DR 0104CR. The credit is capped at the Colorado tax on that income, so if Idaho taxes it more heavily the excess is not refunded by either state.
How current is this?
The Colorado and Idaho rules on this page were last checked against Colorado Department of Revenue — Taxation Division and Idaho State Tax Commission on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- Colorado Department of Revenue — Taxation Division — individual income taxaccessed 2026-08-07
- Idaho State Tax Commission — individual income taxaccessed 2026-08-07