Qualified business income deduction

An individual who claims a qualified business income (QBI) deduction on their federal income tax return may be required to add back on their Colorado returns the full amount of the deduction.

For tax years 2018 and later, an individual who is a partner or shareholder in a partnership or S corporation that makes a SALT Parity election for the tax year must add back any QBI deduction the individual is allowed on their federal return. The individual must add back the full amount of their QBI deduction and not only the amount of the QBI deduction attributable to the partnership or S corporation that makes the SALT Parity election. For tax years 2018 through 2021, this addback may be made as part of the composite amended return filed by the partnership or S corporation making the election.

For tax years 2021 and later, the addback is required for single filers whose adjusted gross income (AGI) exceeds $500,000 and for joint filers whose AGI exceeds $1,000,000. The addback is not required for any taxpayer who files a Schedule F as an attachment to their federal income tax return for the tax year in which they claimed the qualified business income deduction.