Tax colorado severance-tax-formsSeverance TaxForms & InstructionsDepartment of Revenue 2025

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Anyone who receives income from oil and gas production and mining of nonrenewable natural resources must file a severance tax return. Severance tax might be due even though you do not realize a net profit on your investment.
DR 0104AD - Subtractions from Income Schedule. If you use this schedule to claim any subtractions from your income, you must submit it with the DR 0104(opens in new window). See full instructions on page 11 in the DR 0104 Booklet(opens in new window).
Tax Implications in the U.S.: The severance payment would be considered additional income and would attract a flat 22% withholding rate for federal tax, along with any applicable state taxes (depending on the state). Social Security and Medicare taxes would also be applicable, subject to wage limits.
The minimum combined 2025 sales tax rate for Severance, Colorado is 5.9%. This is the total of state, county, and city sales tax rates. The Colorado sales tax rate is currently 2.9%. The Severance sales tax rate is 3.0%.
DR 0021W - Oil Gas Severance Withholding Statement. Any producer, working, royalty or other interest owner of oil and gas produced in Colorado is required to pay severance tax.
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Yes, severance pay is taxable in the year that you receive it.
Severance tax is a state tax imposed on the extraction of non-renewable natural resources that are intended for consumption in other states. These natural resources include such as crude oil, condensate and natural gas, coalbed methane, timber, uranium, and carbon dioxide.
If you make $100,000 a year living in the region of Colorado, USA, you will be taxed $26,786. That means that your net pay will be $73,214 per year, or $6,101 per month.

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