Colorado Riders: Polis Plans to Tax Your Overtime and Tips

If you sling wrenches in a shop, work overtime at the factory, or rely on tips at your favorite biker bar, listen up—Colorado lawmakers just made a move that hits your wallet.

The Federal Deal

Earlier this year, Congress passed a big tax change that gave working folks a break. Overtime pay and tips—money that riders and working families depend on—are now exempt from federal income taxes through 2028. That means less cash to Uncle Sam and more fuel in your tank.

For many, this isn’t just a policy change—it’s real money in your pocket. A server pulling in $200 in tips a week now keeps the full $200, instead of watching $40 disappear in taxes. A mechanic banking 10 hours of overtime at $37.50 an hour would see the full $375 instead of losing $75 to the taxman. That’s the difference between barely covering bills and finally being able to fix the bike or save for a rally.

But Colorado Said “Not So Fast”

Governor Jared Polis and the state legislature decided not to play along. With House Bill 1296, Colorado broke away from the federal rules. Starting with the 2026 tax year, your overtime and tips will still be taxed at the state level, even though Washington won’t be taxing them.  Read the bill by clicking here

Why? Lawmakers say the state would lose up to $600 million a year if they gave you the same break the Feds did. In other words, they want to keep their hands in your back pocket to balance the budget.  HB 25-1296 effectively decouples Colorado from the federal overtime exemption, ensuring the state continues taxing those earnings. As for tips, without legislative action, they remain fully taxable at the state level under current law.

Key Tax Changes in HB 25-1296

Overtime Pay

Colorado will continue taxing overtime compensation, even if it’s exempt at the federal level. The law requires that any overtime income excluded from federal taxable income be added back into state taxable income when calculating Colorado state income tax. This addition provision takes effect starting January 1, 2026.
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Tips

There is no specific mention in HB 25-1296 about tips—meaning the law stays silent on this income category. Because of that, tips will follow existing rules: they’re taxed at both the federal and state levels unless future legislation changes that.

Riders and Workers Fight Back

Not everyone’s letting this ride. A conservative watchdog group called Advance Colorado filed a lawsuit against Polis, claiming the move breaks Colorado’s Taxpayer’s Bill of Rights (TABOR). That law says any new tax hike must go to the voters. Taxing something the feds just made exempt sure sounds like a tax hike, doesn’t it?

And there’s more—Advance Colorado is also pushing a 2026 ballot initiative that would permanently ban state taxes on overtime and tips. If voters approve, it could slam the brakes on Colorado’s tax grab.

What It Means for Riders

Here’s where it hits home:

• Federal Level: No taxes on overtime and tips (through 2028).

• Colorado Level: Overtime and tips still taxed starting in 2026.

• Your Paycheck: Don’t expect the same bump your out-of-state biker brothers and sisters are getting.

For Colorado bikers who make their living slinging drinks, waiting tables, cutting hair, clocking long hours in the plant, or stocking shelves at the grocery store, this new tax law cuts deep. While riders in other states will keep every dollar of their overtime and tip money, thanks to the federal break, Colorado’s decision to continue taxing those earnings means our local workers won’t see the same bump in their paychecks. That’s real money—cash that could cover new tires, rally trips, or the family grocery bill—gone to state taxes instead. For the biker community, where many juggle shift work and depend on every tip jar dollar or extra overtime hour, it feels like the state is taking gas right out of the tank. This isn’t just numbers on paper; it’s the difference between scraping by and riding with a little more freedom.

Final Thoughts

This isn’t just politics—it’s about working-class folks who bust their knuckles and count on every dollar. Riders know the value of sweat equity. Whether you’re pulling double shifts to pay for new pipes, or depending on bar tips to save for your next rally trip, this fight is about keeping more of what you earn in your pocket.

Stay tuned—Motorcycle Rider News will keep you updated as the lawsuit moves forward and the 2026 ballot shapes up.