Taxpayers who regularly work in interstate transportation are subject to special rules of taxation. These special rules are based on federal law enacted to deal with the unique nature of these industries. [Title 49, Subtitle VII, United States Code]
INTERSTATE AIRLINE EMPLOYEES
The pay of an air carrier employee who has regularly assigned duties on an aircraft in at least two states (for example, a pilot or flight attendant) is subject to income taxation by their state of residence and any state in which the employee earns more than 50% of the pay received. [49 U.S.C.S. §14503(b)(2).] An air carrier employee is deemed to have earned more than 50% of their pay in Colorado if the flight time worked by that employee within Colorado exceeds 50% of the total flight time worked by that employee while employed during the calendar year.
A Colorado resident who works for an airline will always include their wages in Colorado taxable income, even if more than 50% of the income is earned in another state. The individual may be able to claim a credit on the Colorado return for any taxes paid to that other state.