Colorado Wage and Payroll Tax Facts
August 1, 2023
Having to comply with unique state taxes and wage laws can make processing payroll doubly daunting. Here’s everything you need to know about these rates and laws for the state of Colorado.
Colorado uses minimum wage rates that are substantially higher than the rates required by the federal government. Case in point, the rates required by the city of Denver are over twice as high as the federally required rates. The state also has a paid sick leave program guaranteeing time off for eligible employees.
When it comes to processing payroll, Colorado-based organizations must handle the following taxes in addition to those required by the federal government:
- Personal Income (a.k.a. State Income Tax)
- State Unemployment Insurance (SUI)
- Paid Family and Medical Leave (PFML)
- Local Occupational Privilege Taxes
The below information was last updated July 28, 2023. It is not intended as legal or tax advice.
Colorado Minimum Wage Rates
|
Wage Type |
Denver Rates |
Colorado Rates |
Federal Rates |
|
Minimum Wage |
$17.29 | $13.65 | $7.25 |
|
Tipped Minimum Wage |
$14.27 | $10.62 | $2.13 |
|
Actual Tip Credit |
$3.02 | $3.02 | $5.12 |
|
Wage Type |
Denver Rates |
Colorado Rates |
Federal Rates |
|
Minimum Wage |
$17.29 | $13.65 | $7.25 |
|
Tipped Minimum Wage |
$14.27 | $10.62 | $2.13 |
|
Actual Tip Credit |
$3.02 | $3.02 | $5.12 |
Colorado State Income Tax (SIT) Rates
Colorado has a flat income tax rate of 4.4%, meaning all residents pay the same amount regardless of their income levels.
|
Additional Colorado SIT Details |
|
|
Valid Filing Statuses |
|
|
Exemptions |
|
|
Form W-4 |
DR-0004 |
|
Reconciliation Frequency |
Annual |
|
Additional Colorado SIT Details |
|
|
Valid Filing Statuses |
|
|
Exemptions |
|
|
Form W-4 |
DR-0004 |
|
Reconciliation Frequency |
Annual |
Colorado State Unemployment Insurance (SUI) Rates
SUI provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined by state law) and meet the state’s eligibility requirements.
|
Colorado SUI Tax Details |
|
|
Taxable Wage Base |
$20,400 |
|
Employee Subject to Tax |
No |
|
Rates for Experienced Employers |
0.75% - 10.39% |
|
Rates for New Employers |
1.70% |
|
Effective Period |
Calendar Year |
|
Voluntary Contributions Allowed |
Yes; must be made before March 15 |
|
Colorado SUI Tax Details |
|
|
Taxable Wage Base |
$20,400 |
|
Employee Subject to Tax |
No |
|
Rates for Experienced Employers |
0.75% - 10.39% |
|
Rates for New Employers |
1.70% |
|
Effective Period |
Calendar Year |
|
Voluntary Contributions Allowed |
Yes; must be made before March 15 |
Colorado State Disability Insurance (SDI) Rates
SDI benefits are funded by employees through mandatory payroll deductions from each paycheck. Colorado, however, doesn't require employers to collect an SDI tax.
Miscellaneous Colorado Tax Information
Reciprocal Agreement(s)
Reciprocal agreements are when workers only pay taxes in the state where they live, not the state where they work. Colorado currently has no reciprocal agreements with any other states.
Paid Sick Leave (PSL)
Colorado doesn't require employers to collect PSL taxes, but the state does have the following program:
|
Colorado PSL Details |
|
| Covered Employees | All employees in the state |
| Accrual Method(s) | One hour for every 30 hours worked |
| Annual Accrual Maximum | 48 hours |
| Carryover Maximum | 48 hours |
| FAQ | Healthy Families and Workplaces Act (HFWA) |
|
Colorado PSL Details |
|
| Covered Employees | All employees in the state |
| Accrual Method(s) | One hour for every 30 hours worked |
| Annual Accrual Maximum | 48 hours |
| Carryover Maximum | 48 hours |
| FAQ | Healthy Families and Workplaces Act (HFWA) |
Paid Family and Medical Leave (PFML) Taxes
Like SDI, Colorado’s Family and Medical Leave Insurance (FAMLI) program is a benefit funded via mandatory payroll deductions. Colorado’s program, however, won’t begin providing benefits until January 1, 2024.
| Colorado PFML Tax Details | |
| Covered Employees | Most employees who have earned at least $2,500 in wages within the state over the period of one year. Self-employed workers may choose to opt into coverage if they both live and work in the state. |
| Covered Employers | All employers with at least one covered employee, except for local government employers and employees, federal employees, and self-employed individuals. |
| Tax Rate |
0.9 of an employee’s wages up to the federal wage base for social security taxes ($160,200 in 2023).
This rate is split evenly (0.45% for each) between employers and employees, except for employers with 9 or fewer employees, who are only required to collect and remit the employee’s 0.45% portion to the state. |
| FAQs | |
| Colorado PFML Tax Details | |
| Covered Employees | Most employees who have earned at least $2,500 in wages within the state over the period of one year. Self-employed workers may choose to opt into coverage if they both live and work in the state. |
| Covered Employers | All employers with at least one covered employee, except for local government employers and employees, federal employees, and self-employed individuals. |
| Tax Rate |
0.9 of an employee’s wages up to the federal wage base for social security taxes ($160,200 in 2023).
This rate is split evenly (0.45% for each) between employers and employees, except for employers with 9 or fewer employees, who are only required to collect and remit the employee’s 0.45% portion to the state. |
| FAQs | |
Note, the FAMLI program is not the same as the state’s Family Medical Leave Act (FMLA) which provides up to 480 hours of protected, unpaid leave to eligible workers within a 12-month period.
Local Taxes
In addition to the state-wide taxes mentioned above, the following cities and localities also require an Occupational Privilege Tax (OPT), also known as a “head tax”:
- Aurora (employers with 25 or more employees file these returns monthly, while employers with fewer employees file them quarterly.)
- Denver (employers doing business in the city and county must have an OPT account; if there are no employee wages to report, but the account is still open, employers must file a “0” return as they’re still liable for a $4.00 cost of doing business fee each month the account is open.)
- Glendale
- Greenwood
- Sheridan
Colorado Employer Registration
The agencies below can help with your state-based employer registration, including best practices, account numbers, and unemployment information. Contact the Department of Revenue for withholding tax topics and the Department of Labor & Employment for unemployment tax topics.
|
Registration Details |
Department of Revenue |
Department of Labor & Employment |
|
Phone |
(303) 592-5920 | (303) 318-9100 |
|
Online Registration |
https://mybiz.colorado.gov/intro | |
|
Registration Form |
https://tax.colorado.gov/sites/tax/files/documents/CR0100__2022.pdf | https://cdle.colorado.gov/sites/cdle/files/Application%20for%20Unemployment%20Insurance%20Account%20and%20Determination%20of%20Employer%20Liability%20%28UITL-100%29_0.pdf |
|
Registration Instructions |
Online and paper registration options are available, but non-profit organizations must use paper registration. Account numbers are issued in 2-3 days via online process or 7-14 days via mail. Separate account numbers for each tax type are issued under a combined registration. |
Online and paper registration options are available. Account numbers are issued in 2-3 days via online process or 7-14 days via mail. Separate account numbers for each tax type are issued under a combined registration. |
|
Employer Self-Service Login |
https://www.colorado.gov/revenueonline/_/#1 | https://myuiemployer.coworkforce.com/ |
|
Registration Details |
Department of Revenue |
Department of Labor & Employment |
|
Phone |
(303) 592-5920 | (303) 318-9100 |
|
Online Registration |
https://mybiz.colorado.gov/intro | |
|
Registration Form |
https://tax.colorado.gov/sites/tax/files/documents/CR0100__2022.pdf | https://cdle.colorado.gov/sites/cdle/files/Application%20for%20Unemployment%20Insurance%20Account%20and%20Determination%20of%20Employer%20Liability%20%28UITL-100%29_0.pdf |
|
Registration Instructions |
Online and paper registration options are available, but non-profit organizations must use paper registration. Account numbers are issued in 2-3 days via online process or 7-14 days via mail. Separate account numbers for each tax type are issued under a combined registration. |
Online and paper registration options are available. Account numbers are issued in 2-3 days via online process or 7-14 days via mail. Separate account numbers for each tax type are issued under a combined registration. |
|
Employer Self-Service Login |
https://www.colorado.gov/revenueonline/_/#1 | https://myuiemployer.coworkforce.com/ |
Additional Colorado Payroll Tax Resources
This information is provided as a courtesy and may be updated at any time. It is not intended as legal or tax guidance. If you have questions or concerns, we encourage you to seek the advice of a qualified CPA, Tax Attorney, or Advisor.
Get Taxes Done Right, Without the Stress
We know there's a lot that goes into preparing and filing payroll tax forms. Save time and get support from our expert team. As a Registered Reporting Agent with the IRS, we can help prepare and file all the necessary forms you need to remain compliant - even in the face of changing legislation. Learn more here.
Payroll Tax Services