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Colorado Wage and Payroll Tax Facts

February 02, 2024

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.

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Table of Contents

  1. Colorado Minimum Wage Rates
  2. Colorado State Income Tax (SIT) Rates
  3. Colorado State Unemployment Insurance (SUI) Rates
  4. Colorado State Disability Insurance (SDI) Rates
  5. Miscellaneous Colorado Tax Information
  6. Colorado Employer Registration
  7. Additional Colorado Payroll Tax Resources

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:

The below information was last updated January 30, 2024. It is not intended as legal or tax advice.

Colorado Minimum Wage Rates

Wage Type

Colorado Rates

Federal Rates

Minimum Wage

 $14.42 $7.25

Tipped Minimum Wage

 $11.40 $2.13

Actual Tip Credit

 $3.02 $5.12

Local Minimum Wage Rates

In addition to the state-wide minimum wage rates above, the cities and counties below also have unique minimum wage rates as well:

Wage Type

Boulder Rates

Denver Rates

Edgewater Rates

Minimum Wage

 $15.69 $18.29 $15.02

Tipped Minimum Wage

 $12.67 $15.27 $12.00

Actual Tip Credit

 $3.02 $3.02 $3.02

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
  • S = Single or married claiming self
  • M = Married claiming both spouses
  • HOH = Head of Household

Exemptions
  • Any services or individuals not subject to withholding under the Internal Revenue Code
  • Nonresident military spouses
  • Interstate carrier employees
  • Nonresident services not in the course of an employer's business, of extremely short duration, or assigned on a variable basis so that an apportionment of income cannot be made

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

$23,800

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
Support Surcharge Varies

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 who live and work in different states are only required to pay taxes to the state where they live. Colorado currently has no reciprocal agreements with any other states.

This doesn’t mean, however, that interstate workers living in Colorado pay double. It’s federally illegal for two states to tax the same income. In most cases, the employee’s work state will credit or refund them at tax time based on the taxes they owe their home state. If the tax rates differ, the employee must cover the difference.

Paid Sick Leave (PSL) Taxes

The state of Colorado doesn't require employers to collect PSL taxes, but it does have a program providing such leave to eligible employees:

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
FAQs 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 funded via mandatory payroll deductions and employer contributions.

Colorado FAMLI 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 gross wages up to the federal wage base for social security taxes.

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.
Wage Base Limit $168,600
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

 MyBizColorado Registration

Registration Form

 Form CR 0100 Form UITL-100

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

 Department of Revenue Login Page MyUI Employer+ Login Page

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.

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