Comprehensive Guide to Payroll Taxes in Colorado (2026)

If you're running payroll for Colorado employees, you need three things: 2026 rates, the right forms, and a way to tell whether your current setup is still correct. This guide gives you all three.

Colorado payroll tax looks simple on paper, with one flat 4.40% state rate and a handful of forms. But the SUI wage base shifts most years, the city-level head taxes have different thresholds and amounts, and Aurora's recent OPT repeal means many providers still have the wrong setting somewhere.

Deel Payroll - US runs state-by-state withholding, SUI premiums, and local payroll taxes for employers across all 50 states, including Colorado. We maintain the rate tables and filing rules so payroll teams don't have to chase them. Below, you’ll find the 2026 guidelines, required tax forms, and a seven-step compliance checklist.

Colorado payroll at a glance (2026)

The 2026 payroll year brings a higher SUI wage base, updated FAMLI premiums, and the second year of Aurora's OPT repeal. Save the table below as your reference for every Colorado payroll rate, threshold, and deadline this year.

How to comply with Colorado payroll tax

Use this checklist as a setup path if you're new to Colorado payroll, or as a self-audit if you've been running payroll here for years. Give extra attention to registration, deposit frequency, and city OPT steps, as these are where most compliance gaps show up:

1. Register your business: Set up your Colorado employer accounts via MyBizColorado. One application registers you for CDOR wage withholding and the CDLE unemployment insurance account.
2. Collect employee withholding certificates: Have each employee complete IRS Form W-4 and, optionally, Colorado Form DR 0004 (Colorado Employee Withholding Certificate). The DR 0004 is required if the employee wants Colorado-specific allowances different from federal.
3. Calculate withholding using DR 1098: Apply the Colorado Withholding Worksheet for Employers (DR 1098) to compute the 4.40% PIT for each pay period.
4. Withhold and remit PIT on the correct schedule: File the Colorado W-2 Wage Withholding Tax Return (DR 1094) quarterly, monthly, or weekly, depending on annual liability. Pay through Revenue Online or by EFT (EFT is mandatory for weekly filers).
5. Pay Colorado SUI and FAMLI quarterly: Report wages and remit unemployment premiums via MyUI Employer+ and paid leave premiums via MyUI FAMLI+ Employer. Both are due April 30, July 31, October 31, and January 31.
6. Pay Colorado SUI quarterly: Report wages and remit unemployment premiums via MyUI Employer+. Due dates: April 30, July 31, October 31, and January 31.
7. Check city OPT obligations: For any employees physically working in Denver, Glendale, Greenwood Village, or Sheridan, register with the city, withhold the employee OPT, and remit both portions on the city's schedule.
8. Complete year-end filings: Issue W-2s to employees and file with CDOR by January 31 using the Annual Transmittal of State W-2 Forms (DR 1093). Electronic filing is required if you file 10 or more W-2s.

Which payroll provider handles Colorado state tax and compliance requirements?

Deel Payroll - US handles Colorado state tax and compliance as part of a multi-state US payroll service. Federal, state, local, and unemployment taxes are calculated, filed, and remitted in-house, so payroll teams don't run separate processes for each tax type or coordinate with outside filing services.

• Multi-state payroll on one platform: Run payroll for employees across multiple US states from one system, with state-specific tax rules applied based on each employee's work location, from Colorado and Texas to California and beyond
• In-house tax filing and remittance: Deel files federal returns (Form 941, Form 940), state withholding and unemployment returns, and local payroll tax returns. No third-party filing service required, no manual remittance scheduling
• Continuous Compliance: Federal, state, and local tax rule changes are monitored on your behalf, so when Colorado updates its SUI wage base or a city changes its OPT, your payroll stays current without your team chasing CDOR or CDLE bulletins
• Year-end W-2 and annual returns: Generate, distribute, and file W-2s and W-3s through a single interface. State annual returns are produced where required, in bulk
• Background checks and HR functions in the same platform: Employment, education, and criminal verification handled alongside payroll, so onboarding a new Colorado hire doesn't mean wiring up another vendor

Withhold and remit Colorado personal income tax (PIT)

Colorado's state income tax is a flat 4.40% for tax year 2026, applied uniformly to all taxable wages regardless of income level. Colorado's constitution mandates a single flat rate, so there are no brackets or progressive tiers. The Colorado Department of Revenue (CDOR) administers PIT withholding for every employer paying Colorado wages.

Key PIT facts

• Rate: 4.40% flat on Colorado wages for 2026
• Who pays: Withheld from the employee. The employer is liable for the correct amount whether or not it's actually withheld
• Forms: DR 1094 (return), DR 1098 (employer worksheet), DR 0004 (employee certificate), DR 1093 (annual transmittal)
• Portal: Revenue Online for filing and payment
• Year-end: W-2s to employees and CDOR by January 31. E-file required for 10 or more W-2s

PIT filing frequencies and due dates

Example: PIT deposit timing

A Colorado employer with $48,000 of annual PIT withholding falls in the monthly bracket ($7,000 to $50,000). Each month's withholding goes on DR 1094 and is due by the 15th of the following month. If the employer withholds $4,200 in December 2026, the DR 1094 and payment are due January 15, 2027.

An employer with $72,000 in annual withholding crosses into weekly status. Weekly filers must remit via EFT by the third business day after the Friday that ends the weekly period. EFT submission satisfies both payment and filing.

Pay Colorado state unemployment insurance (SUI)

Colorado state unemployment insurance (SUI), administered by the Colorado Department of Labor and Employment (CDLE), is paid entirely by the employer, not the employee. You become liable once you pay at least $1,500 in wages in any calendar quarter, or once you employ at least one person for any part of a day in 20 different weeks within a calendar year.

Key SUI facts for 2026

• Chargeable wage base: $30,600 per employee per year (up from $27,200 in 2025)
• Combined premium rate range (experienced employers): Roughly 0.72% to 10.85%, made up of the base rate, the support surcharge, and the solvency surcharge
• Solvency surcharge: In effect for 2026 because the UI Trust Fund reserve ratio is 0.649%, which is below the 0.7% threshold
• New-employer (introductory) rates: Assigned by industry. The solvency surcharge applies on top
• Liability trigger: $1,500/quarter in wages, or one employee for any part of 20 weeks per year
• Filing portal: MyUI Employer+.
• Quarterly due dates: April 30, July 31, October 31, January 31
• Penalties: $50 per delinquent quarterly report. 1.5% interest per month on late premiums

Example: SUI cost on given wages

An employer with a 2.5% combined SUI rate in 2026 pays premiums only on the first $30,600 of each employee's wages.

• Employee earning $45,000/year: SUI premium = $30,600 × 0.025 = $765
• Employee earning $25,000/year: SUI premium = $25,000 × 0.025 = $625 (under the wage base, so the full salary is taxed)

The wage base, not the salary, is the cap. A $250,000 executive and a $45,000 manager generate the same maximum SUI premium for the year.

Check city Occupational Privilege Tax (OPT)

Colorado's Occupational Privilege Tax (OPT) is a flat-dollar monthly tax, sometimes called a "head tax," levied by certain Denver-metro cities on employees who perform work physically inside city limits and on the employers that employ them.

OPT is based on where the work is performed, not where the employee lives or where the employer is headquartered. For broader rules on multi-state pay, see Deel's guide to running remote payroll taxes.

2026 OPT rates by city

Example: Denver OPT calculation

A Denver employee earns $5,000 in a typical month working inside Denver city limits. Because their monthly Denver compensation exceeds the $500 threshold, both portions of the Denver OPT apply for that month:

• Employee OPT (withheld from the paycheck): $5.75
• Employer OPT (paid by the business): $4.00
• Monthly cost to the employer for that employee: $9.75 (of which $5.75 is reimbursed via withholding)
• Annual maximum per Denver employee: $69.00 employee plus $48.00 employer = $117.00 combined

If the same employee splits time between Denver and Aurora, only the Denver OPT applies, since Aurora repealed its OPT. If they split between Denver and Glendale and meet both thresholds, the OPT is owed to the city where the employee worked the most hours that month.

Workers' compensation in Colorado

Colorado law requires every employer with one or more employees (full-time, part-time, or family member) to carry workers' compensation insurance. There is no small-business exemption. Workers' comp covers medical care, lost wages, and rehabilitation costs for employees injured on the job, and is administered by the CDLE Division of Workers' Compensation.

Key WC facts

• Required for: Every employer with one or more employees
• Coverage source: Qualified commercial carriers, self-insurance (with state approval), or Pinnacol Assurance (Colorado's quasi-state carrier)
• Penalty for non-coverage: Civil fines and potential closure orders from CDLE
• Resource: CDLE Insurance Coverage page

Pay Colorado Paid Family and Medical Leave Insurance (FAMLI)

Colorado’s Paid Family and Medical Leave Insurance (FAMLI) program ensures Colorado workers have access to paid leave during major life events. Administered by the CDLE FAMLI Division, this program is funded through a mandatory statewide payroll tax. Effective January 1, 2026, the total premium rate decreased to 0.88% of gross wages (down from 0.90% in 2025).

Key FAMLI facts

• Total Premium Rate: 0.88% of employee gross wages
• The Cost Split: Shared 50/50 between employer (0.44%) and employee (0.44% withheld from the paycheck). Employers may choose to pay the employee's portion as an added benefit
• 2026 Chargeable Wage Cap: Tied to the Federal Social Security Wage Cap, which is $184,500 per employee for 2026. No premiums are owed on earnings above this amount
• Small Business Exemption: Employers with 9 or fewer employees are exempt from the employer’s share (0.44%). However, they must still withhold the employee’s share (0.44%) and remit it to the state
• Filing Portal: My FAMLI+ Employer
• Quarterly Due Dates: April 30, July 31, October 31, and January 31 (matching the SUI schedule

Example: FAMLI cost on given wages

Scenario A: Business with 15 employees (Subject to full premium)

For an employee earning $60,000 per year, the 2026 FAMLI calculation looks like this:

• Total Annual Premium: $60,000 × 0.0088 = $528.00
• Employee Deduction: $60,000 × 0.0044 = $264.00 (withheld across the year)
• Employer Portion: $60,000 × 0.0044 = $264.00

Scenario B: Business with 5 employees (Small business exemption)

For the same employee earning $60,000 per year:

• Total Annual Premium: $60,000 × 0.0044 = $264.00
• Employee Deduction: $264.00 (withheld across the year)
• Employer Portion: $0.00 (exempt)

Scenario C: High-earning executive

For an executive earning $200,000 per year at a large company, the tax stops calculating once they cross the wage limit:

• Taxable Base Cap: $184,500
• Total Max Premium: $184,500 × 0.0088 = $1,623.60 ($811.80 ER / $811.80 EE)

Common Colorado payroll terms

Colorado payroll borrows federal vocabulary in some places and creates its own in others. The definitions below clarify the terms most likely to trip up your team as you read CDOR notices, MyUI Employer+ screens, or city OPT ordinances:

• UI / SUI: Unemployment Insurance / State Unemployment Insurance. The employer-funded premium paid into Colorado's UI Trust Fund. Colorado calls it "UI premiums”
• FUTA: Federal Unemployment Tax Act. The federal 6.0% tax (with up to a 5.4% credit) on the first $7,000 of each employee's wages. Paid separately from Colorado SUI
• Wage base / chargeable wage base: The maximum amount of each employee's annual wages on which the employer owes SUI. In 2026, Colorado's chargeable wage base is $30,600
• PIT: Personal Income Tax. The state income tax withheld from employee wages. In Colorado, it's a flat 4.40% for 2026
• OPT: Occupational Privilege Tax. A flat-dollar monthly tax in select Colorado cities, owed by both the employee and the employer when the employee performs work in that city above a monthly earnings threshold
• EFT: Electronic Funds Transfer. Mandatory for weekly PIT filers in Colorado. EFT submission satisfies both payment and filing
• Deposit frequency: How often an employer files DR 1094 and remits withheld tax: quarterly, monthly, or weekly, based on annual withholding liability
• Solvency surcharge: An additional SUI premium component triggered when Colorado's UI Trust Fund reserve ratio falls below 0.7%. In effect for 2026
• FAMLI: Family and Medical Leave Insurance. A state-mandated paid leave premium calculated as 0.88% of gross wages up to the Social Security wage cap ($184,500 for 2026), split evenly between employers and employees

Run Colorado payroll your way with Deel Payroll

Colorado payroll doesn't have to be one more spreadsheet your team maintains by hand. Deel Payroll replaces the patchwork of state portals, rate updates, and end-of-year scrambles with a single platform built on owned infrastructure. Your team gets a choice in how they use it, whether you want to run payroll yourself or have Deel’s experts manage it for you.

Either way, Deel Payroll connects to Deel HR, Deel Benefits, and your existing HRIS (Workday, BambooHR, HiBob), so onboarding a new Colorado hire, updating their benefits, and paying them correctly all happen in the same system. Continuous compliance is part of the platform, with federal, state, and local rule changes applied by Deel's tax engine and compliance team, not tracked by yours.

Book a demo to see Deel Payroll run a Colorado payroll cycle end-to-end.