Payroll tax in Colorado: What employers need to know [Updated 2026]

It doesn't matter if you're running a huge corporation or a small business; one undeniable fact is that you're going to have to deal with taxes. Despite all the sweat equity, business owners in the state of Colorado don't get off easy. You'll have to deal with US FICA taxes (Medicare tax and Social Security tax), state taxes, and, depending on your location, local taxes. State taxes vary across the country, so it's important to be on top of the tax regulations where your employees live.

Colorado has a flat income tax, meaning the same tax rate is applied to all taxpayers, no matter how much they earn. The income tax rate in Colorado is 4.4% for 2026. Colorado also has a state-mandated paid family leave program (FAMLI) that began contributions in recent years. Even with a flat tax, filing payroll taxes can be a challenge—get it wrong and you risk fines, penalties, and unhappy employees.

If you have a business with employees in Colorado, you'll need to know the ins and outs of different payroll taxes, how much you'll need to pay or withhold, how to file, and when. Let's take a look.

The 3 Colorado payroll taxes

There are three statewide payroll taxes that Colorado employers are responsible for: the Colorado State Unemployment Insurance (SUI) tax, administered by the Colorado Department of Labor and Employment (DLE); the Colorado Wage Withholding Tax, administered by the Colorado Department of Revenue (DOR); and the Family and Medical Leave Insurance (FAMLI) program. Most employers are required to contribute to all three (details below).

In addition, several municipalities have their own payroll taxes. These regional Occupational Privilege Taxes (OPT) are paid by both the employer and employee. They're flat-rate taxes and are levied where work is carried out. The following localities have an OPT: Aurora, Denver, Glendale, Greenwood Village, and Sheridan.

Here's a closer look at Colorado's payroll taxes, how they're calculated, and how much the maximum contributions are.

Unemployment insurance tax (SUI)

Colorado's unemployment insurance program goes back to 1935, when it was created under the Social Security Act. It's run in partnership with the US Department of Labor and assists people who lose their jobs through no fault of their own (for example, layoffs). The Colorado Department of Labor and Employment determines the tax rates and taxable wages. In 2026, the taxable wage base is $30,600 per employee—up from $23,800 in 2025—one of the highest SUI wage bases in the country.

Businesses that pay wages of at least $1,500 in a calendar quarter during the prior or current calendar year or have employed at least one person for any part of a day in 20 weeks during the previous or current calendar year are required to pay unemployment insurance. Premiums are paid through a quarterly premium report and wage report process. Employers will need to acquire an unemployment account number through MyBizColorado. For new businesses, the SUI rate depends on the type of business. A solvency surcharge remains in effect for 2026.

Colorado businesses are also required to pay federal unemployment tax under the Federal Unemployment Tax Act (FUTA).

Colorado wage withholding tax

Colorado businesses that pay wages in the state are subject to the wage withholding tax. It's collected alongside federal income tax withholding taxes. In Colorado, withholding tax funds state programs and services like healthcare, public safety, and education. Employers withhold this tax from their employees' paychecks at the flat rate of 4.4% for 2026.

The Colorado Department of Revenue oversees the reporting, collection, and enforcement of the withholding tax. Amounts are based on employees' tax forms, either IRS form W-4 or Colorado form DR 0004.

Employers determine the amount they must withhold from their employees using the Colorado Withholding Worksheet for Employers (DR 1098). The worksheet requires information from the IRS Employee's Withholding Certificate form W-4 or the Colorado Employee Withholding Certificate form DR 0004 to calculate the withholding amount. Employers are required to file returns and remit tax when required and prepare a Wage and Tax Statement form W-2 for each worker. Employers must provide copies of the W-2 to employees and the DOR by January 31 of the following year.

Family and Medical Leave Insurance (FAMLI)

Colorado's FAMLI program provides employees with paid leave for qualifying family and medical events. In 2026, the total FAMLI premium rate is 0.88% of an employee's gross wages, up to the Social Security wage cap of $184,500. Employers and employees each pay 0.44%. However, employers with fewer than 10 employees are exempt from the employer portion but must still withhold and remit the 0.44% employee share. Employers who offer an approved equivalent private plan may be exempt from the state program.

Running payroll and understanding the complexities of tax laws in Colorado can be challenging. Keeping up with changing tax rates, complicated forms, and programs like FAMLI is grueling. But Rippling's payroll compliance software simplifies your tax burden. Rippling can automatically work out your taxes and file tax forms and payments for you—all while ensuring you're compliant with the latest IRS, Colorado state, FAMLI, and local regulations. To delve even deeper, Rippling's PEO can automate even more of the payroll process by registering your state tax accounts and keeping them current.

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Payroll tax due dates in Colorado

Submitting your paperwork and payments on time will save you from headaches and costly penalties. Employers in Colorado must file wages and pay unemployment premiums quarterly. Due dates are the final day of the following month after the quarter ends. If the due date falls on a Saturday, Sunday, or legal holiday, the reports and payments are due on the next business day. These are the current due dates:

• First quarter (January-March): Due April 30

• Second quarter (April-June): Due July 31

• Third quarter (July-September): Due October 31

• Fourth quarter (October-December): Due January 31

Late reports incur a penalty of $50 for each quarter of delinquency. New employers face a fine of $10 for the first four quarters. Late premiums as of June 30 are assessed a penalty equal to the amount of delinquent premiums or 1% of the taxable payroll, whichever is less. You'll also be charged interest at a rate of 1.5% per month or any portion thereof on late premiums and penalties.

For the Colorado Wage Withholding Tax, every employer required to withhold the Colorado state income tax must have a Colorado wage withholding account. Registration can be done online at mybiz.colorado.gov or by filing a Colorado Sales Tax and Withholding Account Application (CR 0100AP) and emailing it to the address on the form, dropping it off at a Taxpayer Service Center, or mailing it to:

Colorado Department of Revenue, Taxpayer Service Center, PO Box 17087, Denver, CO 80217-0087

Employers are required to file returns and pay taxes quarterly, monthly, or weekly. Your filing frequency is based on an annual account review by the DOR.

Penalties are assessed on late payments. The fine is the greater of either $5 or 5% of the unpaid tax, plus 0.5% for each additional month the tax remains unpaid (maximum 12%). There is also a collection penalty equal to 15% of the outstanding amount if the employer fails to pay. Interest is added from the original due date until the tax is paid.

How to submit payroll taxes in Colorado

Now that you're familiar with the different types of payroll taxes and when they're due, it's time to file them. There are several methods for Colorado employers, but the methods differ depending on the tax.

Unemployment insurance tax

Online

With Colorado's MyUI Employer+, businesses and third-party administrators (TPAs) can file both wage and premium reports, pay premiums, view account status, check balances, and check rates.

The MyUI Employer+ website has additional information and set-up instructions for employers and TPAs.

FTP

You can file quarterly wage reports by FTP. To access this service and receive email notifications, visit the FTP website. Premiums will have to be paid separately, either by mail or electronically.

File by mail

The Department of Labor and Employment accepts wage reports and payments by mail. The address is printed on the wage report form.

Wage withholding tax

Electronic Funds Transfer (EFT)

The Colorado Department of Revenue encourages all employers to remit their wage withholding tax by EFT. Withholding payments made via EFT satisfies both payment and filing requirements and reduces the chance of errors and delays.

Employers that are on a weekly payment schedule must remit by EFT. Employers who file quarterly or monthly can use the EFT system to reduce paperwork.

Revenue Online

Monthly and quarterly filers can submit reports and make payments with e-checks and credit cards (transaction fees apply) through the DOR's Revenue Online portal.

File by mail

Employers who aren't required to pay via EFT can file by mail. You'll need to fill out a Colorado W-2 Wage Withholding Tax Return (DR 1094) and submit it along with payment (check or money order) to: Colorado Department of Revenue, Denver, CO 80261-0009.

Rippling's full-service payroll software

With Colorado's SUI wage base at $30,600 in 2026, a 4.4% flat income tax, and FAMLI contributions on top, your Colorado payroll obligations are more complex than they look. Rippling's payroll software handles it all—automatically calculating, filing, and paying your taxes at the federal, state, and local level. Rippling tracks rate changes as they happen, so you're always compliant without any manual effort. Your HR and payroll data live in one system, so employee changes flow straight through to payroll without re-entry.

Frequently Asked Questions