The Colorado PFML tax is a 0.88% payroll contribution in 2026 that funds the state’s Family and Medical Leave Insurance (FAMLI) program. For employers with 10 or more workers, the cost is split evenly, with the employer paying 0.44% and the employee paying 0.44% through payroll withholding.1Family and Medical Leave Insurance. Premium and Benefits Calculator The rate dropped from 0.9%, which applied from 2023 through 2025, and by statute it can never exceed 1.2% of wages.
How the 2026 Rate Is Calculated
Premiums apply only to wages up to the Social Security wage base, which is $184,500 for 2026.2Social Security Administration. Contribution and Benefit Base Anything you earn above that line is not subject to FAMLI withholding.
A worker earning $60,000 in 2026 generates a total FAMLI premium of $528 for the year ($60,000 × 0.0088). With the standard split, $264 comes out of the employee’s paychecks and $264 comes from the employer. Someone earning $200,000 pays on only the first $184,500, so the total premium is about $1,624 rather than $1,760.
Who Pays the Tax
Nearly every Colorado worker is covered. If you draw a Colorado paycheck, your employer should be withholding your 0.44% share each pay period and remitting it to the state along with any employer contribution owed.
The employer side depends on headcount. Businesses with 10 or more employees owe the full 0.44% employer share. Businesses with fewer than 10 employees are not required to pay the employer portion, but they still have to withhold the employee’s 0.44% and send it to the FAMLI Division. A small employer can choose to cover the employer share voluntarily as a benefit.1Family and Medical Leave Insurance. Premium and Benefits Calculator
Self-Employed Workers and Independent Contractors
If you’re self-employed or work as an independent contractor, FAMLI is voluntary. Nothing is withheld from your earnings unless you opt in through the My FAMLI+ Employer portal. The self-employed rate is 0.44% of gross self-employment income, matching the standard employee share.3Family and Medical Leave Insurance. Self-Employed Workers
Opting in is a real commitment. You must stay in the program for at least three years once you enroll. You become eligible to claim benefits after you have reported and paid premiums for at least one quarter. If you don’t want to participate, no action is needed.
Employer Notice Obligations
Colorado employers must post the FAMLI Program Notice in a visible spot at the workplace. The notice explains the deduction, how to apply for benefits, and the anti-retaliation rules that protect workers who use the program or discuss it with coworkers.4Family and Medical Leave Insurance. Required Program Notice
Quarterly Deadlines and Late Penalties
Employers report wages and remit FAMLI premiums each quarter. Payments are due the last day of the month after the quarter closes:5Family and Medical Leave Insurance. Individuals and Families FAQs
- Q1 (January through March): due April 30
- Q2 (April through June): due July 31
- Q3 (July through September): due October 31
- Q4 (October through December): due January 31
Late payments accrue interest at 0.66667% per month, and the interest compounds monthly on any unpaid balance.6Family and Medical Leave Insurance. My FAMLI+ Employer User Guide – Wages and Payments Late wage reports carry an additional $5-per-employee penalty for each quarter reported late. New employers with fewer than 10 workers face a $25 minimum penalty per occurrence; those with 10 or more workers face a $50 minimum.
How FAMLI Benefits Are Taxed
Paying into FAMLI is one question. How the benefits are taxed when you actually collect them is another, and the answer depends on the type of leave and who funded the premiums. The IRS addressed this in Revenue Ruling 2025-4.7Internal Revenue Service. Revenue Ruling 2025-4
Family leave benefits, such as bonding with a new child or caring for a sick relative, are included in federal gross income. You will receive a Form 1099 if these payments total $600 or more in a year. Medical leave benefits are split. The portion funded by your own employee contributions is excluded from federal gross income under Internal Revenue Code Section 104(a)(3). The portion funded by your employer’s contributions is taxable and treated much like third-party sick pay.
Colorado exempts all FAMLI benefit payments from state income tax.8Family and Medical Leave Insurance. IRS Tax Guidance for Employers Beginning in 2027, employers will report taxable medical leave benefits on W-2 forms. The IRS ruling does not cover benefits paid under approved private plans, so any employer running a private plan should get tax advice on its own reporting.
Who Isn’t Covered
Two categories sit outside the standard FAMLI tax rules. Self-employed workers, as noted, participate only if they opt in. Local governments in Colorado can also decline participation entirely: a city council, school board, or district’s governing body can vote to opt out of both the employer contribution and the employee withholding.9Family and Medical Leave Insurance. FAQs for Local Governments If your employer is a local government that has opted out, you can still enroll on your own through the state. Local governments that decline must revisit the vote at least every eight years and notify employees within 30 days of the decision.