The Denver, Colorado income tax rate is Colorado’s flat state rate of 4.40% on taxable income. Denver itself does not charge a city income tax. Anyone working within Denver who earns at least $500 in a month also owes a small flat fee called the Occupational Privilege Tax: $5.75 withheld from the employee’s paycheck, plus $4.00 paid by the employer.
The 4.40% Colorado Flat Rate
Colorado applies a single flat rate of 4.40% to taxable income, with no brackets. Voters set the current rate through Proposition 121 in 2022, lowering it from 4.55%.1Colorado General Assembly. Proposition 121 State Income Tax Rate Reduction A part-time worker and a corporate executive pay the same percentage.
The 4.40% is applied to your federal taxable income, meaning the figure from your federal return after you’ve taken either the standard deduction or itemized deductions. It is not applied to adjusted gross income, which is a higher number. For 2026, the federal standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Colorado has no separate state standard deduction.
Colorado does apply some additions and subtractions before the rate hits. Interest from another state’s municipal bonds may need to be added back; qualifying retirement income may be subtracted. For most W-2 earners with straightforward finances, federal and Colorado taxable income differ little or not at all.
Denver Has No City Income Tax
Denver does not levy any municipal income tax on residents or workers.3City and County of Denver. Business Tax FAQ Cities like New York, Philadelphia, and Detroit charge a local percentage on top of state tax. Denver does not. No slice of your salary goes to a city general fund based on how much you earn. The only Denver-specific charge tied to working in the city is the flat-fee Occupational Privilege Tax.
The Occupational Privilege Tax
Denver’s Occupational Privilege Tax, often called the OPT or “head tax,” is a flat monthly fee. If you earn at least $500 in a calendar month from work performed in Denver, two charges apply:4City and County of Denver. Occupational Privilege Taxes
- $5.75 per month withheld from the employee’s paycheck.
- $4.00 per month paid by the employer for each taxable employee.
Together that comes to $9.75 per month, or $117 per year. The fee never scales with income. Someone earning $4,000 a month and someone earning $40,000 a month pay the same $5.75. Most employees barely notice the deduction because it sits alongside much larger federal and state withholding on the pay stub.
Exemptions
Governmental and charitable organizations are exempt from the $4.00 employer portion, but their employees still owe the $5.75 employee share.4City and County of Denver. Occupational Privilege Taxes Nonprofit and city agency workers should still expect the deduction on their pay stubs.
Working in More Than One City
Some Colorado cities besides Denver charge their own occupational privilege tax. Glendale, for instance, charges $5 per month from both employee and employer.5City of Glendale. Occupational Privilege Tax If you split your working hours between Denver and another Colorado city that also imposes such a tax, you pay only in the city where you spend the majority of your working hours.4City and County of Denver. Occupational Privilege Taxes If the other city has no such tax, Denver’s still applies whenever you meet the $500 threshold from work done in Denver.
Remote Workers
The OPT applies to anyone doing the work within Denver’s physical boundaries, no matter where the employer is based. If you work remotely from a Denver home office for a company headquartered in Texas or California, your employer is responsible for withholding the $5.75 and remitting it to the city.3City and County of Denver. Business Tax FAQ Out-of-state payroll teams often don’t know this, so flag it when you’re onboarded.
FAMLI Premiums on Your Paycheck
Colorado’s Family and Medical Leave Insurance program also shows up on Denver pay stubs. The total premium is 0.88% of wages, split evenly at 0.44% each between employee and employer, and it applies to wages up to the federal Social Security wage cap.6Colorado FAMLI Division. Employers FAMLI is not technically an income tax, but it reduces take-home pay the same way.
Who Owes Colorado Tax
Colorado treats you as a full-year resident, and taxes your worldwide income at 4.40%, if either of two things is true: you are domiciled in Colorado, or you maintain a permanent home in the state and spend more than six months of the year here.7Department of Revenue – Taxation. Income Tax Topics Part-Year Residents and Nonresidents Domicile is the place you intend as your permanent home, even during long stretches away.
If you lived in Colorado only part of the year, you file as a part-year resident and owe tax only on income earned during your months of Colorado domicile. Nonresidents who earned money from Colorado sources — say, rental property or freelance work for a Denver client — owe tax only on that Colorado-source income. Both groups file Form DR 0104 with the DR 0104PN schedule.8Department of Revenue – Taxation. DR 0104 – Individual Income Tax Return
Filing Deadlines
Colorado individual income tax returns are due April 15, filed on Form DR 0104 through the Department of Revenue’s Revenue Online portal.9Colorado Department of Revenue – Taxation. Individual Income Tax – Due Dates and Filing Extension The state grants an automatic extension to October 15 with no separate request. You still have to pay at least 90% of what you owe by April 15 to avoid penalties. The extension buys time to file, not time to pay.
If you’re self-employed or otherwise don’t have taxes withheld from a paycheck, make estimated quarterly payments on April 15, June 15, September 15, and January 15.10Department of Revenue – Taxation. Individual Income Tax Estimated Payments Missing them or underpaying triggers interest that adds up quickly.
Penalties for Late Payment
Colorado charges interest on unpaid state income tax from the original due date until you pay. For calendar year 2026, the annual rate is 8% if you pay within 30 days of receiving a deficiency notice, and 11% if you wait longer.11Department of Revenue – Taxation. Tax Topics Penalties and Interest Interest compounds daily.
Late OPT payments carry a 15% penalty on the tax due, with a $25 minimum, plus 1% interest per month or any fraction of a month from the due date until payment.12City and County of Denver. Business Tax FAQ Because the underlying amounts are so small, the $25 minimum can easily exceed the tax owed if an employer falls behind.