Denver Payroll Tax: OPT Filing, Deadlines, and Penalties

The Denver payroll tax, formally the Occupational Privilege Tax and often called the “head tax,” is a flat monthly charge on people who work inside Denver’s city limits and on the businesses that employ them. Employees owe $5.75 a month, and their employer owes another $4.00, for a combined $9.75 per qualifying worker each month. The employee side kicks in once a worker earns at least $500 in gross compensation during a calendar month for services performed in Denver.¹ It is a separate tax from federal and Colorado state income taxes and applies regardless of where the employer is headquartered.

Who Owes the Tax

The OPT has two sides that move together. Any employee who performs work within Denver and earns at least $500 in a calendar month owes the $5.75 employee portion. It does not matter whether the worker lives in Denver or whether the business is based there. If the work happens inside city boundaries and the pay crosses that threshold, both the employee and the employer owe their respective portions.¹

Any business conducting activity in Denver is liable for the $4.00 employer portion for each month it has operations in the city, even without a permanent office or storefront.² A construction crew on a two-week Denver job, a consultant meeting clients downtown, and a restaurant with a fixed location all fall under the same rule.

Owners, Partners, and Sole Proprietors

Business owners are treated differently from regular employees. The $500 earnings test does not apply to owners or partners because they are not considered employees for OPT purposes. Any owner, partner, or proprietor engaged in business in Denver owes the $4.00 business OPT every month they have activity in the city, no matter how much they earn.² That obligation stands even if the owner also pays the employee OPT through a separate job with a different employer.

Sole proprietors and partnerships without employees can pay the entire calendar year’s business OPT in a single lump sum, due by January 31.²

Households With Domestic Workers

If you hire a housekeeper, nanny, or other domestic worker in Denver, you are technically an employer under the OPT rules. You must withhold and remit the $5.75 employee OPT from your worker’s pay. Because you are not engaged in a business, you are not subject to the $4.00 business OPT yourself.²

Exemptions and a Common Trap

Two narrow exemptions exist. An employee who works for a single employer across multiple cities that each impose their own occupational privilege tax pays only in the city where they spend the majority of their working hours, and the employer gets the same exemption in the other jurisdictions. Government and charitable organizations are exempt from the $4.00 business OPT for employees performing duties consistent with the organization’s exempt purpose, though those employees still owe the $5.75 employee OPT and the organization must withhold it.

The multi-jurisdiction exemption only works when both cities impose an occupational privilege tax. If you split time between Denver and a city that has no such tax, you still owe Denver OPT as long as you meet the $500 threshold for work performed in Denver. Spending most of your time in the other city does not help.²

Filing Deadlines

Denver ties filing frequency to workforce size:

Employers with 10 or more taxable employees file and remit monthly. Payment is due by the last day of the month following the month the liability was incurred. January’s OPT, for example, is due by the last day of February.
Employers with fewer than 10 taxable employees may file quarterly. Payment is due by the last day of the month following the end of the quarter.
Sole proprietors and partnerships without employees may pay for the full calendar year in one payment, due January 31.

The count that sets your filing frequency is taxable employees, not total headcount.² Crossing the 10-employee mark in any month bumps you to monthly filing.

How to Register and File

Every business operating in Denver needs a Denver tax account before it can file or pay any business taxes. The fastest route is online through Denver’s eBiz Tax Center. New businesses can complete the full registration through the portal. Businesses that already have a Denver tax account but have not used the online system can create an eBiz profile and link the existing account.¹

To file, you will need your Denver tax account number, the number of taxable employees for each month in the filing period, and the total tax due for both the business and employee portions.¹ The eBiz portal accepts electronic funds transfers and major credit cards. If you cannot file online, you can download the Occupational Privilege Tax Return form and mail it with a check or money order to the Treasury Division. Mailed returns must carry an official U.S. Post Office postmark on or before the due date; a postage meter date will not satisfy the requirement.³

Penalties for Late Filing or Payment

Late filing costs more than the tax itself suggests. Denver charges a penalty of 15% of the tax due or $25, whichever is greater. Interest accrues at 1% for each month the return remains past due.³ Because of the $25 floor, even the smallest employer faces a real cost for filing late, and a few stacked months turn a minor obligation into an unpleasant bill.

Remote and Split-Location Workers

The OPT is location-based. What matters is where the work is physically performed, not where the employer or employee lives. If an employee works from home in Denver for a company headquartered in Boulder, the OPT applies because the services happen inside city limits. If a Denver-based company has employees working entirely from home in Colorado Springs, those workers are not performing services in Denver and the tax does not apply.

Split schedules complicate things. An employee working three days a week in a Denver office and two days at home in Aurora is performing services in Denver and likely meets the $500 threshold on that Denver work. The multi-jurisdiction exemption only helps if the other city imposes its own occupational privilege tax and the employee spends the majority of working hours there.² Aurora has its own OPT, so the exemption can come into play there. If the other city has no such tax, you owe Denver regardless of the hour split.

1
City and County of Denver. Business Tax Information
2
City and County of Denver. Tax Guide Topic 61 Occupational Privilege Taxes
3
City and County of Denver. General Tax Information Booklet