Colorado Salary Paycheck Calculator
It’s snowy in Colorado creating a winter wonderland for skiers. And it’s not only winter when you’ll see snow. If you’re in the mountains, it can snow on July 4th!
Even though the snow leaves you shivering and reaching for a tall cup of hot chocolate, understanding the payroll taxes in Colorado won’t send a shiver down your spine. That’s because we’ve answered the most common questions employers ask about Colorado payroll taxes and paycheck rules.
Colorado payroll taxes and paycheck rules
Does Colorado have a personal income tax?
Yes. Colorado has a flat tax rate of 4.55% for 2022.
How is personal income tax withheld from paychecks in Colorado?
Colorado uses information from federal Form W-4, Employee’s Withholding Certificate. Unlike many states, it doesn’t have a state-specific withholding form.
The information on Form W-4 combined with the Colorado Income Tax Withholding Worksheet for Employers lets employers calculate how much state income tax to withhold. Learn more about how to fill out Form W-4.
Instead of manually calculating withholding for each employee, a hassle-free solution is to use payroll software.
Do non-residents have Colorado income tax withheld?
Yes. All non-residents working in Colorado will have state income tax withheld.
When do Colorado employers pay the taxes to the state?
It depends on how much withholding tax you collect. Payment schedules can be weekly, monthly, or quarterly.
You’ll also need to complete form DR1094, Colorado W-2 Wage Withholding Tax Return each time you pay your taxes.
Colorado requires an annual summary report of all W-2 wages using form DR1093, Colorado Department of Revenue Annual Transmittal of State W-2 Forms.
Remember that you’ll still need to file a zero-return when you have no wages to report or no tax to pay.
Keep in mind full-service payroll providers will complete and file your state reports for you ensuring you don’t miss a deadline.
Does Colorado have a state unemployment tax?
Yes, Colorado charges employers unemployment tax.
New businesses are charged standard rates based on the industry they are in. Rates in 2022 range from 0.75% to 7.58%.
Established businesses are charged rates that take into account the amount of benefits paid to former employees and past wage totals.
Are there payroll taxes in Denver?
Yes, Denver charges an Occupational Privilege Tax that is paid by both employers and employees.
|Denver Occupational Privilege Tax|
|Employee||$5.75/month when wages are $500 or more a month|
|Employer||$4.00/month per taxable employee|
Are there other local taxes in Colorado?
Yes. If you have employees working in one of the below locations, you or your employees may be liable for an Occupational Privilege Tax (OPT). You can find your existing OPT account number(s) and deposit schedule(s) on notices you’ve received from the local agencies. You can also contact the agency directly:
- Aurora: (303) 739-7000
- Denver: [email protected]
- Glendale: (303) 759-1513
- Greenwood Village: (303) 486-8299
- Sheridan: (303) 762-2200
What is the salary threshold in Colorado?
The state salary threshold to qualify as an exempt executive, administrative, or professional employee in Colorado is $45,000–which is equivalent to $865.38 per week. For individuals who meet the duties and requirements of “highly compensated employees,” the salary threshold in Colorado is $101,250.
Do I have to report new hires to Colorado?
Yes and you have 20 days to report new hires or rehired employees to the Colorado New Hire Reporting Center.
Are Colorado Employers required to obtain Workers’ Compensation?
Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.
Is paid time off required in Colorado?
Paid sick leave is required for all businesses starting in 2022. Employees need to earn at least one hour for every 30 hours worked and the maximum they can earn is 48 hours in a year.
Colorado employers must also provide up to three days off every 12 months for employees who are victims of domestic abuse, stalking, or sexual assault. This leave can be paid or unpaid.
When are final paychecks due to Colorado employees?
When an employee is let go, their final paycheck is due on the last day they work. But when an employee leaves voluntarily, their final paycheck is due by the next regularly scheduled payday.
Federal payroll taxes for Colorado employers
How does an employer know how much to withhold for federal income tax?
With information on federal Form W-4, Employee’s Withholding Certificate, and some tax tables, employers can calculate how much to withhold. There is help if you don’t want to do the math manually. Payroll software saves you time and money by making the withholding calculations for you.
Form W-4 should be completed by employees when they start work. A new form isn’t needed each year but employees should consider providing an updated form when the amount of tax they owe changes, for example as a result of getting married or having children.
How much is FICA tax?
FICA tax is short for Federal Insurance Contributions Act and it has two parts—the Social Security tax and the Medicare tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
|FICA Tax in 2022|
|Social Security||6.2% on the first $147,000 of each employee’s wages|
|Medicare||1.45% on all employee wages|
Who pays federal unemployment tax and how much is it?
Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but most employers only have to pay 0.6% each year.
What is the Additional Medicare tax?
The Additional Medicare tax has been around since 2013 and is paid by employees who earn more than certain threshold amounts. The Additional Medicare tax kicks in based on the employee’s tax filing status. Nonetheless, employers must withhold this 0.9% tax on each employee who earns more than $200,000 per year. Only the excess amount over $200,000 is taxed.
Nothing to sweat, right!? Now you’re up to speed and ready to process your Colorado payroll. But if you’re not so sure and looking for a helping hand, you have a few options. You can call on a qualified accountant or use a payroll processor.
The information provided by the Employer Tax Calculator is for general information and estimation. All of the taxes or fees that apply to your business may not be accounted for, or fully up to date. Gusto, Inc. (dba “Gusto”) does not promise or guarantee that the information in the Employer Tax Calculator is accurate or complete, and Gusto expressly disclaims all liability, loss or risk incurred by employers or employees as a direct result or an indirect consequence of its use. By using the Employer Tax Calculator, you waive any rights or claims you may have against Gusto in connection with its use.