Payroll Done Right

Colorado Payroll Requirements: What Employers Need to Know in 2026

Colorado payroll involves more moving parts than most states because employers must manage both a flat state income tax and two separate paid leave contribution programs. The state income tax rate is a flat 4.4% on all taxable wages, administered by the Colorado Department of Revenue. Employers file the quarterly DR 1094 withholding return to report amounts withheld and remit payment. In addition to income tax withholding, Colorado employers must also administer the Family and Medical Leave Insurance (FAMLI) program and, for many workers, the Healthy Families and Workplaces Act (HFWA) paid sick leave requirement.

The FAMLI program launched January 1, 2024, and continues in full operation in 2026. The total FAMLI contribution rate is 0.9% of wages, split equally between employer and employee — each pays 0.45%. Employers with fewer than 10 employees are exempt from paying the employer portion but must still withhold and remit the employee portion of 0.45%. FAMLI wages are subject to the same federal Social Security wage base. Employers also pay State Unemployment Insurance (SUI) with a 2026 taxable wage base of $23,800; new employers pay a rate of 1.7%, for a maximum annual obligation of $404.60 per worker. Learn how Colorado SUI experience rating is assigned and how FAMLI premiums interact with unemployment contributions.

Colorado's minimum wage is $14.42 per hour statewide in 2026. Denver has a higher local minimum of $18.29 per hour — employers with workers in Denver must pay the Denver rate, not the state floor. Other Colorado localities may also set their own minimums, so employers operating in multiple jurisdictions should verify the applicable rate for each worksite. Colorado allows a limited tip credit: tipped employees must receive a cash wage of at least $11.40 per hour (the state minimum minus $3.02), provided total earnings reach the full $14.42 minimum after tips.

The HFWA requires employers to provide paid sick leave accruing at one hour for every 30 hours worked, up to 48 hours per year. Unlike some state sick leave laws with employee thresholds, HFWA applies to all Colorado employers regardless of size. Employees may use accrued sick leave for their own illness, a family member's illness, or certain public health emergencies. Employers must also provide up to 80 hours of public health emergency leave when a federal, state, or local public health emergency is declared. Read the full Colorado payroll compliance guide for HFWA notice requirements, FAMLI registration steps, and quarterly filing deadlines.

Final paycheck rules in Colorado set a strict deadline for discharged employees: the final paycheck is due immediately upon termination or within six hours of the start of the next business day if the payroll unit is not available at the time of discharge. For employees who resign with at least 72 hours' notice, the final paycheck is due on the last day worked. Without advance notice, it is due within six business days. These are among the tightest final pay rules in the country and have resulted in enforcement actions against employers who assumed a one-pay-period grace period applied.

Colorado requires new hire reporting within 20 days of the first day of work, submitted to the Colorado State Directory of New Hires. The state also has specific pay stub disclosure requirements: employers must provide itemized statements showing gross wages, withholding amounts, and net pay each pay period. Employers new to Colorado payroll will need accounts with both the Department of Revenue and the Department of Labor and Employment. See the Colorado new employer registration guide for a complete list of required registrations, including FAMLI account setup at the dedicated FAMLI Division portal.