Denver local tax guide
Who pays Denver's local tax
Denver's OPT follows the work, not the home. A commuter from Lakewood, Aurora, or Arvada who works downtown pays it, and a Denver resident whose job is in a city without an OPT does not. The tax applies only in months when you earn at least $500 for work in Denver, and the employer withholds it. Fully remote employees who do no work in Denver generally fall outside it, so tell payroll if your work location changes. If you hold two jobs in the city, Denver's withholding certificate lets one employer collect the monthly tax so it is not taken twice.
How Denver's Occupational Privilege Tax works
The OPT is a monthly head tax on the privilege of working in the City and County of Denver. It has two parts: an employee tax of $5.75 a month, withheld from pay, and a business tax of $4.00 a month that the employer pays for each worker. Only the employee share reduces your paycheck.
Because the amount is fixed, its weight shrinks as pay rises. The $69 yearly cost equals 0.17% of a $40,000 salary, 0.09% of $75,000, and just 0.05% of $150,000. Anyone paid weekly or biweekly will see it taken in some checks and not others, depending on how payroll assigns the monthly charge.
Worked example: $75,000 in Denver
Federal tax on a $75,000 single filer is $7,670, figured on $58,900 of taxable income. Colorado starts from that same federal taxable income and applies its flat 4.4% rate, for $2,592 of state tax. FICA adds $4,650 of Social Security tax and $1,088 of Medicare tax.
Denver's OPT removes $69 more, leaving take-home pay of $58,931, or about $4,911 a month. Without the OPT, as in Aurora, the same worker keeps $59,000. The Colorado $75,000 salary page breaks the state figures down by pay period.
Withholding and what the estimate leaves out
Employers report and pay both halves of the OPT to Denver's treasury, and you do not file a city return for it. State withholding is set from the federal W-4 or, if you want a different Colorado amount, from Form DR 0004.
Our estimate excludes Colorado's FAMLI paid family and medical leave premium, which many employers split with workers. Check your pay stub for that line along with the Denver OPT.
Denver compared with other Colorado cities
Denver's $5.75 is the highest employee OPT among the Colorado cities on our site. Glendale, the small city surrounded by Denver, charges $5 a month ($60 a year), Sheridan $3 ($36), and Greenwood Village $2 ($24). Aurora repealed its OPT, so a job there carries no local tax.
Even in Denver the OPT is small next to state tax. At $75,000 the $69 city charge is a fraction of Colorado's $2,592, and the state ranks 27th of 51 for take-home pay at that salary. See the Aurora calculator for a no-OPT comparison.
Tips for Denver paychecks
Look for the OPT line on your stub
Payroll systems often label it Denver OPT or Denver head tax. At $5.75 a month it is easy to miss, but its absence when you work in Denver usually means a setup error.
Tell payroll when you go remote
If you move to full remote work outside Denver, ask payroll to review the OPT. Months with no Denver work generally should not carry the employee charge.
Low-earning months may be exempt
Part-time and seasonal workers who earn less than $500 in a month for Denver work owe no employee OPT for that month.