Colorado does not have a statewide local payroll tax, but a handful of cities levy an Occupational Privilege Tax (OPT) — a flat monthly “head tax” on people who work in the city and earn above a set amount. If you have employees working in one of these cities, here is what applies.
This is general information, not tax advice. Confirm current amounts with each city’s finance department.
A flat monthly amount, not a percentage
Unlike most payroll taxes, OPT is not a percentage of wages — it is a fixed dollar amount per employee per month, charged only when the employee earns above a monthly wage threshold in that city. Because it is monthly, a system paying more often than monthly pro-rates it across the pay periods in the month.
Both an employee and an employer portion
OPT generally has two pieces: an amount withheld from the employee and a matching amount the employer pays. In Denver, for example, it is $5.75 per month from the employee and $4.00 per month from the employer, for employees who earn at least $500 in the month from work performed in Denver. Greenwood Village charges $2.00 from each side above a $250 monthly threshold; Sheridan and a few others have their own amounts.
Which cities — and which no longer apply
The cities that levy OPT include Denver, Greenwood Village, Sheridan, and Glendale. Aurora repealed its OPT effective January 1, 2025, so no OPT applies there anymore — a good example of why these local taxes need to be kept current rather than set once.
How Payrollix handles it
Payrollix applies the correct OPT for the city where an employee works, checks the monthly earnings threshold, pro-rates the flat amount across pay periods, and tracks both the employee and employer portions. Because it is a per-city, per-employee flat fee with its own thresholds, it is easy to miss manually — so it is calculated automatically for the Colorado cities that levy it.
See what flat per-client pricing looks like
Start your 14-day free trial. No credit card required.
Start Free Trial