What are Occupational Privilege Taxes?

Occupational Privilege Taxes in Colorado are essentially a “head tax” that is levied on most workers within jurisdictions that have the tax. Simply put, this means that every employee that falls under the requirements in the jurisdiction has to pay it, and there is typically an employer match of this tax. The tax is levied on a city and/or county basis of where you work, even if the business is located outside of the jurisdiction. This can get complicated if a business is located in Glendale but the employee works in a satellite office or from their home located in Denver. In a situation like this, the employee should not have to pay the Glendale tax, but likely would have to pay the Denver tax.

Here is a breakdown of where the tax is levied, the amount of the tax (per month) for employees and employers, and the minimum amount you must earn in a month for the tax to be levied on you.

City Tax  for Employees Tax for Employers Income Threshold
Denver $5.75 $4.00 $500
Glendale $5.00 $5.00 $750
Aurora $2.00 $3.00 $250

Keep in mind that this is just the basic applicability of the tax and there can be more unique circumstances that can have an impact on your business and employees’ tax liability.

For example, if you have one job but work in more than one jurisdiction that has an Occupational Privilege Tax, generally, you would only pay the tax for the jurisdiction that you spend the majority of your time working in. Employees with multiple jobs in the same jurisdiction usually only have to pay the tax once and can fill out a form to be sure it is not withheld by their second job. Those who are self-employed may only have to pay the employer side of the tax, but it depends on the situation and jurisdiction.

In many cases, businesses without any employees are still required to pay the employer portion of the tax. Owners of a business may also be required for at least the employer portion of the tax, even if they are not paid. As you can see, there are a variety of circumstances that can complicate how the Occupational privilege applies to your business, so be sure that you seek out good advice about it.

If you have questions about legal matters for your business, don’t hesitate to   reach out to the Law Office of E.C. Lewis, PC, home of your Denver Business Attorney, Elizabeth Lewis, at 720-258-6647 or email her at elizabeth.lewis@eclewis.com.