How a Colorado paycheck works
Colorado has the shortest withholding calculation of any state that taxes wages. The employer annualises your pay, subtracts one allowance amount that depends on nothing but the filing status box on your federal Form W-4, and applies a single flat rate to the rest. There are no brackets, no allowance count and no state certificate to fill in unless you want one.
Federal income tax withholding
Federal withholding annualises the wage, subtracts the standard deduction that matches the filing status on Form W-4 Step 1, applies the graduated schedule for that status, and deducts the dependent credit from Step 3. This page models a W-4 with Steps 2 and 4 left blank: one job, no spouse income, no other income, no extra withholding. Above the income limit for the status, the dependent credit tapers by a set amount for every thousand dollars of excess rather than disappearing at a cliff.
Social Security and Medicare
Social Security applies a flat rate to wages up to an annual ceiling that is re-indexed each year, so it stops partway through the year for a high earner. Medicare applies to every dollar, and above a fixed wage threshold the employer withholds the Additional Medicare tax on the excess, with no employer match and no regard for filing status.
The allowance amount has only two values
Colorado's worksheet names one amount for an employee whose W-4 says married filing jointly or qualifying surviving spouse, and another, half as large, for everybody else. Head of household falls in the second group, because the worksheet does not name it. Neither does a married employee whose spouse also works get a different figure: unlike most states, Colorado asks no question about your spouse's income at all, so a two-income couple who both tick married on their W-4 will each subtract the full joint amount and are likely to be under-withheld together.
If you file no W-4 and no state form, your employer treats you as expecting to file single and uses the smaller amount.
Form DR 0004 replaces the amount entirely
Colorado gives employees their own certificate, Form DR 0004, and it is optional. Its purpose is to let you override the standard allowance amount with a figure of your own, worked out from the deductions you actually expect. If you file one, your employer uses your number instead of the standard one, including a zero if that is what you enter.
This page models the standard case, an employee with a W-4 and no DR 0004. If you have filed one, your withholding will differ. The worksheet is also strict about the order: filing a new W-4 revokes any earlier DR 0004, so a routine W-4 update can quietly reset a custom amount you set years ago.
Paid family and medical leave
Colorado runs a paid family and medical leave insurance programme, FAMLI, funded by a premium split between employer and employee. The employee share is deducted from wages up to a cap, so it appears on real payslips as a separate line below the income tax. It is not included in this figure, because the premium and split are published by the FAMLI division rather than in the withholding worksheet, and that source could not be verified when this page was built. Expect your actual take-home pay to be slightly lower than shown.
Local income tax
Colorado has no local income tax on wages. Denver, Colorado Springs and Aurora all have the same payroll deductions as anywhere else in the state.
What the employer pays on top
The employer matches Social Security and Medicare and pays federal unemployment tax at its net rate. Colorado unemployment insurance is charged to the employer at a rate set from its own claims record on a state wage base, so it is left out, as is the employer half of the FAMLI premium.
What this calculator assumes
The figure models a salaried employee paid evenly across the year with a standard Form W-4 and no Form DR 0004, and no pre-tax deductions. It leaves out:
- Pre-tax contributions such as a 401(k), health premiums, HSA or flexible spending accounts, which reduce the wages subject to income tax and often to FICA.
- The employee share of the FAMLI paid leave premium.
- A Form DR 0004 allowance amount of your own, and any additional withholding requested on its third line.
- Extra withholding requested on the federal certificate, and the W-4 Step 2 and Step 4 adjustments.
- Bonuses and other supplemental wages, which may be withheld at a flat supplemental rate.
- Employer-side state unemployment insurance, which is priced per employer, and any federal unemployment credit reduction.
- Employees outside the normal Social Security system, such as some public-sector staff and certain visa holders.
Withholding versus your final tax bill
Withholding is a prepayment. The annual returns, federal and state, replace these standard assumptions with your real situation: itemised deductions, other income, and credits payroll knows nothing about. One job usually produces a refund; two jobs, a working spouse or investment income often produce a balance due.