Not an income tax
Why is the Denver OPT different from a city income tax?
Most city-level taxes in the US are calculated as a percentage of your earned income. New York City charges 3%+, Philadelphia charges 3.7%+, and Ohio cities typically charge 2%+. These taxes scale with income: the more you earn, the more you pay.
Denver's OPT works the opposite way. It is a fixed dollar amount per person per month. A software engineer earning $150,000 pays the same OPT as a retail worker earning $30,000. At roughly $69 per year for employees, the OPT is one of the lightest local tax burdens in the country. Denver does not have a separate percentage-based city income tax.
The employer portion ($4.00/month per employee) is also flat. An employer with 100 Denver employees pays approximately $400/month in OPT regardless of their payroll size. This is vastly different from Philadelphia or NYC where employer-side obligations can run into millions based on total payroll.
Who is exempt from the Denver OPT?
The main exemption is income-based: if you earn less than the minimum monthly threshold (historically $500 per calendar month), you are exempt from the employee portion for that month. This primarily protects very part-time or seasonal workers.
The threshold is applied month by month, not annually. If you work full-time in Denver for 10 months and earn nothing the other two months, you owe the OPT for 10 months, not all 12.
Federal and state government employees may also have exemptions depending on intergovernmental immunity rules. Check with your employer if you work for a government agency.
Do other Colorado cities charge an OPT?
Yes. The occupational privilege tax is common in the Denver metropolitan area. Other cities and towns that levy a similar flat per-person tax include:
- Aurora — flat monthly OPT on employees and employers
- Greenwood Village — flat per-person charge
- Glendale — flat per-person charge
- Sheridan — flat per-person charge
The amounts vary by municipality but the structure is the same: a flat dollar charge, not a percentage of income. If you work in multiple Colorado municipalities during the year, you may owe the OPT to each one separately. Unlike Ohio's credit system, there is no credit between Colorado OPT jurisdictions — each is independent.
How does the OPT appear on your paycheck?
Employers are required to withhold the employee OPT from paychecks, typically showing it as a separate line item labeled "Denver OPT" or "Occupational Privilege Tax." Because the amount is small and fixed, it is easy to overlook on a paystub. If you do not see it, ask your employer whether they are registered with the Denver Department of Finance for OPT withholding.
Self-employed individuals working in Denver must file and pay the OPT directly with the Denver Department of Finance. Both the employee and employer portions apply to self-employed workers, totaling roughly $9.75/month.
How does Denver's tax burden compare to cities with income taxes?
Denver residents enjoy one of the lightest local tax burdens among major US cities because the OPT is the only local payroll-related tax. Colorado's state income tax is a flat rate (recently reduced to approximately 4.4%), and there is no additional Denver city income tax. Compare this to a NYC resident paying 3%+ city tax on top of NY state rates, or a Philadelphia resident paying 3.7% on top of PA state tax. A Denver worker earning $80,000 pays roughly $69/year in local tax vs. $2,400+ in Philadelphia or $2,500+ in a typical Ohio city.
What does a Denver worker's total tax picture look like?
Worked example: $75,000 salary, single filer, Denver resident
| Tax layer | Approximate amount |
|---|---|
| Federal income tax | ~$8,600 |
| FICA (employee share) | ~$5,740 |
| Colorado state income tax (~4.4%) | ~$3,300 |
| Denver OPT (employee portion) | ~$69/year |
| Estimated take-home | ~$57,291 |
Illustrative example. The Denver OPT is negligible compared to income-based taxes. Use our Denver take-home calculator for a personalized estimate.
The contrast with other major cities is stark. At $75,000 in income, a Denver worker pays about $69/year in local tax. The same worker in Philadelphia would pay approximately $2,800 in city wage tax. In Cleveland, about $1,875. In NYC (as a resident), about $2,400. Denver's flat per-person structure makes it one of the lightest local tax environments among major US cities.
Questions
Denver occupational privilege tax FAQ
How much is the Denver Occupational Privilege Tax?
The Denver OPT has two components: the employee portion and the employer portion. The employee pays a flat monthly amount (historically $5.75/month) and the employer pays a flat monthly amount per employee (historically $4.00/month per employee). These are fixed dollar amounts, not percentages of income. Verify the current amounts on the Denver Department of Finance website as they can be adjusted.
Is the Denver OPT based on how much I earn?
No. The Denver OPT is a flat per-person charge. Whether you earn $30,000 or $300,000, the employee portion is the same fixed monthly amount. This makes it fundamentally different from percentage-based city income taxes like those in NYC, Philadelphia or Ohio cities. There is a minimum earnings threshold below which you may be exempt.
Who is exempt from the Denver OPT?
Workers who earn less than a minimum monthly threshold (historically $500/month in a calendar month) may be exempt from the employee portion for that month. The employer portion may also have exemptions for months where no employees meet the threshold. Check the Denver Department of Finance for current exemption thresholds.
Do other Colorado cities have a similar tax?
Yes. Several other Colorado cities and towns levy an occupational privilege tax, including Aurora, Greenwood Village, Glendale, Sheridan and others. The amounts and structures vary by municipality. Denver's is the most prominent because of the city's size, but the concept of a flat per-person local tax is common in the Denver metro area.
Does Denver have an income tax in addition to the OPT?
No. Denver does not levy a percentage-based city income tax. The OPT is the only local payroll-related tax for Denver workers. Colorado has a state income tax (flat 4.4% as of recent years), but there is no separate Denver city income tax on top of it. The OPT is a modest flat charge, not a percentage of earnings.
- Sources: Denver Dept. of Finance · Denver Revised Municipal Code · CO Dept. of Revenue.
- Last updated July 31, 2026
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