Self-employed taxes and LLC costs in Colorado, 2026
Colorado taxes what is left after the federal return is done, at one rate, and Denver adds a small monthly charge on every owner.
Total tax on this income in 2026
$20,014
Put aside 24% of each payment · $5,003 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| Colorado income tax | $2,214 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 23.5% |
With an S corp election and a $34,000 salary, about $2,806 less tax (check it).
Computed by Radif Partners from IRS and Colorado agency documents read on October 15, 2026 · How we calculate
Colorado taxes individuals at a flat 4.4 % in 2026, applied to federal taxable income, so the standard deduction, the deduction for half of self-employment tax and the QBI deduction are already subtracted before the state rate applies. On $75,000 of freelance profit, a single filer owes about $1,887 to Colorado and $17,382 in all. The LLC side is light: $50 to file the articles online and a $25 periodic report each year, with no franchise tax, for $175 over five years. In Denver, each owner of a business owes an occupational privilege tax of $4 a month regardless of earnings. Colorado follows the S election and does not tax the corporation, but its 2026 unemployment rate for new employers includes a temporary solvency surcharge. With $120,000 of profit and a $50,000 salary, the election saves about $4,183 a year after that payroll cost.
Colorado at a glance, 2026
| LLC filing fee | $50 |
| Periodic Report | $25 a year |
| Income tax | flat 4.4 % |
| S corporation election | followed by the state |
| Tax on $75,000 of profit (single) | $17,382 in all, $1,887 to Colorado |
Denver is one of the few American cities that taxes the simple fact of working inside its limits. Its Business Occupational Privilege Tax is $4.00 a month for each owner, partner or manager engaged in business in the city, and the $500 earnings test that shields low-paid employees does not apply to owners, so a one-person LLC with a slow year owes $48 for it all the same (Denver tax guide, occupational privilege taxes). A sole proprietor without employees may prepay the whole year by January 31. Once an owner elects S status and goes on payroll, the city also collects the employee OPT of $5.75 a month from any employee earning at least $500 a month in Denver, the owner included.
One rate, applied late in the return
Colorado starts from federal taxable income rather than from adjusted gross income (Colorado DOR, 2026 DR 0104EP). Everything the federal return already removed, including the 20% QBI deduction, never reaches the state rate. That makes the flat 4.4 % lighter in practice than its headline: on $120,000 of profit, the state share is $3,359.
The same profit in another state
Colorado minus Texas
$2,705
| Colorado | $2,705 |
| Texas | $0 |
Estimated payments are due once you expect to owe more than $1,000 of net Colorado tax. The required yearly amount is the smaller of 70% of this year's liability or 100% of last year's, a lower current-year share than the federal 90 %, so a freelancer whose income jumps has more room before a penalty. The estimated tax guide explains the federal rule that runs alongside.
Keeping the LLC in good standing
Articles of Organization are filed online only, for $50. After that, the Secretary of State expects a periodic report each year in the anniversary month of formation, with a window that opens two months before and closes two months after without penalty (Colorado SOS business fees). The fee is $25, raised from $10 in July 2024. Colorado has no LLC franchise tax, which keeps the state among the cheaper places in the LLC cost ranking.
Payroll after the S election
A new non-construction employer pays 3.05 % on the first $30,600 of wages in 2026, of which 1.35 points is a solvency surcharge (CDLE, introductory rates). The surcharge switches off in 2027, when the introductory rate falls to 1.70% and the wage base rises to $32,100. On a $50,000 owner salary, 2026 unemployment tax comes to about $933, a cost the LLC vs S corp calculator includes. Colorado's paid family leave premium also applies to wages; its 2026 rate for very small employers could not be confirmed on the program's own pages, so it is left out here.
City and county taxes on business income in Colorado
| Place | Tax | Rate | Who pays |
|---|---|---|---|
| Denver | Occupational Privilege Tax (OPT) | varies | The $500 earnings test does not apply to owners or partners; any entity with activity in Denver owes at least $4.00 per month. Sole proprietors without employees may prepay the year by January 31. |