Colorado’s unemployment tax rate for 2026 applies to the first $30,600 of wages paid to each employee, and the total combined rate runs from roughly 0.72% at the low end to above 10% at the high end, depending on your claims history and the statewide surcharges in effect. Only the employer pays this premium; deducting any part of it from an employee’s paycheck is prohibited. The Colorado Department of Labor and Employment (CDLE) recalculates each employer’s rate every year and sends a notice in the fall or early winter spelling out what you’ll owe the following year.
The Wage Base Your Rate Applies To
For 2026, employers owe UI premiums on the first $30,600 paid to each individual employee during the calendar year.1Justia. Colorado Code 8-70-103 – Definitions Once a worker’s year-to-date gross wages cross that line, you stop paying UI premiums on that person for the rest of the year. The clock resets every January 1.
The base has climbed sharply on a statutory schedule, from $17,000 in 2022 to $27,200 in 2025 before reaching $30,600 this year.1Justia. Colorado Code 8-70-103 – Definitions For lower-wage workers whose annual pay falls entirely under the cap, that higher ceiling means a larger total UI bill per head than you were writing checks for just a couple of years ago.
How Your Rate Is Built
Colorado uses an experience rating system. Employers whose former workers file more unemployment claims pay higher rates; employers with stable workforces pay less.2Colorado Department of Labor & Employment. Experience Rates
The CDLE calculates a “percent of excess” for your account by taking total lifetime premiums paid, subtracting total lifetime benefits charged against you, and dividing the balance by your average annual chargeable payroll over the previous three state fiscal years (July through June).2Colorado Department of Labor & Employment. Experience Rates A positive number means you’ve paid in more than has been charged out; a deeply negative one means the opposite, and your rate rises accordingly.
That percent of excess is then plotted on a Premium Rate Schedule chosen by the statewide reserve ratio, which reflects the health of the UI trust fund as a whole. For 2026, the reserve ratio of 0.649% puts every employer on the 0.006 to 0.008 rate schedule.3Colorado Department of Labor & Employment. Premium Rates The trust fund’s condition pushes everyone’s schedule up or down together, not just the employers generating claims.
Surcharges Added to Your Base Rate
Your final bill is not just the experience rate. Two surcharges appear as separate line items on your rate notice, and both are active in 2026.
Solvency Surcharge
When the UI trust fund balance on June 30 drops to 0.5% or less of total reported wages, a solvency surcharge switches on for every experience-rated employer, and it stays on until the fund recovers to at least 0.7%.4Justia. Colorado Code 8-76-102.5 – Rates Effective Upon Fund Solvency – Solvency Surcharge – Definitions The amount scales with your percent of excess, running from 0.10% for the best-rated employers to 2.70% for the worst.5Colorado Department of Labor & Employment. Unemployment Insurance Premiums Even employers with no recent claims pay it, and it cannot be protested because the trigger is statutory.3Colorado Department of Labor & Employment. Premium Rates
Support Surcharge
The support surcharge funds administrative costs and is also scaled by percent of excess. For 2026 it runs from 0.06% at the best end to 0.81% at the worst.5Colorado Department of Labor & Employment. Unemployment Insurance Premiums Like solvency, it cannot be protested, and dollars paid toward it do not build your experience rating.3Colorado Department of Labor & Employment. Premium Rates
What New Employers Pay in 2026
If your business is new to Colorado payroll, you don’t have the history for an experience rating yet. The CDLE assigns an introductory rate based on your industry, and most employers move to an experience-based rate after about a year of reporting wages, depending on when you became liable relative to the computation date.
The 2026 introductory combined rates are:6Colorado Department of Labor & Employment. Introductory Rates
- Non-construction, general construction, and trades: 1.53% beginning rate plus 0.17% support plus 1.35% solvency, for a combined 3.05%.
- Heavy construction: 4.28% beginning rate plus 0.48% support plus 1.525% solvency, for a combined 6.285%.
- Political subdivisions (group rate): 0.20% combined, with no surcharges.
Heavy construction sits higher because the industry historically generates more claims. At the general 3.05% rate on a $30,600 wage base, a new non-construction employer’s maximum UI cost per employee tops out at roughly $934 for the year.
Finding Your Rate and Paying It
Each fall the CDLE issues the Notice of Combined Unemployment Insurance Tax Rate (Form UITR-1), which spells out your rate for the next calendar year and breaks it into the experience rate, support surcharge, and solvency surcharge so you can see how the total was built. The notice is available through the MyUI Employer+ portal.
Quarterly wage reports and premium payments are due on the last day of the month after each quarter closes:7Colorado Department of Labor & Employment. Wage Reporting
- Quarter 1 (January–March): April 30
- Quarter 2 (April–June): July 31
- Quarter 3 (July–September): October 31
- Quarter 4 (October–December): January 31
Reports list gross wages for every employee during the quarter, and the system calculates liability from your assigned rate and the $30,600 base. Check that the rate programmed into your payroll software matches the UITR-1. Mismatches are one of the most common causes of underpayment notices.
Protesting the Rate You Were Assigned
If you believe the CDLE used wrong numbers in calculating your experience rate — for example, benefits charged against your account for someone who never worked for you — you can file a rate protest through MyUI Employer+. The window is typically 20 calendar days from the mailing date on your rate notice.3Colorado Department of Labor & Employment. Premium Rates Miss it and the rate stands for the year.
The protest has to target errors in benefit charges or payroll data feeding the experience calculation. The solvency and support surcharges are set by statute and apply uniformly, so they’re off the table.
Penalties for Late Filing or Payment
Each delinquent quarterly wage report draws a $50 penalty per occurrence. New employers get a reduced $10 per occurrence during their first four quarters of coverage.8Colorado Department of Labor & Employment. Interest and Penalties
Unpaid premiums carry their own hit. If your account is delinquent as of the annual computation date (June 30), the CDLE assesses a delinquent premium penalty equal to the amount owed or 1% of your taxable payroll, whichever is less, billed across four quarterly installments the following year.9Justia. Colorado Code 8-79-104 – Failure to File
Interest runs on top at 1.5% per month, or 18% annualized, on any past-due premiums and penalties.8Colorado Department of Labor & Employment. Interest and Penalties A modest delinquency compounds into a real liability within a few quarters. The CDLE can waive penalties for good cause, but waivers are discretionary and not something to plan around.
Federal Unemployment Tax Runs Alongside
Colorado’s premiums are only one layer. Every employer also owes federal unemployment tax (FUTA) on the first $7,000 of each employee’s annual wages, reported on IRS Form 940. The gross FUTA rate is 6.0%, but employers who pay their state UI on time receive a credit of up to 5.4%, dropping the effective federal rate to 0.6%, or about $42 per employee per year.10Internal Revenue Service. Topic No. 759, Form 940, Employer’s Annual Federal Unemployment Tax Return
Form 940 is due January 31 of the following year, with an extra 10 days if all FUTA deposits were made on time.11Internal Revenue Service. Employment Tax Due Dates Colorado is not currently on the FUTA credit reduction list, so Colorado employers get the full 5.4% credit as long as state premiums are paid when due. Falling behind on state UI can jeopardize that federal credit and push your effective FUTA rate up substantially.
FAMLI Is a Separate Program
Colorado’s Family and Medical Leave Insurance (FAMLI) program is easy to confuse with UI because both involve payroll-based premiums administered by the CDLE. They are separate: separate rates, separate trust funds, separate purposes. FAMLI funds paid leave for serious health conditions, new children, and family caregiving, not job loss. Its premium is capped at 1.2% of wages by statute and is split between employer and employee, while UI premiums are paid entirely by the employer. If you’re calculating total Colorado payroll tax, account for the two programs independently.