Nanny Taxes in Colorado

Household employers need to comply with tax, wage, and labor laws that affect nannies, in-home senior caregivers, and other household employees. While federal laws cover employers in all states, there are also state- and city-specific regulations that employers must follow. Here’s what you need to know about nanny taxes in Colorado household employment.

Colorado Minimum Wage

Household employees must be paid at least the highest of the federal, state, or applicable local minimum wage rates. Colorado’s state minimum wage rate of $14.42/hour applies. The rate will be adjusted annually based on the state’s Consumer Price Index.

In Denver, the minimum wage rate is $18.29/hour.

In Boulder County, the rate is $15.69/hour. This rate will increase each year until it reaches $25/hour on January 1, 2030.

In Edgewater, the minimum wage rate is $15.02/hour. Edgewater’s rate will increase to $16.52 in 2025; $18.17 in 2026; $19.99 in 2027; and $21.99 in 2028.

Overtime

Household employees in Colorado are required to be paid at least time and a half for hours worked over 40 in a seven-day workweek. Overtime compensation is not required for live-in employees.

Colorado State Unemployment Tax & Rate

In Colorado, the new employer SUI (state unemployment insurance) rate is 3.05 percent on the first $23,800 of wages for each employee. This rate combines the beginning, support, and surcharge rates. Employers with previous employees may be subject to a different rate. This is an employer-only tax.

Workers’ Compensation Insurance

Household employers in Colorado are required to have a workers’ compensation policy for all household employees working 40 hours or more in a week or working five days or more in a week. Get a quote on workers’ compensation insurance.

Colorado Paid Family and Medical Leave

Colorado’s paid family and medical leave insurance program (FAMLI) program covers virtually all employers. Employer and employee contributions began on January 1, 2023. Benefits became available on January 1, 2024.

Household employers are covered by this program and must:

• Register with the FAMLI Division
• Post the required program notice
• Submit quarterly wage reports and premiums to the FAMLI Division

For household employers with less than 10 workers, there is no employer contribution (50% of the premium) just a payroll deduction for employees (also 50% of the premium).

With the premium set to 0.9% of the worker’s wage, that means 0.45% of an employee’s pay can be deducted to cover their FAMLI contribution. Employers may also choose to pay the full amount if they would like.

Benefits are calculated on a sliding scale using the individual’s average weekly wage from the previous five calendar quarters in relation to the average weekly wage for the state of Colorado and may increase over time.

The maximum weekly benefit is currently $1,100.

Employees who have earned at least $2,500 in wages and have been employed by their current employer for at least 180 days are generally eligible for FAMLI benefits.

Individuals can use FAMLI leave to take time away from work to:

• Care for a new child, including adopted and fostered children
• Care for themselves if they have a serious health condition
• Care for a family member’s serious health condition
• Make arrangements for a family member’s military deployment
• Address the immediate safety needs and impact of domestic violence and/or sexual assault.

Most employees are eligible to receive up to twelve weeks of paid leave. Those who experience pregnancy or childbirth complications may receive an additional four weeks.

Learn more about Colorado FAMLI.

Paid Sick & Safe Time (Healthy Families and Workplaces Act)

Colorado employers – including families with household help – are required to provide paid sick and safe time (PSST) for the following reasons:

• a mental or physical illness, injury, or health condition that prevents work;
• obtaining preventive medical care (including a vaccination), or a medical diagnosis, care, or treatment, of any mental or physical illness, injury, or health condition;
• obtaining medical attention, mental health care or other counseling, legal or other victim services, or relocation required as a result of being a victim of domestic abuse, sexual assault, or criminal harassment;
• care for a family member who has a mental or physical illness, injury, or health condition, or who needs the sort of care listed in the categories above;
• closure by a public official of the employee’s place of business or the employee’s child’s school or place of care due to a public health emergency (as defined by the law), requiring the employee to care for the child;
• to grieve, attend funeral services or a memorial, or deal with financial and legal matters that arise after the death of a family member;
• to care for a family member whose school or place of care has been closed due to inclement weather, loss of power, loss of heating, loss of water, or other unexpected events (effective August 7, 2023); or
• to evacuate the employee’s place of residence due to inclement weather, loss of power, loss of heating, loss of water, or other unexpected events

Family members include an employee’s immediate family (a person related by blood, marriage, civil union, or adoption), a child to whom the employee stands in loco parentis, a person who stood in loco parentis to the employee when the employee was a minor, and a person for whom the employee is responsible for providing or arranging health- or safety-related care.

Household employees accrue at least one hour of PSST for every 30 hours they work, up to a maximum of 48 hours per year. Or, at the beginning of the year, an employer can provide a PSST amount that meets or exceeds the law’s requirements. Unused PSST hours carry forward to the next year.

Employers can’t impose a waiting period before employees can use leave. Household employees must use leave in hourly increments unless their employer permits them to use leave in smaller increments.

Employers must also notify their workers of their right to take paid leave, including the reasons they can take paid time off.

Equal Pay for Equal Work Act

Under the Equal Pay for Equal Work Act (EPEWA), all employers, including household employers, must include pay transparency and other requirements in their job postings:

• hourly compensation or range of hourly pay
• general description of benefits and other compensation applicable to the job opportunity
• date the application window is expected to close
• how to apply for the job opportunity

While EPEWA originally took effect in 2021, the pay transparency amendments became effective on January 1, 2024.

Colorado Anti-Discrimination Act

The Colorado Anti-Discrimination Act makes it illegal for household employers to discriminate against a worker for disability, race, sex, sexual orientation, religion, age, and nationality. The law also protects household employees from pay discrimination based on all protected statuses.

However, when hiring, sex, age, and religion can be considered bona fide occupational qualifications that are already protected by state statute and existing case law. In particular, the bill specifies that it would not be discriminatory to consider sex when hiring an employee for childcare-related work.

Learn more about the Colorado Anti-Discrimination Act.

Final Pay

When terminating a household employee, all earned wages are due immediately or no later than 24 hours after the start of the next business day if payroll is done offsite. When a household employee resigns or quits, all earned wages are due by or on their next regular payday.

While household employers are not required to provide paid vacation time or paid time off (PTO) to their workers if a family does provide this benefit, any earned but unused vacation time or PTO should be treated as wages and paid out upon separation. Any work agreement or nanny contract stipulating a forfeiture of any earned but unused vacation and/or PTO is considered void.

Helpful Links for Nanny Taxes in Colorado

Colorado Department of Labor and Development

Colorado Division of Financial Services

Federal Regulations

All household employers need to follow certain federal regulations including:

Fair Labor Standards Act (FLSA) Classification Guidelines

• Household workers are considered employees and not independent contractors. Learn more about misclassifying employees as independent contractors.
• Household workers are also non-exempt employees, which means they receive overtime pay of at least time-and-a-half for hours worked over 40 per workweek. Learn more about overtime pay.

FICA Taxes

Social Security and Medicare taxes are commonly referred to as FICA taxes. If you pay cash wages of $2,700 or more to any household employee in 2024 (or will pay a domestic worker $2,800 or more in 2025), you must withhold and pay FICA taxes. FICA taxes are 15.3 percent of cash wages. As an employer, you pay 7.65 percent (6.2 percent for Social Security and 1.45 percent for Medicare). Your employee's share is also 7.65 percent, which you can withhold from their wages or choose to pay yourself. You don't withhold or owe FICA taxes on wages you pay to your spouse, child under the age of 21, parent, or any employee under 18 at any time during the calendar year.

Federal Unemployment Tax (FUTA)

If you pay a household employee total cash wages of $1,000 or more in any calendar quarter, you'll owe federal unemployment tax. This is an employer-only tax. FUTA is six percent of cash wages on the first $7,000 you pay an employee.

Mileage Reimbursement

If your employee uses their own car in the course of their work, you can reimburse them for mileage. For 2024, the IRS has set the optional standard mileage rate at 67 cents per mile driven. This rate increases to 70 cents per mile on January 1, 2025. Paying mileage is not mandatory or you can reimburse your employee at a different rate. However, if the cost of mileage causes your employee to fall below minimum wage, then you need to reimburse them for mileage.

GTM Can Help with Colorado Household Employment

Call (800) 929-9213 for a free, no-obligation consultation with a household employment expert. We’ll answer all your questions and show you how to comply with wage, tax, and labor laws as a household employer. Or, if you’re ready to have GTM Payroll Services handle it all for you, get started with our nanny payroll and tax service.

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