What Colorado Employers Need to Change on January 1, 2027

Why January 1 Matters

Most payroll changes don't arrive one at a time. They pile up on January 1. For 2027, Colorado employers are looking at a higher state minimum wage, a higher Denver minimum wage, a bigger unemployment insurance wage base, a lower FAMLI premium, and a higher Social Security wage base, all on the same day.

None of these is hard on its own. The risk is the first payroll of the year: it usually covers hours worked on January 1, so any rate you forget to update is wrong from the first check. Here's what's changing, what it means in dollars, and what to do before then.

Colorado Minimum Wage: $15.71 an Hour

The Colorado Department of Labor and Employment announced that the statewide minimum wage rises from $15.16 to $15.71 an hour on January 1, 2027. The minimum cash wage for tipped workers rises to $12.69 an hour.

What it costs: the increase is $0.55 an hour. For a full-time employee at the minimum (40 hours × 52 weeks = 2,080 hours), that's:

• $0.55 × 2,080 = $1,144 more in gross wages per year

If you have five full-time minimum-wage employees, budget about $5,720 more in wages for the year, before payroll taxes.

For tipped employees, the gap between the full minimum and the tipped minimum is $3.02 ($15.71 − $12.69). That's the most tip credit you can take, and only when an employee's tips actually make up the difference. If tips fall short in a pay period, you owe the rest.

Also check anyone paid just above the old minimum. A rate that was legal in 2026 can fall under the line in 2027.

Denver Minimum Wage: $19.84 an Hour

If your employees work inside Denver city limits, the local rate applies instead. Denver's minimum wage rises from $19.29 to $19.84 an hour on January 1, 2027. The tipped minimum for food and beverage workers rises to $16.82 an hour, so the maximum tip credit is $3.02.

The increase is also $0.55 an hour, or $1,144 a year for a full-time employee at the minimum. Denver's tip credit applies only to food and beverage workers. It doesn't apply in other industries, even when an employee sometimes gets tips.

Denver isn't the only city that can set its own rate. Other localities set minimum wages by local ordinance and may announce 2027 rates on their own schedule. If you have employees working in more than one city, confirm which rate applies where the work is actually done.

Colorado Unemployment Insurance: Wage Base Rises to $32,100

Colorado charges unemployment insurance (UI) premiums on each employee's wages up to a yearly cap called the chargeable wage base. For 2027, that cap rises from $30,600 to $32,100.

Three things to know:

• New employers start at an introductory rate of 1.70%, or 4.06% for heavy construction.
• Established employers have their own rate, which comes on the annual Rate Notice from the UI Division. Use that number, not the new-employer rate.
• The solvency surcharge is off for 2027.

Worked example at the 1.70% new-employer rate, for one employee earning at least $32,100 in 2027:

• $32,100 × 1.70% = $545.70 in UI premium for the year
• Of that, $25.50 comes from the higher wage base ($1,500 × 1.70%)

At the 4.06% heavy construction rate, the same employee costs $1,303.26 for the year, with $60.90 of it from the higher wage base. The increase is modest per person, but it applies to every employee who reaches the cap.

Colorado FAMLI: Premium Drops to 0.86%

Some good news: the FAMLI Division is lowering the paid family and medical leave premium from 0.88% to 0.86% of wages on January 1, 2027.

For every $50,000 in wages, the total premium falls from $440 to $430. That $10 is split between employer and employee for businesses with 10 or more employees. Employers with fewer than 10 employees still deduct and send in the employee share but don't owe the employer share. Small savings, but only if you update the rate. An outdated rate means over-withholding from employees' checks.

New FAMLI rules also take effect January 1, 2027. They cover premiums, benefits and employer participation, private plans, program integrity, job protection and anti-retaliation, and investigations. If you run a private plan instead of the state plan, or you have an employee on FAMLI leave, read the rule changes on the FAMLI site or ask us.

Social Security Wage Base: $192,300

At the federal level, the Social Security wage base rises from $184,500 to $192,300. The 6.2% tax rate is unchanged, so the most an employee pays in 2027, and the most you match, is $11,922.60 each.

This mainly matters for owners and higher-paid staff. For an employee earning $192,300 or more, both you and the employee pay $483.60 more in Social Security tax than in 2026 ($7,800 × 6.2%). For everyone under the old cap, nothing changes.

Watch For: The 2027 PAY CALC Order

Colorado's overtime-exempt salary threshold, the minimum salary for a manager or professional to be exempt from overtime, is set each year in the PAY CALC Order. The 2027 PAY CALC Order was proposed on September 30, 2026, and is still in rulemaking. It takes effect January 1, 2027, or as soon after as rulemaking finishes, and it is expected to adjust the exempt salary threshold for inflation.

If you have salaried, overtime-exempt employees paid close to the 2026 threshold, watch for the final order. Anyone who falls below the new figure will need a raise or will need to be paid overtime.

Year-End Checklist

Before your first 2027 payroll:

1. Update pay rates. Raise anyone below $15.71 (or $19.84 in Denver), plus any other city with its own rate.
2. Post the new minimum wage posters. Swap in the 2027 state poster, and the Denver poster if it applies.
3. Check tipped employee pay. Set cash wages to at least $12.69 (or $16.82 for Denver food and beverage), and make sure tips actually cover the difference every pay period.
4. Update UI and FAMLI rates in payroll. Enter your 2027 UI rate from your Rate Notice, the $32,100 wage base, and the 0.86% FAMLI premium.
5. Confirm the Social Security wage base of $192,300 is in your payroll system.
6. Review salaried exempt employees once the final 2027 PAY CALC Order is out.

Key Takeaways

• Colorado minimum wage: $15.71 an hour; tipped $12.69 ($1,144 a year more per full-time minimum-wage employee)
• Denver minimum wage: $19.84 an hour; tipped food and beverage $16.82; other cities may differ
• Colorado UI wage base: $32,100; new-employer rate 1.70% (4.06% heavy construction); no solvency surcharge for 2027
• FAMLI premium: 0.86% of wages, plus new rules effective January 1
• Social Security wage base: $192,300; max tax $11,922.60 each for employee and employer
• Watch for the final 2027 PAY CALC Order and its exempt salary threshold

If you're a Unify Payroll client, we apply these updates for you: the new wage bases, UI and FAMLI rates, and tax tables are in place before your first 2027 payroll. If you're running payroll yourself and want a second set of eyes on your January 1 changes, get in touch. We're a local Fort Collins team, and we're happy to help.

This article is general information, not legal or tax advice. Check with your advisor about your specific situation.