Self-Employment Tax in Colorado (2026)
Federal Self-Employment Tax (Applies to All States Including CO)
The federal self-employment tax is 15.3% on the first $168,600 of net SE income (2024), composed of 12.4% Social Security and 2.9% Medicare. Above $168,600, the 2.9% Medicare portion continues. An additional 0.9% Medicare surtax applies to SE income over $200,000 (single) or $250,000 (married joint).
Self-employed individuals can deduct half of their SE tax (7.65%) from gross income before calculating federal and state income tax.
Colorado State Income Tax on Self-Employment Income
Self-employed Coloradans pay the 4.40% flat rate on net SE income. Colorado also imposes an occupational privilege tax in some municipalities (e.g., Denver: $5.75/month for employees, $4/month for self-employed).
In Colorado, net self-employment income is taxed as ordinary income at up to 4.40% flat (flat rate system).
Quarterly Estimated Tax Payments for Colorado Self-Employed
Self-employed Colorado residents typically must make quarterly estimated tax payments to both the IRS (due Apr 15, Jun 15, Sep 15, Jan 15) and the Colorado Department of Revenue. Underpayment can trigger penalties.
Deductions Available to Colorado Self-Employed
- Half of federal SE tax (7.65%) — deductible above-the-line on federal return
- Home office deduction (if qualifying dedicated workspace)
- Health insurance premiums (100% deductible for self-employed if not eligible for employer plan)
- SEP-IRA or Solo 401(k) contributions — up to 25% of net SE income
- Business expenses: equipment, software, vehicle mileage (67 cents/mile in 2024), professional fees
Frequently Asked Questions
What taxes do self-employed people pay in Colorado?
Self-employed Colorado residents pay: (1) federal self-employment tax of 15.3% on net SE income up to $168,600; (2) federal income tax on net earnings; and (3) Colorado state income tax at up to 4.40% flat. Self-employed Coloradans pay the 4.40% flat rate on net SE income. Colorado also imposes an occupational privilege tax in some municipalities (e.g., Denver: $5.75/month for employees, $4/month for self-employed).
What is the self-employment tax rate in 2026?
The federal SE tax rate is 15.3% on the first $168,600 of net self-employment income (2024). Above that, only the 2.9% Medicare portion continues. An additional 0.9% Medicare surtax applies above $200,000 (single). This applies to all self-employed individuals regardless of state, including Colorado.
Can I deduct the self-employment tax in Colorado?
Yes. Half of your federal SE tax (7.65%) is deductible as an above-the-line deduction on your federal return, reducing your federal and state taxable income. In Colorado, this deduction also reduces your state taxable income, saving you up to 4.40% flat of the deducted amount.
Do I need to make quarterly estimated tax payments in Colorado?
Yes, if you expect to owe more than $1,000 in federal taxes for the year. Colorado also requires estimated payments if state tax owed exceeds $500. Payment due dates are typically April 15, June 15, September 15, and January 15.