Quick Answer
Denver's Occupational Privilege Tax (OPT) requires freelancers working in Denver to pay $5.75 per month ($69 annually) regardless of income level. This applies if you work even one day per month in Denver, whether from home or a client's office. Payment is due by the 20th of each month.
Best Answer
James Okafor, Self-Employment Tax Specialist
Established freelancers who need to understand Denver's unique monthly tax requirement and compliance
What is Denver's Occupational Privilege Tax?
Denver's OPT is a "head tax" of $5.75 per month ($69 annually) that applies to anyone who works within Denver city limits, regardless of income. Unlike income-based taxes, this is a flat fee that hits freelancers whether you earn $500 or $50,000.
When the OPT applies to freelancers
You owe OPT if you:
Key trigger: Working even ONE day per month in Denver makes you liable for the full $5.75 monthly tax.
Example: Consultant with mixed work locations
Sarah is a marketing consultant who lives in Aurora but has clients throughout the metro area:
January work locations:
Result: Sarah owes $5.75 for January because she worked 3 days in Denver, even though most of her work was elsewhere.
Annual calculation if she works in Denver 8 months:
Payment schedule and compliance
Monthly payment system:
Payment methods:
Who is exempt from Denver OPT?
Complete exemptions:
No income exemptions: Unlike federal taxes, there's no minimum income threshold. A freelancer earning $100/month owes the same $5.75 as someone earning $10,000/month.
Penalties for non-compliance
Late payment penalties:
Example penalty calculation:
Strategic considerations for freelancers
Location planning:
Record keeping requirements:
Tax deductibility:
Integration with other tax obligations
Federal estimated taxes:
Colorado state taxes:
What you should do
1. Determine your work locations - map out where you actually perform work activities
2. Set up automatic payments if you regularly work in Denver to avoid late fees
3. Track work location daily using a simple log or calendar system
4. Use our quarterly estimator to factor OPT deductions into your federal estimated tax calculations
5. Consider location strategy - small changes in meeting locations can save $69 annually
Key takeaway: Denver's $5.75 monthly OPT applies to any freelancer working even one day per month in the city - budget $69 annually and track work locations carefully to stay compliant.
Key Takeaway: Budget $69 annually for Denver's OPT if you work in the city regularly, and track your work locations daily since even one day per month triggers the full $5.75 monthly tax.
Denver OPT compared to other local tax obligations
| Tax Type | Amount | Frequency | Based On | Exemption Threshold |
|---|---|---|---|---|
| Denver OPT | $5.75 | Monthly | Work location | None - flat fee |
| Federal Income Tax | 10-37% | Quarterly/Annual | Income earned | $400 self-employment |
| Colorado Income Tax | 4.4% | Quarterly/Annual | Income earned | Standard deduction |
| Denver Business License | $13-$4,000+ | Annual | Business revenue | Under $2,000 revenue |
More Perspectives
James Okafor, Self-Employment Tax Specialist
First-year freelancers who are confused about Denver's unique monthly tax and how it differs from income taxes
Why Denver's tax is different from what you expect
Denver's Occupational Privilege Tax confuses new freelancers because it works completely differently from federal income taxes. It's a flat $5.75 per month fee, not a percentage of what you earn.
Simple rule: Work in Denver = Pay the tax
Think of it like a monthly membership fee for working in the city:
Common mistakes new freelancers make
Mistake #1: "I only earned $200, so I don't owe any taxes"
Mistake #2: "I'll pay it all at tax time"
Mistake #3: "My client didn't tell me about this"
Getting started with OPT compliance
Month 1 setup:
1. Register on Denver's tax website
2. Set up monthly calendar reminders for the 20th
3. Create a simple work location tracking system
4. Budget $5.75/month in your business account
Sample tracking method:
The good news: It's tax deductible
While paying an extra $69/year hurts when you're starting out, remember it reduces your federal and Colorado income taxes:
Example for new freelancer in 12% bracket:
What if you can't afford it?
Denver doesn't offer hardship exemptions, but the penalties are worse than the tax itself. If cash flow is tight:
1. Pay the current month first to avoid new penalties
2. Set up a payment plan for any back taxes
3. Consider working outside Denver until your income stabilizes
Key takeaway: Denver's OPT is a flat $5.75/month fee for any work performed in the city - set up monthly payments and track locations daily to avoid surprise penalties.
Key Takeaway: Set up monthly auto-pay for $5.75 and track work locations daily - this tax hits all Denver freelancers equally regardless of income level.
Sources
- Denver Department of Finance — Official Denver Occupational Privilege Tax information and payment portal
- IRS Publication 535 — Business Expenses - includes deductibility of local taxes and fees
Reviewed by James Okafor, Self-Employment Tax Specialist on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.