Quick Answer
Denver's Occupational Privilege Tax (OPT) requires most freelancers working in Denver to pay $5.75 per month ($69 annually). This applies whether you live in Denver or just work there, with limited exemptions for earnings under $500 monthly or specific business types like direct sales.
Best Answer
James Okafor, Self-Employment Tax Specialist
Established freelancers who work in Denver and need to understand OPT compliance and payment strategies
What is Denver's Occupational Privilege Tax (OPT)?
Denver's OPT is a monthly "head tax" of $5.75 that applies to anyone who works in Denver, including freelancers and independent contractors. Unlike income taxes that vary based on earnings, OPT is a flat monthly fee regardless of how much you make.
Do freelancers have to pay Denver OPT?
Most freelancers working in Denver must pay OPT, but there are specific exemptions:
"Working in Denver" includes serving Denver-based clients, even if you work from home outside the city. However, if you live in Denver but all your clients are located outside Denver (and you never work within city limits), you don't owe OPT.
Example: Freelance consultant OPT calculation
Maria is a freelance marketing consultant living in Aurora but working with Denver-based clients. She earns $8,000 monthly from her freelance work. Here's her OPT obligation:
Even though Maria lives outside Denver, she owes OPT because she works within Denver city limits by serving Denver clients.
How to pay Denver OPT as a freelancer
Freelancers have several payment options:
Monthly payments ($5.75/month)
Annual payment ($69)
Quarterly payments
Tax implications and deductions
The good news: Denver OPT is fully deductible as a business expense on your federal and Colorado state tax returns. According to IRS Publication 535, business license fees and similar taxes are ordinary business expenses.
Tax savings example:
Common freelancer mistakes with OPT
1. Assuming residence determines obligation - it's where you work, not where you live
2. Missing the monthly deadline - $5 penalty per month adds up quickly
3. Not deducting the expense - missing a legitimate business deduction
4. Paying when exempt - double-check if you qualify for the under-$500 exemption
5. Not registering initially - you must register before your first payment
What you should do
1. Determine if you work in Denver - includes serving Denver clients
2. Check if you exceed $500 monthly - consistent monthly income threshold
3. Register online at denvergov.org/opt if you owe tax
4. Choose payment schedule - monthly vs annual based on your cash flow
5. Set reminders for payment due dates (20th of each month)
6. Track payments for tax deduction purposes
[Use our quarterly estimator →](quarterly-estimator) to factor OPT into your business tax planning and estimated payments.
Key takeaway: Denver freelancers earning $500+ monthly pay $5.75 monthly ($69 annually) in OPT, which is fully tax-deductible and based on work location, not residence.
Key Takeaway: Denver freelancers earning $500+ monthly pay $5.75 monthly ($69 annually) in OPT, which is fully tax-deductible and based on work location, not residence.
Denver OPT requirements by freelancer situation
| Freelancer Situation | Monthly Income | OPT Required | Monthly Payment |
|---|---|---|---|
| Lives & works in Denver | $500+ | Yes | $5.75 |
| Lives outside, works in Denver | $500+ | Yes | $5.75 |
| Lives in Denver, works outside | Any amount | No | $0 |
| Works in Denver occasionally | Under $500/month | No | $0 |
| Direct sales/MLM in Denver | Any amount | No | $0 |
More Perspectives
James Okafor, Self-Employment Tax Specialist
First-year freelancers confused about whether Denver's OPT applies to their situation
I just started freelancing - do I need to worry about Denver OPT?
If you're earning money from freelance work in Denver, you probably need to pay OPT once you consistently earn over $500 monthly. But don't panic - it's only $5.75 per month, and there's a grace period while you're building your business.
When does OPT kick in for new freelancers?
OPT applies when you have a "regular" income over $500 monthly. For new freelancers, this typically means:
Example for a new freelancer
Tom starts freelance web design in Denver:
Tom would register for OPT in March and pay $5.75 for March and April, but skip May since he earned under $500.
Simple steps for new freelancers
1. Track monthly earnings - know when you cross the $500 threshold
2. Register when required - first month you earn $500+ in Denver
3. Pay by the 20th - $5.75 due by 20th of following month
4. Save receipts - it's a business tax deduction
5. Don't overthink it - it's less than $6 per month when you owe it
Key takeaway: New Denver freelancers pay $5.75 monthly OPT only when they earn $500+ that month, making it manageable while building their business.
Key Takeaway: New Denver freelancers pay $5.75 monthly OPT only when they earn $500+ that month, making it manageable while building their business.
Sources
- IRS Publication 535 — Business Expenses - covers deductibility of business taxes and fees
- Denver Occupational Privilege Tax — Official Denver OPT requirements, rates, and payment information
Related Questions
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.