Denver's head tax follows work, not your home address

A small line labeled Denver shows up on a paycheck, and the worker has never lived in the city. That is usually the occupational privilege tax at work: a local payroll-style tax, often called the head tax, that catches people new to the area off guard. It is charged monthly and has two halves: a piece the employee pays and a piece the business pays.

What triggers it is where the work happens, not where anyone lives. A person can live in Aurora or Lakewood and still owe it if their job is performed inside Denver. A company can be headquartered far outside the city and still be on the hook the moment its people are doing taxable work within Denver’s limits.

For a household, that single fact is usually enough to explain the mystery deduction on a pay stub. For a small business, it is a question to settle when payroll is first set up, getting it right from the start rather than discovering a gap at year-end when the bill and any back amounts come due all at once.

The exact dollar figures and the filing schedule live with Denver Treasury, on its business tax page and the occupational privilege tax FAQ. Those are the spots to confirm the current rule before you set anyone up or sort out a paycheck question.