Short answer: In Colorado, employers can pay tipped workers a cash wage of $12.14 an hour, as long as tips bring them up to the $15.16 minimum wage. The most an employer can count from tips, the tip credit, is $3.02 an hour.
Colorado tipped wage at a glance
| Colorado | |
|---|---|
| Minimum wage | $15.16 an hour |
| Cash wage for tipped workers | $12.14 an hour |
| Maximum tip credit | $3.02 an hour |
| Who counts as a tipped employee | Federal rule: someone who regularly gets more than $30 a month in tips |
| In force since | 1 January 2026 |
The federal tipped minimum is $2.13 an hour with a $5.12 tip credit toward the $7.25 federal minimum wage. Where a state sets a higher figure, the higher one applies.
An example week
A server works 30 hours. The employer pays at least 30 x $12.14 = $364.20 in cash wages. To reach the minimum wage of 30 x $15.16 = $454.80, the server's tips must add up to at least $90.60. If they make less in tips that week, the employer must pay the difference.
Upcoming changes
1 Jan 2027: $15.71, tipped cash wage $12.69 (CDLE, announced 13 Aug 2026).
Local rates and exceptions
Denver $19.29 in 2026, tipped $16.27. Boulder city, unincorporated Boulder County and Edgewater also set higher local rates.
Tip pools and who keeps the tips
Your employer can require sharing tips, but must tell you in advance how and customers must be informed. Colorado guidance says pooling with managers or with staff who do not customarily get tips (such as cooks) means the employer loses the tip credit. Pooling among servers, bussers and similar customer-facing roles is allowed.
Federal FLSA: employers, managers and supervisors may not keep any part of employees' tips. A mandatory tip pool may include only customarily tipped staff when a tip credit is taken; if the full minimum wage is paid, back-of-house staff may share the pool.
To share a pool fairly by hours or points, use the tip split calculator. To work out what a server owes support staff, use the tip-out calculator.
Who owns the tips
Colorado wage law says your employer cannot claim ownership or control of your tips. Tips are your money and fall under the same payday rules as wages.
Can card fees come out of tips?
Colorado agency guidance (INFO #3C, citing the state wage order) says an employer that uses tips to pay credit card processing fees cannot take the tip credit. Treat deductions of card fees from your tips as a red flag and ask the state labour division.
Service charges
Colorado treats an automatic service charge as a charge, not a tip, even if the menu calls it a gratuity. If the business tells customers it goes to staff, it still has to be paid to you as wages rather than counted as a tip toward the minimum wage.
Income tax on tips in Colorado
Colorado taxes tips as income but starts from federal taxable income. The Department of Revenue Individual Income Tax Guide says no addback is required for the federal qualified tips deduction, so the federal deduction (up to $25,000, tax years 2025 to 2028) carries through to your Colorado return. Overtime, by contrast, must be added back from tax year 2026.
Other rules
- Denver limits its tip credit to workers in food and beverage service.
- Minors who are not emancipated can be paid 15% below the minimum wage ($12.89 in 2026).
The agency in charge is the Colorado Department of Labor and Employment, Division of Labor Standards and Statistics.
Tips and federal income tax
From 2025 to 2028, up to $25,000 of qualified tips a year can be deducted from federal taxable income. See the no tax on tips calculator for who qualifies and what it saves.
Taking tips by card
Customers carry less cash. A personal QR code lets them tip you by card, Apple Pay or Google Pay from their own phone, with no app to install. See QR code tip jars by job.
Sources
- US DOL WHD, Minimum Wages for Tipped Employees (revised 1 Jul 2026)
- US DOL WHD, State Minimum Wage Laws (updated 1 Jul 2026)
- 2026 Temporary PAY CALC Order, 7 CCR 1103-14
- Press Release: Colorado Minimum Wage will Increase to $15.71/hour in 2027
- INFO #3C Tips (Gratuities) and Tipped Employees Under Colorado Wage Law
- Individual Income Tax Guide
- Denver's Minimum Wage
- Fact Sheet #15: Tipped Employees Under the FLSA
Checked in October 2026 against the sources above. Wage rates change, often on 1 January and 1 July; check the state labor department before relying on a figure. This is general information, not legal advice.
Common questions
What is the tipped minimum wage in Colorado in 2026?
In Colorado, employers can pay tipped workers a cash wage of $12.14 an hour, as long as tips bring them up to the $15.16 minimum wage. The most an employer can count from tips, the tip credit, is $3.02 an hour.
Does Colorado allow a tip credit?
Yes. Employers can count up to $3.02 an hour of tips toward the $15.16 minimum wage.
What happens if my tips do not make up the minimum wage?
When an employer pays a tipped cash wage, it must make up any shortfall so that your cash wage plus tips is at least the full minimum wage for the hours you worked.
Can my employer or manager keep part of my tips?
No. Under federal law, employers, managers and supervisors may not keep any part of employees’ tips, including through a tip pool.
Is the Colorado minimum wage going up?
1 Jan 2027: $15.71, tipped cash wage $12.69 (CDLE, announced 13 Aug 2026).
Can my employer take card fees out of my tips in Colorado?
Colorado agency guidance (INFO #3C, citing the state wage order) says an employer that uses tips to pay credit card processing fees cannot take the tip credit. Treat deductions of card fees from your tips as a red flag and ask the state labour division.
Does Colorado tax tips?
Colorado taxes tips as income but starts from federal taxable income. The Department of Revenue Individual Income Tax Guide says no addback is required for the federal qualified tips deduction, so the federal deduction (up to $25,000, tax years 2025 to 2028) carries through to your Colorado return. Overtime, by contrast, must be added back from tax year 2026.
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