Before 2022, Colorado did not have an income tax withholding form, but for the 2022 tax year, the Colorado Department of Revenue introduced a Colorado Employee Withholding Certificate for Colorado employees to adjust their state withholding. The Department has updated both the withholding certificate for employees (DR004) and the withholding worksheet for employers (DR1098) to reflect changes to federal income tax deductions for 2023.
While employees can use the DR004 to adjust their state tax withholding, they are not required to. Employees who submitted a form for 2022 can update it for 2023 but are not required to. If an employee does not submit a CO form, employers should calculate withholding based on the employee’s federal withholding certificate (W-4).
Employers must begin using the updated DR1098 for pay periods beginning on or after January 1, 2023.
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