Colorado Will Lower FAMLI Premium Rate in 2027

The state's paid leave program will see its contribution rate drop to 0.86% at the start of the new year.

Updated on Oct. 7, 2026 in Child Care

Colorado Will Lower FAMLI Premium Rate in 2027

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Do you support reducing payroll tax-funded benefit premiums to increase current worker take-home pay?

Starting January 1, 2027, the Colorado Department of Labor and Employment will reduce the FAMLI program premium rate to 0.86%. This adjustment marks the latest change to the state's paid leave system since its inception.

Why it matters

The reduction aims to balance the financial sustainability of the benefit fund while allowing Colorado workers to retain more income and providing cost savings for businesses. The program remains a key component of the state's social safety net for eligible employees.

The FAMLI premium rate will decrease to 0.86% for 2027, down from 0.88% in 2026 and the initial 0.9% rate set in 2023. Eligible workers maintain access to a maximum of 12 weeks of paid family leave through the program.

The players

Colorado Department of Labor and Employment

This state agency is responsible for overseeing the administration, premium collection, and benefit distribution of the FAMLI program.

The details

The Colorado Department of Labor and Employment is lowering the required contribution rate as part of an ongoing effort to manage the state's paid family and medical leave insurance fund. This change follows the program's initial launch in 2023 and the subsequent rollout of benefit distributions that began in 2024.

The initial premium rate was established at 0.9% in 2023.
Benefit distribution for the FAMLI program began in 2024.
The premium rate was reduced to 0.88% in 2026.
The new 0.86% premium rate takes effect on January 1, 2027.

Roadmap

The adjustment of the FAMLI premium rate reflects the state's iterative approach to managing a large-scale social insurance mandate within the Colorado FAMLI Act. This ensures the program evolves in response to fund performance rather than maintaining a static, potentially inefficient tax burden.

The rate decrease will slightly reduce the premium deductions from worker paychecks while simultaneously lowering payroll costs for Colorado employers starting in 2027. Residents can continue to rely on the program to provide up to 12 weeks of paid leave for qualifying family or medical needs.

The takeaway

Workers and employers should update their payroll systems to reflect the new 0.86% contribution rate by the start of the year. This shift demonstrates the state's commitment to adjusting program costs based on the actual usage and fund requirements observed since 2024.