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HB 25-1208

Local Governments Tip Offsets for Tipped Employees

2025 Regular Session Introduced by Judy Amabile and 19 co-sponsors

Local governments with higher local minimum wages may raise tip offsets starting Jan 1, 2026, but cannot reduce tipped workers' cash pay below state minimum minus $3.02.

Governor Signed
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Bill Summary · HB 25-1208

HB 25-1208 — Local Governments Tip Offsets for Tipped Employees

Status: Governor signed (approved June 3, 2025). Effective date: July 1, 2025.

Main purpose

The bill clarifies and expands how local governments set the tip offset (tip credit) that applies when they adopt a local minimum wage above the state minimum. It establishes a statutory baseline tip offset and permits certain local increases beginning in 2026, while setting a floor to protect the statewide tipped minimum.

Key provisions

  • Sets the baseline tip offset associated with a local minimum wage at $3.02 (the amount in the state constitution) as of the act’s effective date. (C.R.S. 8-6-101(3.5)(a))
  • Beginning January 1, 2026, a local government that has enacted a local minimum wage exceeding the state minimum wage may increase the tip offset associated with that local minimum wage. (C.R.S. 8-6-101(3.5)(b))
  • Limit: a local government may not set a tip offset that results in a tipped employee earning less than (state minimum wage minus $3.02). In other words, local increases cannot reduce the tipped employee’s cash wage below that protected floor.
  • Existing provisions remain that tip offsets apply only to employees who regularly receive tips and only where allowed by state law; local governments retain authority to set local minimum wages.

Who is affected

  • Local governments with adopted minimum wages higher than the Colorado statewide minimum (fiscal notes reference at least four such jurisdictions, including Denver and Boulder).
  • Employers in food & beverage and other tipped positions operating in those local jurisdictions.
  • Tipped employees in those jurisdictions (potential changes to their cash wage and combined wage).
  • State agencies (Colorado Department of Labor and Employment — CDLE) for enforcement and complaint handling.

Fiscal and administrative impact

  • State General Fund revenue is expected to decrease if local governments increase tip offsets; the amount is uncertain. Early fiscal estimates provided an upper bound (initial analysis up to ~$6.8 million annually), but later revisions characterize the revenue change as indeterminate and dependent on local decisions.
  • CDLE workload to handle wage complaints and guidance updates may increase; fiscal notes differ — one estimated one-time and ongoing staffing costs (FY 2025-26 ~$92K GF and 0.8 FTE), later analysis assumed workload could be managed within existing appropriations unless demand grows.
  • Any reduction in income tax collections may affect TABOR refund calculations.

Timing / implementation

  • Act effective July 1, 2025.
  • Local governments may increase local tip offsets starting January 1, 2026, subject to the statutory limit described above.
  • The actual state fiscal impact depends on whether and how localities exercise the new authority.

Compiled from official sources — confirm details with the bill’s official record.

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