How does Colombia payroll tax work in 2026?
Colombia's employer social charge is 20.5% of salary, before parafiscales push the total employer cost even higher. The income-tax scale runs to 39% across six UVT-indexed bands. And Law 2466 of 2025 added a fresh set of obligations on top. If you are building a team here, the cost structure is different from most markets you have hired in before.
· Colombia guide
Illustration · Bogota, Colombia
Colombia employer payroll cost in 2026: the employer pays 20.5% of salary in social security contributions. That covers health insurance at 8.5% and pension at 12%.
Parafiscales add more on top. SENA, ICBF, and Caja de Compensacion Familiar each take a percentage of the payroll base. The combined employer burden is materially higher than the 20.5% headline.
The employee pays 8% of salary into social security. That covers health at 4% and pension at 4%. Income tax has six bands. The zero-rate band covers earnings up to COP 57,087,660 a year. The top rate is 39%.
Payroll is filed monthly via PILA, the integrated contribution platform. The minimum wage is COP 1,750,905/month from January 2026.
What does an employer pay in Colombia social security?
The employer pays 20.5% of an employee's salary in social security. That is 8.5% for health insurance and 12% for pension.
Parafiscales sit on top of this. Most employers pay an additional 9% in parafiscales. These go to SENA (vocational training), ICBF (family welfare), and Caja de Compensacion Familiar (family compensation fund).
| Contribution | Employer rate | Basis |
|---|---|---|
| Health (EPS) | 8.5% | Monthly salary |
| Pension (AFP) | 12% | Monthly salary |
| Social security subtotal | 20.5% | Monthly salary |
| SENA (vocational training) | 2% | Monthly payroll |
| ICBF (family welfare) | 3% | Monthly payroll |
| Caja de Compensacion Familiar | 4% | Monthly payroll |
Employers with a monthly payroll base below 10 minimum wages are exempt from SENA and ICBF contributions. The Caja contribution applies regardless of payroll size. High-income employees (above 13 minimum monthly wages) face an additional solidarity pension contribution from the employer, ranging from 1% to 2% depending on salary level.
ARL: workplace accident insurance
Employers also pay the Administradora de Riesgos Laborales (ARL) contribution. The ARL rate depends on the risk classification of the job, from under 1% for low-risk office roles to over 6% for high-risk occupations. Every employer must register each employee with an ARL and fund the premium directly. This is a separate cost on top of the 20.5% social security total.
What does an employee pay in Colombia social security?
The employee pays 8% of their salary into social security. That is 4% for health and 4% for pension.
Employees earning more than 4 minimum wages (SMMLV) pay an additional solidarity pension levy. This ranges from 1% to 2% of salary, deducted from pay.
| Contribution | Employee rate | Basis |
|---|---|---|
| Health (EPS) | 4% | Monthly salary |
| Pension (AFP) | 4% | Monthly salary |
| Social security total | 8% | Monthly salary |
The 8% deduction is taken by the employer via PILA before the employee receives their net pay. The employee chooses their health insurer (EPS) and pension fund (AFP) during onboarding. Both choices can be changed, but only at specific intervals and with a written request. Teamed handles the registration and the deduction calculation.
Colombia also has a voluntary savings vehicle called the Cuenta AFC (housing savings account). Employee contributions to an AFC are tax-deductible up to a legal limit. This is common among higher-earning professionals as a way to reduce income tax exposure. It is voluntary and employer-administered on request.
Colombia income tax bands for 2026
Colombia income tax has six bands. Earnings up to COP 57,087,660 a year pay no tax. The top rate is 39% on income above COP 1,623,594,000 a year.
All thresholds are set in UVT (Unidad de Valor Tributario). The 2026 UVT is COP 52,374, set by DIAN Resolution 000238 of 2025. The thresholds adjust each year when DIAN publishes the new UVT.
| Income band (COP/year, 2026 UVT) | Rate | UVT band |
|---|---|---|
| Up to COP 57,087,660 | 0% | 0 to 1,090 UVT |
| COP 57,087,660 to COP 89,035,800 | 19% | 1,090 to 1,700 UVT |
| COP 89,035,800 to COP 214,733,400 | 28% | 1,700 to 4,100 UVT |
| COP 214,733,400 to COP 454,082,580 | 33% | 4,100 to 8,670 UVT |
| COP 454,082,580 to COP 993,534,780 | 35% | 8,670 to 18,970 UVT |
| COP 993,534,780 to COP 1,623,594,000 | 37% | 18,970 to 31,000 UVT |
| Above COP 1,623,594,000 | 39% | Above 31,000 UVT |
How income tax is collected
Income tax on employment is generally collected through a monthly withholding mechanism called retencion en la fuente. The employer calculates and withholds the monthly tax estimate based on a DIAN-approved table. Employees with multiple income sources or deductions file an annual return. Employees with a single employer and income below the filing threshold do not need to file annually; the withholding is their final tax.
Deductions that reduce the taxable base
Colombian employees can reduce their taxable income through several legal deductions. Mandatory social security contributions (8% of salary) are deductible. Voluntary pension contributions and Cuenta AFC deposits are deductible up to a combined limit (generally up to 30% of gross employment income, capped at a UVT ceiling). The practical effect is that the effective income tax rate for most employees is lower than the nominal band rate.
How does Colombia PILA payroll filing work?
PILA stands for Planilla Integrada de Liquidacion de Aportes. It is the single monthly filing that collects all social security and parafiscal contributions in one transaction.
Every employer must file PILA by the deadline set for their NIT (tax ID) number each month. Filing late means penalties. Missing a month means the employee may lose health cover.
Every employer in Colombia must file PILA monthly for each employee on payroll. The filing combines health, pension, ARL, SENA, ICBF, and Caja contributions into a single transaction. Payment is due between the 7th and the 17th of each month, depending on the final digit of the employer's NIT. Late payment triggers interest charges and penalties, and may suspend the employee's EPS health coverage until the arrears are settled.
Source: PILA: Planilla Integrada de Liquidacion de Aportes (pila.gov.co)
The components filed through PILA each month:
- EPS (health): employer 8.5% + employee 4% = 12.5% of salary
- AFP (pension): employer 12% + employee 4% = 16% of salary
- ARL (workplace risk): employer-only, rate by risk class
- SENA: employer 2% (most employers)
- ICBF: employer 3% (most employers)
- Caja de Compensacion: employer 4%
All components are calculated on the same base: the employee's monthly salary. For salaries that include variable pay, the PILA base is the total monthly earned income. Payments made via non-salary channels (expense reimbursements, travel allowances structured as such) are generally excluded from the PILA base under Colombian law, but the rules are specific and must be set up correctly at hiring.
Payroll frequency
The Colombian Labour Code sets the maximum payment interval for salaried employees at one calendar month. Most employers pay monthly. Some pay fortnightly, which is allowed and common in certain industries. Weekly pay is permitted for hourly workers. Teamed's standard Colombia payroll cycle is monthly, matching the PILA filing cycle.
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Confirm salary and variable pay
Gather the employee's monthly salary and any variable earnings for the period. The PILA base includes all earned income for the month.
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Calculate gross social security
Apply the employer rate to the salary base. Confirm the ARL risk class for each employee to get the correct workplace-accident premium.
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Deduct employee contributions
Withhold the employee social security rate from gross salary. Apply income tax withholding using the retencion en la fuente table for the month.
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Calculate parafiscales
Calculate SENA, ICBF, and Caja de Compensacion contributions on the total monthly payroll base.
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File PILA by the NIT deadline
Submit the integrated PILA return for all employees by the employer's specific deadline (between the 7th and 17th of the month). Late filing suspends health cover.
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Process cesantias and prima accruals
Update the running cesantias and prima accrual for each employee. Deposit the full cesantias balance to the fund by 14 February for the prior year.
Pension and social benefit contributions in the payroll stack
Pension contributions are split between employer and employee. The employer pays 12% and the employee pays 4%, for a combined 16% into the chosen AFP pension fund.
Colombia also requires the employer to pay cesantias (a severance fund accrual) and prima de servicios (a semi-annual bonus). Both are mandatory and add to the total cost of employment.
The four mandatory benefit contributions that sit on top of salary and social security in Colombia:
- Cesantias: one month's salary per year accrued and deposited into a cesantias fund. The deposit deadline is 45 days after 31 December each year. The employer also pays 12% annual interest on the cesantias balance directly to the employee by 31 January.
- Prima de servicios: one full month's salary per year, paid in two equal instalments. Half is paid in June (by 30 June) and half in December (by 20 December).
- Vacaciones: 15 working days of paid annual leave per year, accrued throughout the year and paid when taken.
- Dotacion: employer-funded clothing and footwear for employees earning less than two minimum wages, issued three times per year.
The pension system offers two tracks. Employees choose between the individual capitalisation track (Regimen de Ahorro Individual con Solidaridad, RAIS) and the defined-benefit public system (Regimen de Prima Media, RPM run by Colpensiones). The choice affects the retirement benefit structure but not the contribution rate (16% total either way).
The minimum wage as the payroll floor
Every contribution base must be at least the minimum wage. The 2026 minimum wage is COP 1,750,905/month, set by Decreto 0159 de 2026. All PILA contributions are calculated on actual salary, with the minimum wage as the floor. No employee contribution base may fall below this figure, even for part-time workers whose pro-rata salary falls under it.
How does Teamed handle Colombia payroll for you?
Teamed becomes your legal employer of record in Colombia for from $599 per employee per month, with zero FX mark-up in any currency.
PILA, social security, income tax withholding, cesantias, prima, and every other Colombia payroll layer runs on one platform.
Real HR and legal experts handle your Colombia hires, from the first offer letter through every monthly PILA filing and year-end cesantias deposit. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice.
EOR payroll, contractor onboarding, and entity setup all live on one platform. A Colombia contractor who converts to payroll keeps their record. That same employee can graduate from EOR to your own Colombia entity without switching systems. EOR is the right model for a first Colombia hire, until it isn’t. Run the Employer Cost Calculator to see the full picture. Start from the Colombia hiring overview.
Key sources: PwC Worldwide Tax Summaries: Colombia, PwC: Colombia income tax, and Codigo Sustantivo del Trabajo Art. 134.
Frequently asked questions
What is the employer social security rate in Colombia in 2026?
The employer pays 20.5% of salary in social security contributions. That is 8.5% for health insurance and 12% for pension. Parafiscales (SENA 2%, ICBF 3%, Caja de Compensacion 4%) add a further 9% for most employers. Workplace-accident insurance (ARL) is a separate employer cost on top, with the rate depending on the risk class of the job.
What does a Colombian employee pay in social security?
The employee pays 8% of their salary into social security. That is 4% for health insurance and 4% for pension. The employer deducts this from gross pay before paying net salary. Employees earning above four minimum wages pay an additional solidarity pension levy of 1% to 2%, also deducted from pay.
What are the Colombia income tax bands in 2026?
Colombia has six income tax bands, all set in UVT (the 2026 UVT is COP 52,374). Earnings up to COP 57,087,660 a year attract 0%. Then 19% up to COP 89,035,800, then 28% up to COP 214,733,400, then 33% up to COP 454,082,580, then 35% up to COP 993,534,780, then 37% up to COP 1,623,594,000, then 39% above COP 1,623,594,000.
What is PILA and when must it be filed?
PILA (Planilla Integrada de Liquidacion de Aportes) is the monthly electronic filing that covers all social security and parafiscal contributions for every employee. Every employer must file and pay PILA between the 7th and 17th of each month, with the specific deadline set by the last digit of the employer's NIT. Late payment triggers interest penalties and may suspend the employee's health insurance coverage.
What is the minimum wage in Colombia in 2026?
The minimum monthly salary (Salario Minimo Mensual Legal Vigente, SMMLV) is COP 1,750,905/month from January 2026, set by Decreto 0159 de 2026. All social security and parafiscal contributions are calculated on actual salary, with the minimum wage as the floor. No contribution base can fall below this figure.
The number that surprises most new Colombia employers is not the social security rate. It is when they add up cesantias, prima, vacaciones, and parafiscales on top of the headline salary. Total employer cost in Colombia is typically 45% to 55% above the base salary figure. Model that before the offer goes out.
Colombia's employer social charge is 20.5%. Add parafiscales, cesantias, prima, and vacaciones and the real cost lands around half as much again as the salary figure.
Six income tax bands up to 39%. Minimum wage COP 1,750,905/month. Run the numbers before the offer.
