Colorado: Sales Tax Handbook

Colorado Sales Tax Rate

2023 Colorado Sales Tax Handbook

Colorado Table of Contents

• List of Local Sales Tax Rates
• Sales Tax Calculator
• Sales Tax Exemption Certificates
• Sales Tax Info For Businessowners
  • Getting A Sales Tax Permit
  • Filing Your Sales Tax Return
  • Sales Tax Return Filing Schedule
  • What Defines Sales Tax Nexus?
  • Appealing Sales Tax Audits
• Taxable vs. Non-Taxable Purchases
  • What Sales Are Taxable?
  • Sales Tax Exemptions
  • Sales Tax Basis Components
  • Alcohol Excise Taxes
  • Tobacco Excise Taxes
  • Gasoline & Fuel Excise Taxes
  • Marijuana Taxes
• Sales Tax on Cars & Vehicles
• More Information
  • State Sales Tax Map
  • State Sales Tax Rate Table
  • Recent Tax Rate Changes
  • List of Sales Tax Holidays
  • Contact the Department of Revenue

These rankings show how the Colorado sales tax compares to the other 49 states + DC. The state with the highest sales tax is ranked 1st, and states with the same sales tax have a tie rank.

Colorado's Sales Tax By The Numbers:

Colorado has a lower-than-average state sales tax rate of 2.9%, but the actual combined sales tax rates are higher than average when local sales taxes from Colorado's 276 local tax jurisdictions are taken into account.

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Rankings by Average State + Local Sales Tax:

  Ranked 23rd highest by combined state + local sales tax

  Ranked 18th highest by per capita revenue from state + local sales taxes ($1,054 per capita)

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Rankings by State Sales Tax Only:

  Ranked 23rd highest by state sales tax rate

  Ranked 45th highest by per capita revenue from the statewide sales tax ($446 per capita)

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CO City & County Taxes

CO Sales Tax Calculator

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Printable PDF Colorado Sales Tax Datasheet

What is exempt from sales taxes in Colorado?

Many states have special sales tax rates that apply to the purchase of certain types of goods, or fully exempt them from the sales tax altogether. Here's how Colorado taxes five types of commonly-exempted goods:

Clothing

  2.9%

Groceries

  EXEMPT

Prepared Food

  2.9%

Prescription Drugs

  EXEMPT

OTC Drugs

  2.9%

For more details on what types of goods are specifically exempt from the Colorado sales tax see Colorado sales tax exemptions. To learn more about what types of transactions are subject to the sales tax to begin with, see what purchases are taxable in Colorado? Taxation of vehicle purchases in particular are discussed in the page about Colorado's sales tax on cars.

Are services subject to sales tax in Colorado?

"Goods" refers to the sale of tangible personal property, which are generally taxable. "Services" refers to the sale of labor or a non-tangible benefit. In Colorado, specified services are taxable.

About the Colorado Sales Tax

Colorado is a "home rule" state, which means that local governments like counties and cities have expanded powers when it comes to setting local sales tax rules. As a result, Colorado has relatively complicated sales tax laws that vary significantly depending on which jurisdiction you are in.

The Colorado Department of Revenue collects local sales taxes on behalf of a number of cities and counties. However, many cities in Colorado are known as "home rule" cities, which set and collect their own local sales taxes (see Colorado Form DR1002).

Sales and use taxes are the primary revenue sources for Colorado municipalities, and while none currently have a tax rate higher than 8% there is no limit set by the state government. State law allows municipalities to collect a sales or use tax if approved by their residents at an election. Most municipalities that collect a sales tax also collect a corresponding use tax. Due to the wide variety of local rates and regulations, direct contact with these home rule cities is suggested to receive up-to-date information concerning their tax rates, exemptions, license fees and procedures.

In addition to cities and counties, other local government organizations (specifically school districts, transportation districts, and special purpose districts) may also collect local sales taxes. Certain purchases, including rental cars and lodging rentals, are also subject to special sales taxes as high as 11.25% in some localities.

Is the Colorado Sales Tax Destination-Based or Origin-Based?

Colorado is a destination-based sales tax state, which means that sales tax rates are determined by the location of the buyer when the transaction is completed. This means that, for orders placed via the internet/mail by a customer within Colorado from a Colorado vendor, the vendor must collect a sales tax rate applicable at the buyer's address (including any applicable local sales taxes). This can significantly increase the complication of filing your sales tax return, because different sales tax rates must be charged to different buyers based on their location.

Is Colorado a Streamlined Sales Tax State?

Colorado is not a member of the Streamlined Sales and Use Tax Agreement. The SSUTA is an agreement adopted by about half of states that ensures that their sales tax laws are simplified to lower the costs associated with compliance.

Contact the Colorado Department of Revenue

The Colorado Sales Tax is administered by the Colorado Department of Revenue. You can learn more by visiting the sales tax information website at www.colorado.gov.

Phone numbers for the Sales Tax division of the Department of Revenue are as follows:

• Local Phone: (303) 238-7378

Learn More: Our Book Recommendations

If you would like to learn more about how to manage your Colorado sales taxes, we recommend the following books:

Small Business Taxes For Dummies

This introductury book assists both current and aspiring small business owners with important tax planning issues, and covers a wide variety of small business tax topics.

Buy on Amazon

A Guide to Sales and Use Tax

This book provides information and insights on how to comply with a multitude of sales and use tax laws and regulations. This is our recommendation if you need an in-depth look into sales taxes.

Buy on Amazon