Sales tax in Colorado can be complex to navigate for businesses and consumers. Unlike most states, Colorado has both state-level and local sales taxes that apply. There are over 300 home-rule cities and counties that each set their own rates. Understanding when, where, and how much sales tax is due in Colorado requires a dive into the various taxing jurisdictions. This in-depth guide provides everything you need to know about colorado sales tax in 2023.
Colorado Sales Tax Calculator
The Colorado sales tax calculator is an online tool that automatically calculates sales tax for purchases made in Colorado based on the location entered by the user. To use the calculator, a person first selects the county and city where the purchase will take place from a dropdown menu. They then enter the total purchase price without tax. The calculator will apply the sales tax rate for that jurisdiction and provide the estimated total sales tax amount owed.
Colorado Sales Tax Calculator
Colorado Sales Tax Calculator
This eliminates the need to manually look up tax rates and calculate the sales tax yourself. The calculator ensures you pay the correct sales tax on purchases made across Colorado, as rates vary widely across different cities and counties. Having an automatic calculator makes complying with Colorado’s complex sales tax system seamless for both residents and visitors purchasing taxable goods or services within the state.
An Overview of Colorado Sales Tax
Colorado has a 2.9% state sales tax that applies statewide. On top of this, there is an additional sales tax in most Colorado cities, counties and special districts. Combined state and local rates can reach over 11% in some areas.
Key facts about colorado sales tax:
- 2.9% Colorado state sales tax
- Local sales taxes up to 8.3%+ in cities/counties
- Special district taxes on lodging, restaurants, and more
- Taxable sales include retail goods, food, services, and more
- Exemptions for prescription drugs and groceries
- Different rules for wholesalers, manufacturers and remote sellers
With so many taxing jurisdictions, retailers must look at each specific store location to know what sales tax rate to collect. Use of a ZIP code sales tax lookup is critical to get this right.
Do I Need to Collect Colorado Sales Tax?
Sales tax requirements in Colorado depend on your business activities and locations throughout the state.
In-State Brick & Mortar Stores
Any retailer with physical store locations in Colorado must collect state sales tax plus all local sales taxes applicable in those jurisdictions. You must register for sales tax permits, file returns, and charge the proper combined rates when making taxable sales.
Remote Sellers & Online Marketplaces
Out-of-state retailers also have Colorado sales tax obligations if they have substantial economic nexus. This includes:
- Gross revenue over $100,000 from Colorado sales
- 200 or more separate Colorado transactions
- Inventory stored in Colorado fulfillment centers
- Utilizing click-through affiliates located in Colorado
Remote sellers meeting these thresholds must collect Colorado sales tax on taxable sales delivered into the state.
No Physical or Economic Nexus
If your business does not have any real property, employees, inventory or meaningful sales revenue sourced to Colorado, you generally do not need to collect Colorado sales tax. However, you may still need to provide buyers with a transaction tax report they can use to remit use tax.
What is Taxable in Colorado?
Colorado broadly taxes retail sales of tangible personal property along with a number of services. Some taxable transactions include:
- Retail goods (clothing, electronics, furniture, etc.)
- Restaurant meals
- Hotel rooms & short term rentals
- Admissions to events, shows, recreational facilities
- Telecom services like mobile phone plans
- Repairs and installations
Notable exemptions from colorado sales tax include prescription drugs, grocery food, agricultural products, machinery and machine tools used in manufacturing.
See a full list of taxable and exempt sales in Colorado.
Colorado Sales Tax Rates
The statewide sales tax rate is 2.9%. Local sales tax rates vary:
- Denver charges a combined 7.65% – 4.31% Denver tax plus 3.4% RTD/Cultural tax.
- Boulder has a 6.845% sales tax rate.
- Colorado Springs taxes sales at 6.25%
- Smaller cities and rural areas may have rates around 3-5%.
Special sales taxes also apply for lodging, car rentals, food and more. For example:
- Lodging taxes can add another 2-7% around the state.
- Rental car taxes range from 2-10% locally.
Use Colorado sales tax lookup tools to find the exact combined rate that applies based on location and business type. Apply location-specific rates at the time of each taxable transaction.
Registering & Remitting Colorado Sales Tax
Retailers that meet the nexus thresholds must register for a Colorado Sales Tax License to collect sales tax. Apply for your license online with the Colorado Department of Revenue.
You will file and remit sales tax to the state on a monthly or quarterly basis using Form DR 0100. Taxes are due on the 20th day following each reporting period. You can mail the DR 0100 or file and pay online.
Keep detailed records of your taxable sales and exemptions to support the sales tax returns. Failing to properly report Colorado sales tax carries penalties and interest.
Claiming Sales Tax Exemptions
Some customers and transactions are exempt from Colorado sales tax. Common examples include:
- Resale certificates – if a customer will resell the item, provide a completed resale certificate.
- Charitable exemptions – sales to charitable organizations are exempt. Collect an exemption certificate.
- Agriculture exemptions – machinery, livestock, feed and more are exempt. Use an agriculture affidavit form.
- Wholesale sales – sales for resale/remanufacture are exempt. Get a copy of buyer’s state tax license.
Never assume a sale is exempt. Always obtain proper certificates and documentation up front.
Out-of-State Purchases and Use Tax
With lower sales tax rates than neighboring states, Colorado sees significant cross-border shopping. When items are purchased tax-free out-of-state and brought back into Colorado, the buyer owes use tax.
Colorado’s use tax is 2.9% state plus any applicable local taxes for where the item will be stored or used. Individuals must report and pay use tax on their CO income tax return. Businesses report use tax on their sales tax returns.
Keeping detailed records of out-of-state purchases makes use tax filing easier. Use DR 0252 to report and pay any owed use tax.
Local Taxes in Colorado Tourist Areas
On top of standard sales tax, Colorado has special lodging, car rental, restaurant and other taxes that boost rates in tourist cities and ski towns:
- Vail – 10.4% lodging tax, 5% restaurant tax
- Aspen – 10.3% lodging tax plus 1.5% real estate transfer tax
- Breckenridge – 10.4% lodging tax plus 0.5% public safety impact fee
- Colorado Springs – 7% lodging tax plus 0.5% public safety fee
Ensure you are compliant with both the general sales tax plus any special district taxes applicable to your business activities.
How to Get Help with Colorado Sales Tax
- Review Colorado sales tax guides and forms published online by the Department of Revenue.
- Use the Colorado Sales Tax System to manage your account, file returns and make payments.
- Call the CO Taxpayer Service Center at (303) 238-7378 with any questions.
- Connect with an accountant or online sales tax filing service if you want help with registrations, returns, and payments.
- Attend a CO sales tax workshop for up-to-date info and education.
With numerous taxing jurisdictions, collecting, reporting and remitting Colorado sales tax can be complex. Let experts advise you on handling everything correctly!
Frequently Asked Questions About Colorado Sales Tax
1. What is the sales tax rate in Colorado?
Colorado has a 2.9% statewide rate plus local taxes from 1-8%+ that vary by city and county. Total sales tax can exceed 11% in some districts.
2. Does Colorado tax groceries?
No, grocery food is exempt from sales tax in Colorado. Prepared meals, restaurant food, and concessions are taxed.
3. How often do you pay sales tax in Colorado?
Sales tax filing frequencies in Colorado are monthly for collections over $300 and quarterly for collections under $300. Taxes are due on the 20th of the next month after the reporting period ends.
4. Does Colorado have use tax?
Yes, Colorado imposes a 2.9% use tax on out-of-state purchases brought into the state. Local use taxes may also apply. Use tax should be reported on your sales tax return.
5. Do I need a sales tax license in Colorado?
Retailers with physical or economic nexus in Colorado doing taxable sales must register for a Colorado Sales Tax License in order to legally collect sales tax.
6. What happens if you don’t collect sales tax in Colorado?
Consequences for not collecting owed Colorado sales tax include penalties of 10-30% of taxes due, interest charges, and fines up to $1,000 per return period.
7. Are services taxed in Colorado?
Some services like telecom, admissions, and repairs are subject to Colorado sales tax. Professional services and custom software are exempt from sales tax.
The Bottom Line on Colorado Sales Tax
With hundreds of different sales tax jurisdictions, compliance in Colorado can be complex. Ensure you are registered for permits, using accurate rates, collecting all owed tax, securing exemptions, and filing returns on time. Consider automating with sales tax software to remove the hassle and improve accuracy!
