The Denver sales tax rate is 8.81% on most retail purchases within city limits. That combined rate stacks four separate levies: Denver’s own 4.81% city tax, Colorado’s 2.9% state tax, the Regional Transportation District’s 1.0%, and the Scientific and Cultural Facilities District’s 0.1%.1City and County of Denver. Business Tax Information Because Denver is a home-rule municipality, it writes and enforces its own tax rules under Chapter 53 of the Denver Revised Municipal Code, so some items and services carry Denver tax even when Colorado exempts them at the state level.
Special Rates for Food, Lodging, and Cannabis
Not every purchase in Denver rings up at 8.81%. Three categories carry their own rates.
Restaurant meals, takeout, catered food, and drinks sold at bars and cafes are taxed at a reduced city rate of 4.00% rather than 4.81%.2City and County of Denver, Colorado. Tax Guide Topic 32 – Food and Drink With state, RTD, and SCFD added, a restaurant bill comes to about 8.00%. The lower city rate applies to food trucks, caterers, and hotel dining rooms as well.
Hotels, motels, and short-term rentals of fewer than 30 consecutive days carry a lodger’s tax of 10.75%.3City and County of Denver. Tax Guide Topic 52 – Lodgers Tax Hotels with 50 or more rooms owe an additional 1% Tourism Improvement District tax, bringing the city-level total to 11.75%. Add the state’s 4% lodging tax, and a stay at a large hotel reaches roughly 15.75%. Short-term rental hosts should confirm whether their booking platform remits Denver’s lodger’s tax on their behalf or whether they need to file it directly.
Licensed retail marijuana sales carry a separate 5.5% municipal cannabis business tax, which stacks on top of Colorado’s 15% state excise tax and the ordinary state and local sales taxes.
What Denver Taxes That the State Doesn’t
Denver taxes the sale or use of all tangible personal property: clothing, electronics, furniture, vehicles, anything physical.4City and County of Denver. Business Tax FAQ Its home-rule authority also reaches further than the state’s tax base in a few places worth knowing about.
The city taxes gas, steam, and electricity delivered for residential or commercial use, along with telecommunications services like local and long-distance calls originating in Denver.4City and County of Denver. Business Tax FAQ Temporary rentals of personal property, such as construction equipment or a moving truck, are taxable too.
Software is taxed broadly: downloaded programs, software license fees, maintenance agreements, and Software as a Service accessed through the cloud.5City and County of Denver. Tax Guide Topic No. 18 Software This is one of the sharpest gaps between city and state rules. Colorado generally exempts SaaS; Denver taxes it. For SaaS, taxability follows the customer’s location of use, not where the server sits. Separately stated programming, setup, or consulting fees are not taxable, but if they’re bundled into a single charge with the software, the whole amount is taxed.
What’s Exempt
Denver exempts a short list of categories from its city sales tax, and most of them line up with basic necessities.
- Food purchased for home consumption, as defined by federal food-assistance program standards, is exempt from the city sales tax. The exemption does not cover hot prepared food, food heated on the premises, or anything sold for immediate consumption at the point of sale.6City and County of Denver. Treasury Tax Rule 002 – Rules Implementing the Exemption for Certain Food and Drink
- Medications prescribed by a licensed practitioner are exempt. Over-the-counter drugs, vitamins, supplements, and health aids like cough syrup or antacids are taxed at the standard rate.2City and County of Denver, Colorado. Tax Guide Topic 32 – Food and Drink
- Qualifying nonprofits with 501(c)(3) status and government entities can claim exemption on purchases by presenting a valid exemption certificate. Organizations apply for the certificate through the Colorado Department of Revenue at no cost, and it does not expire.
A common mistake at the checkout counter: assuming everything sold at a grocery store is exempt. Paper towels, cleaning supplies, pet food, and toiletries are taxed at the full rate even when they ride along with exempt groceries.
Use Tax on Purchases From Outside Denver
Denver also charges a use tax at the same 4.81% city rate on items bought outside the city but stored, used, or consumed within it. If you order something online from a retailer that doesn’t collect Denver tax at checkout, you owe use tax on that purchase.1City and County of Denver. Business Tax Information
Getting a Denver Sales Tax License
Any person or business selling tangible personal property or taxable services in Denver needs a Denver Sales and Use Tax License. This is separate from a Colorado state license; operating in Denver requires both.1City and County of Denver. Business Tax Information Denver no longer charges a fee for its biannual retailer’s license.
Applications go through Denver’s eBiz Tax Center. Expect to provide your Federal Employer Identification Number (or Social Security Number for sole proprietors), legal business structure, and basic information about when and how you started or acquired the business.7City and County of Denver. Application for Denver Sales, Use, Lodgers Tax License and/or Occupational Tax Registration Buyers of existing businesses also submit the sale date and purchase price.
Remote Sellers and Marketplace Facilitators
Denver has adopted Colorado’s model ordinance for economic nexus. Out-of-state businesses that make more than $100,000 in gross retail sales into Colorado in a calendar year must register and collect Denver tax on sales delivered into the city. The obligation also kicks in if a seller crosses $100,000 within 90 days during the current year. Denver is listed among the home-rule municipalities that have adopted this framework.8Colorado Municipal League. CML Model Ordinance – Economic Nexus and Marketplace Facilitators
Marketplace facilitators such as Amazon, Etsy, and Walmart Marketplace carry the same collection obligations as any other retailer for sales through their platforms. If you sell through a marketplace that already collects and remits Denver tax, you generally don’t collect it again on those transactions. Direct sales through your own website or at Denver trade shows remain yours to handle.
Filing Returns and Making Payments
Denver assigns your filing frequency based on how much tax you collect:9City and County of Denver. Tax Guide Topic 30 – Filing Periods
- Monthly filers: average monthly tax liability over the previous six months above $300. Returns are due by the 20th of the following month.
- Quarterly filers: average monthly liability of $300 or less. Returns are due April 20, July 20, October 20, and January 20.
- Annual filers: average monthly liability of $15 or less. The return is due by January 20 of the following year.
When a due date falls on a weekend or holiday, the deadline moves to the next business day. Returns go through the eBiz Tax Center, which also handles use tax, lodger’s tax, and occupational privilege tax. Electronic check payments are free; credit and debit card payments carry a 2.5% service fee. Mailed payments with a printed voucher are accepted as well.
Penalties for Late Filing or Payment
Missing a deadline gets expensive quickly. Denver charges a flat 15% penalty on any tax paid late, with a minimum penalty of $25 regardless of how small the balance.4City and County of Denver. Business Tax FAQ Interest accrues at 1% per month, or any fraction of a month, from the original due date until you pay in full. A business owing $1,000 and filing two months late would face $150 in penalties plus $20 in interest before the balance starts to shrink.
Repeated non-payment can escalate. Denver’s municipal code authorizes the Manager of Finance to issue distraint warrants to seize assets for unpaid taxes, and a $100 penalty applies for each warrant beyond the first.10Municode Library. Denver Code of Ordinances – Chapter 53 Taxation and Miscellaneous Revenue Filing a return on time even without the full payment is better than filing late, because the penalty runs on the delinquent tax and late-filed returns can also draw an estimated assessment from the city.