Colorado state taxes include a flat 4.40% individual income tax, a 2.9% state sales tax that local jurisdictions add to, property taxes set and collected by counties, and excise taxes on fuel, marijuana, alcohol, and tobacco. The income tax rate can drop temporarily when the state collects more revenue than the Taxpayer’s Bill of Rights (TABOR) allows it to keep. For tax year 2024, that surplus pushed the effective rate down to 4.25%.1Department of Revenue – Taxation. TABOR
Income Tax
Colorado’s income tax is a flat 4.40% for tax years beginning on or after January 1, 2022, applied to individuals, estates, trusts, and C corporations alike.2Justia. Colorado Revised Statutes Section 39-22-301 (2024) – Corporate Tax Imposed – Repeal Everyone pays the same percentage regardless of income level.
Your Colorado tax starts with your federal taxable income, which is the figure on your federal return after the standard or itemized deduction. It is not your adjusted gross income.3Justia. Colorado Revised Statutes Section 39-22-104 (2022) – Income Tax Imposed on Individuals, Estates, and Trusts From there, Colorado requires certain additions (such as interest on out-of-state bonds) and allows certain subtractions before the 4.40% rate is applied. Your Colorado taxable income can therefore differ from both your federal AGI and your federal taxable income.
Two subtractions matter for many filers. If you are 65 or older by the end of the tax year, you can subtract up to $24,000 of qualifying pension, annuity, or Social Security income. Taxpayers between 55 and 64 may qualify for a smaller amount.4Department of Revenue – Taxation. Income Tax Topics: Social Security, Pensions and Annuities Workers who claim the federal Earned Income Tax Credit can also claim a state EITC; for tax year 2026 and later, the Colorado credit equals 25% of the federal credit, and it is refundable.5Department of Revenue – Taxation. Income Tax Topics: Earned Income Tax Credit
Sales and Use Tax
The state sales tax rate is 2.9% on most retail purchases of tangible goods.6Department of Revenue – Taxation. Sales Tax Guide What you actually pay at checkout is almost always higher, because counties, cities, and special districts add their own sales taxes on top. The combined rate varies by location.
For purchases shipped to a Colorado address, the tax is based on where you receive the item, not where the seller is located. Retailers can look up the correct combined rate through the state’s geographic information system database. An item shipped to Denver may carry a different total rate than the same item shipped to a rural county.
If you buy something from a seller that does not collect Colorado sales tax, you owe consumer use tax at the same 2.9% state rate on items you store, use, or consume in Colorado.7Department of Revenue – Taxation. Consumer Use Tax Guide For individuals, consumer use tax is due by April 15 and can be reported on a separate return or on your individual income tax return.
Groceries
Food purchased for home consumption is generally exempt from the 2.9% state sales tax. The exemption tracks federal food stamp and WIC guidelines, so bread, produce, meat, and dairy are exempt.8Colorado.gov. FYI Sales 4 Taxable and Tax Exempt Sales of Food and Related Items Several categories stay taxable at the state level:
- Prepared food, including hot meals, restaurant food, and items marketed to be heated in the store.
- Soft drinks, candy, and chewing gum when purchased with cash (exempt if bought with food stamps).
- Non-food items such as household supplies, pet food, vitamins, and dietary supplements.
- Alcoholic beverages and tobacco, which are always taxable.
Some cities and counties tax groceries under their own rules even when the state exempts them, so your local receipt may still show tax on food.
Property Tax
Property taxes are set and collected locally in Colorado, not by the state. Your county assessor determines the actual value of your land and improvements based on market data, then multiplies that by an assessment rate to produce the assessed value your bill is calculated from.9Justia. Colorado Revised Statutes Section 39-1-103 (2022) – Actual Value Determined – When
Residential property is assessed at much lower rates than commercial. Starting in 2025, residential property carries two separate assessment rates: one for local government taxes and one for school district taxes. For 2026, those rates are 6.8% and 7.05%. Commercial and agricultural property is assessed at 25%, and other non-residential property at 26%.10Colorado Department of Local Affairs Division of Property Taxation. Understanding Property Taxes in Colorado
Local taxing authorities then apply mill levies. A mill is one-tenth of a cent, so 100 mills means $100 per $1,000 of assessed value. These levies fund school districts, fire protection, libraries, and water districts, among other services. You receive a notice of value early in the year and can protest the assessed value with your county assessor within a set window.
Senior and Veteran Exemptions
Homeowners who are at least 65 and have owned and lived in their primary residence for at least 10 consecutive years as of January 1 of the application year can apply for an exemption that removes 50% of the first $200,000 of actual value from taxation, when the state budget funds it.11Colorado Department of Local Affairs Division of Property Taxation. Property Tax Exemption for Senior Citizens in Colorado A surviving spouse who has not remarried may qualify if the deceased spouse met the requirements on any January 1 since 2002.
Disabled veterans with a 100% permanent and total disability rating get the same 50% exemption on the first $200,000 of actual value, with no age or ownership-duration requirement. Gold Star spouses are also eligible.12Colorado Division of Veterans Affairs. Property Tax Exemption Both exemptions are applied for through the county assessor.
Excise Taxes
Colorado charges excise taxes on several specific products, each with its own rate and structure.
Motor Fuel
The base excise tax on gasoline is $0.22 per gallon; diesel (special fuel) is $0.205 per gallon.13Justia. Colorado Revised Statutes Section 39-27-102 (2024) – Tax Imposed on Gasoline and Special Fuel – Deposits – Penalties On top of the base rate, the state adds a road usage fee, environmental response surcharge, bridge and tunnel impact fee, and smaller surcharges. For July 2025 through June 2026, the road usage fee alone adds $0.05 per gallon, rising to $0.06 the following year. All combined, the effective state-level charge on a gallon of gasoline is roughly $0.29 to $0.30 in 2026, before federal tax.14Department of Revenue – Taxation. Fuel Tax and Fee Rates
Marijuana
Retail marijuana carries a 15% state excise tax on the wholesale transfer from cultivator to retailer, plus a 15% special sales tax at the retail register.15Department of Revenue – Taxation. Average Market Rate for Unprocessed Retail Marijuana Retail marijuana is exempt from the regular 2.9% state sales tax, so the marijuana-specific taxes replace it rather than add to it.
Alcohol
Colorado’s alcohol excise rates are among the lowest in the country:16Colorado General Assembly. Liquor Tax
- Beer, malt liquors, and hard cider: $0.08 per gallon.
- Wine: roughly $0.0733 to $0.1333 per liter, with surcharges on Colorado-produced wines depending on winery size.
- Spirits: $0.6026 per liter.
The regular 2.9% state sales tax also applies to alcohol at retail, on top of these excise amounts.
Tobacco and Nicotine
Cigarettes are taxed at 11.2 cents per cigarette from July 2024 through June 2027, or $2.24 per pack of 20.17Department of Revenue – Taxation. Cigarette Tax Cigarettes classified as modified risk tobacco products carry a lower 7.2 cents per cigarette rate. The regular 2.9% sales tax applies on top of the excise. Other tobacco and nicotine products carry their own excise taxes under separate reporting rules.
Retail Delivery Fee
Any delivery of tangible personal property to a Colorado address triggers a retail delivery fee. For July 2025 through June 2026, the fee is $0.28 per order and is typically shown as a line item on your receipt.18Department of Revenue – Taxation. Retail Delivery Fee Rates The amount adjusts each July for inflation, with the updated rate published by April 15.
TABOR Refunds
The Taxpayer’s Bill of Rights caps how much revenue the state can keep. When collections exceed that limit, the surplus must come back to taxpayers, which is why Colorado’s effective income tax rate can be lower than 4.40% in some years and why you may see a refund even without overpaying.19Department of Revenue – Taxation. TABOR Refund
Surplus dollars go out in a set order. First, the state reimburses local governments for property tax exemptions claimed by qualifying seniors and disabled veterans. Second, the income tax rate may be temporarily reduced. Third, any remaining surplus goes out as a sales tax refund claimed on your individual income tax return, with joint filers receiving double the amount of single filers and the amount scaled by income.
Whether any refund happens depends on the state’s actual collections for the year. Check each year’s filing instructions, because both the effective tax rate and the refund amounts can change.
Filing Deadlines and Penalties
Individual income tax returns for tax year 2025 are due April 15, 2026.20Department of Revenue – Taxation. State Now Accepting 2025 Income Tax Returns Colorado grants an automatic six-month extension to file, but any tax you owe is still due by April 15. The extension buys time for paperwork, not for payment. You can file and pay through the state’s Revenue Online portal.21State of Colorado. Revenue Online
Late income tax payments carry a 5% penalty on the unpaid balance, plus an additional 0.5% for each month unpaid, capping at 12%. Interest runs on top at 8% or 11% annually for calendar year 2026, with the lower 8% rate applying if you pay or set up a payment plan within 30 days of a deficiency notice. Sales tax penalties are higher: 10% of the unpaid amount plus 0.5% per month, capping at 18%.22Colorado.gov. Tax Topics: Penalties and Interest
If the IRS adjusts your federal taxable income after you file, Colorado will adjust your state liability to match. A federal correction ripples automatically into your state account.
What Colorado Does Not Tax
Colorado has no estate or inheritance tax. The former state estate tax was tied to a federal credit that Congress phased out, and no Colorado estate tax return has been required for deaths occurring after December 31, 2004.23Colorado General Assembly. Estate Tax If Congress ever reinstates that credit, a Colorado estate tax could return, but under current law there is nothing to file at the state level when someone dies.