Colorado does have state taxes, but the mix is narrower than in many states. Colorado collects a flat 4.40% individual income tax, a 2.9% state sales tax, and excise taxes on things like fuel, marijuana, cigarettes, and alcohol. It does not impose an estate tax, an inheritance tax, or a state-level property tax. Property taxes exist, but they are set and collected by counties and other local jurisdictions under rules the state writes.
Income Tax
Colorado uses a flat income tax. Every filer pays the same percentage of taxable income regardless of how much they earn. For the 2025 tax year, the rate is 4.40%.1
That rate moves around because of the Taxpayer’s Bill of Rights (TABOR), a 1992 constitutional amendment that caps how much revenue the state can keep. When collections exceed the cap, the surplus goes back to taxpayers. Sometimes that happens through a temporary rate cut, sometimes through a refundable credit on your return. Taxpayers filing 2024 returns saw the rate drop from 4.40% to 4.25% for that year. For 2025, the rate returned to 4.40%, and qualifying residents can claim a refundable sales tax credit on their return instead.1 You don’t apply for either mechanism separately; the change flows through the return.
Who Has to File
You need to file a Colorado return if you were a full-year resident required to file a federal return, a part-year resident who earned taxable income while living in Colorado, or a nonresident with Colorado-source income. The form is DR 0104, the Colorado Individual Income Tax Return.1 The deadline is April 15, with an automatic extension to October 15 if you need more time.
Your Colorado taxable income starts from your federal taxable income, then adjusts for state-specific additions and subtractions. The most widely used subtraction is for pension and annuity income: filers between 55 and 64 can subtract up to $20,000 of qualifying pension or annuity income, and filers 65 or older can subtract up to $24,000. Other subtractions cover certain military retirement pay and contributions to Colorado 529 education savings plans.
Estimated Payments, Audits, and Penalties
If you expect to owe $1,000 or more in Colorado income tax after withholding and credits, you generally have to make quarterly estimated payments. Colorado’s audit window is four years from the return’s due date, a year longer than the federal standard. Late filing or late payment triggers penalties and interest.
Sales and Use Tax
The state sales tax is 2.9% on retail sales of tangible personal property. Most services are not taxed, though commercial gas and electric service and telephone service are exceptions. Businesses register for a sales tax license using Form CR 0100 before they collect and remit any tax.1
Buy something from an out-of-state seller that doesn’t collect Colorado sales tax, and you owe 2.9% use tax on the purchase yourself. You can report it on your annual income tax return or through a separate consumer use tax form.
Local Rates and Home-Rule Cities
The 2.9% state figure is only the beginning. Counties, cities, and special districts add their own sales taxes, and combined rates in many areas run 8% to 10% or higher. What makes Colorado unusual is that many cities operate under “home-rule” charters and administer their own sales taxes independently. Self-collected cities like Denver, Colorado Springs, and Aurora set their own rules on what is taxable, require separate business licenses, and run their own audits.1 Counties and non-home-rule cities have their local taxes collected by the state Department of Revenue alongside the 2.9%.
For businesses, that can mean registering with both the state and each home-rule city where you sell. An item exempt under state law may still be taxable in a particular city.
Retail Delivery Fee
Colorado charges a flat fee on every retail delivery of tangible personal property to a Colorado address. From July 2025 through June 2026, the total is $0.28 per delivery.1 The amount adjusts each July for inflation.
Small businesses are exempt if their total retail sales of tangible personal property in Colorado were $500,000 or less in the prior calendar year. Out-of-state retailers with no physical presence in Colorado and $100,000 or less in annual Colorado retail sales are also exempt.1 When the fee applies, it shows up as a separate line item on the receipt, charged once per delivery no matter how many items are in the order.
Property Tax
Colorado does not collect a state-level property tax. All property tax revenue goes to local jurisdictions: counties, school districts, and special districts that fund schools, roads, and emergency services. The state’s role is oversight. The Division of Property Taxation and the State Board of Equalization make sure county assessors apply valuations uniformly.
Assessment Rates
The legislature sets the assessment rate, which is the fraction of a property’s actual market value that ends up subject to tax. For 2026, residential property is assessed at 6.8% of actual value, after a 10% reduction applied to the first $700,000 of that value, with a minimum assessed value of $1,000.1 Non-residential property, including commercial, industrial, and agricultural land, is assessed at a higher rate. These percentages change often as the legislature adjusts the balance between residential and commercial burdens.
Exemptions for Seniors and Disabled Veterans
Two exemptions reduce the taxable value of a primary residence.
- Senior exemption. Residents who are 65 or older and have owned and occupied their home as a primary residence for at least 10 consecutive years can exempt 50% of the first $200,000 of the home’s actual value.
- Disabled veteran exemption. Veterans with a service-connected disability rated 100% permanent and total by the U.S. Department of Veterans Affairs, or those with individual unemployability status rated at 70% or higher but compensated at the 100% rate, can exempt 50% of the first $200,000 of their primary residence’s actual value. Gold Star spouses also qualify.
Both exemptions require an application filed with your county assessor by set annual deadlines.
Protesting a Valuation
If your assessed value looks too high, you can protest. For personal property, the county assessor mails a Notice of Valuation by June 15, and you have until June 30 to file a protest and request a hearing. If you disagree with the assessor’s decision, you can appeal to the County Board of Equalization by July 20.1 Residential real property follows a similar timeline with its own spring protest window.
No Estate or Inheritance Tax
Colorado does not have an estate tax or an inheritance tax. The state replaced its inheritance tax with an estate tax in 1980, but that estate tax was tied to a credit on the federal estate tax return. When Congress eliminated the credit in 2001, phased out by 2005, Colorado’s estate tax effectively disappeared with it. No Colorado estate tax filing has been required for anyone who died after December 31, 2004, and the state has not collected estate tax revenue since fiscal year 2013–14.1 A Colorado estate tax could theoretically return if Congress ever reinstates the federal state death tax credit, but no such change is pending.
Excise and Special Taxes
Marijuana
Retail (recreational) marijuana carries two state-level taxes on top of the 2.9% state sales tax. A 15% retail marijuana sales tax applies to consumer purchases. A separate 15% marijuana excise tax is charged on the first wholesale sale or transfer from a cultivation facility to a retail store or product manufacturer.1 Revenue is earmarked for school construction, local government distributions, and public health programs.
Fuel
The base state excise tax is $0.22 per gallon on gasoline and $0.205 per gallon on diesel, called “special fuel.”1 Beginning in 2022, Colorado layered several per-gallon fees on top, including a Road Usage Fee, a phased rate increase, and environmental surcharges. From July 2026 through June 2027, the additional charges bring the combined state-level cost to roughly $0.37 per gallon on gasoline and $0.34 per gallon on diesel. The fees adjust annually and fund road maintenance, bridge repairs, and emissions programs.
Cigarettes and Tobacco
Colorado taxes cigarettes at 11.2 cents each, or $2.24 per pack of 20. That rate runs from July 1, 2024 through June 30, 2027.1 It rose after voters approved Proposition EE in 2020, which phased in higher tobacco taxes. The rate goes up again to 13.2 cents per cigarette, $2.64 per pack, starting July 1, 2027.
Alcohol
Beer, wine, and spirits each carry their own state excise tax rates based on volume. These taxes are collected from manufacturers, distributors, and importers rather than charged directly at the register, though the cost is built into retail prices. Alcohol excise taxes are separate from the 2.9% state sales tax, which also applies to alcohol purchases.
Business Income Taxes
C-corporations doing business in Colorado pay the same flat 4.40% rate as individuals, applied to Colorado taxable income for 2026.1 The calculation starts from federal taxable income with Colorado-specific adjustments. Corporations operating in multiple states apportion their Colorado taxable income using a sales-factor formula tied to the share of sales sourced to Colorado.
Partnerships, S-corporations, and other pass-through entities do not owe Colorado income tax at the entity level under default rules. Income flows through to each owner’s individual return. Colorado had offered an elective pass-through entity tax (PTET) that let these businesses pay state tax at the entity level and give owners a workaround for the federal $10,000 cap on state and local tax deductions. That election was authorized for tax years beginning before January 1, 2026, and its future depends on what Congress does with the federal SALT cap.