Colorado sales tax starts at a statewide rate of 2.9 percent, but what you actually pay at the register is usually much higher because counties, cities, and special districts add their own taxes on top. In most parts of the state the combined rate lands between 7 and 10 percent, and in parts of the Denver metro area it can run higher still. The 2.9 percent state figure has held steady since 2001.1Department of Revenue – Taxation. Sales Tax Rate Changes
How the Rate You Pay Gets Built
The 2.9 percent state tax is just the first layer. A single purchase can also be subject to a county tax, a city tax, and one or more special district taxes, all collected together at checkout.
Two special districts show up often in the Denver area. The Regional Transportation District (RTD) adds 1.0 percent to fund bus and light rail service. The Scientific and Cultural Facilities District (SCFD) adds another 0.1 percent to support museums, theaters, and botanical gardens. Local municipal rates vary widely because Colorado’s “home rule” system lets any incorporated city or town adopt its own sales or use tax once voters approve it.2Justia. Colorado Code 29-2-102 – Municipal Sales or Use Tax
Some cities let the Colorado Department of Revenue collect their local tax alongside the state tax. Others, called self-collected home rule cities, run their own licensing and collection entirely. The Department of Revenue lists these jurisdictions and their contacts in publication DR 1002.3Department of Revenue – Taxation. Local Government Sales Tax
Finding the Exact Rate for an Address
Because rates change block by block, the Department of Revenue runs a Geographic Information System (GIS) lookup tool that returns the exact combined rate for any Colorado street address, with state, county, municipal, and special district layers in one result.4Department of Revenue – Taxation. Geographic Information System (GIS) Information Businesses with compatible point-of-sale systems can also pull current rates automatically through the Department’s API.
What Colorado Taxes
Sales tax applies broadly to “tangible personal property” — any physical item that can be seen, weighed, measured, or touched.5Justia. Colorado Code 39-26-102 – Definitions Furniture, clothing, electronics, and motor vehicles are all taxable by default. Unless a specific exemption applies, selling a physical product triggers the tax.
Services are mostly untaxed. The main exceptions are utilities (electricity, gas, and steam sold for home or commercial use) and telecommunications services including telephone and certain digital transmissions.6Department of Revenue – Taxation. Sales Tax Guide Legal, accounting, consulting, and most other professional services are not taxed.
Digital Goods and Software
Colorado treats digital downloads — video, music, electronic books — as tangible personal property, so they are taxable at the same 2.9 percent state rate whether delivered on a disc or by download.6Department of Revenue – Taxation. Sales Tax Guide Cable television, satellite television, and satellite radio subscriptions are not taxable at the state level, because the state treats the subscription as paying for a transmission service rather than content.
Software accessed remotely through a cloud provider (Software as a Service, or SaaS) is generally exempt from the state sales tax. Some home rule cities, including Denver, apply their own local tax on SaaS, so a cloud software seller needs to check local rules in each jurisdiction with customers.
Major Exemptions
Several categories are carved out of the state tax base to keep essentials affordable.
- Food for home consumption is exempt from the state sales tax. The definition tracks items that would qualify under the federal food stamp program. Some home rule cities still tax groceries locally, so the exemption at the register depends on where you shop.6Department of Revenue – Taxation. Sales Tax Guide
- Prepared food sold by restaurants, cafeterias, and food trucks remains fully taxable. The line between exempt groceries and taxable prepared food turns on whether the item is heated or marketed for immediate consumption.
- Prescription drugs and medical supplies are excluded from the state tax base.
A cold sandwich from a grocery deli can be treated differently than packaged bread and deli meat purchased separately, so the category lines matter at the margin.
Buying for Resale
If you buy goods specifically to resell them in the normal course of business, you can purchase them tax-free by giving the seller a completed DR 0563 Sales Tax Exemption Certificate. The certificate requires you to identify your business type (wholesaler, retailer, manufacturer, or lessor) and certify that you are registered for sales tax in the states and cities where the purchases will be delivered. If you later use any of those goods yourself instead of reselling them, you owe use tax on those items.
Use Tax on Out-of-State Purchases
Colorado charges a use tax at the same 2.9 percent rate on items bought outside the state and brought in for use, storage, or consumption inside Colorado.7Justia. Colorado Code 39-26-202 – Authorization of Use Tax If the out-of-state seller does not collect Colorado sales tax at checkout, you owe the use tax directly to the state and can pay through the Department of Revenue’s online portal.8Department of Revenue – Taxation. Sales and Use Tax
Out-of-state businesses that sell into Colorado have to start collecting Colorado sales tax themselves once they exceed $100,000 in sales delivered into the state during the current or previous calendar year. This “economic nexus” threshold covers total retail sales of tangible personal property, commodities, and services rendered in Colorado. If you sell through a marketplace like Amazon or Etsy, the marketplace facilitator is generally responsible for collecting and remitting the applicable state and state-administered local sales taxes on your behalf.9Department of Revenue – Taxation. Marketplace Facilitators
If You’re Collecting the Tax: License, Filing, and Fees
Before collecting any sales tax, a business needs a Colorado sales tax license. You apply by submitting form CR 0100 (Colorado Sales Tax and Withholding Account Application) through the Department of Revenue.10Department of Revenue – Taxation. CR 0100 – Colorado Sales Tax and Withholding Account Application The license fee runs $16 per physical location for applications filed January through June 2026, dropping to $12 per location for July through December 2026. New accounts also owe a $50 deposit, so a brand-new single-location business applying in early 2026 pays $66 total.11Department of Revenue – Taxation. Standard Retail License
Licenses run on two-year cycles. The current cycle began January 1, 2026, and prior licenses expired December 31, 2025. Renewal is $16 per location, filed online through Revenue Online, by Electronic Funds Transfer, or by mailing form DR 0594.12Department of Revenue – Taxation. Renew Your Sales Tax License
How Often You File
Filing frequency depends on the volume of tax collected each month:13Department of Revenue – Taxation. Sales Tax Filing Information
- $600 or more per month: file monthly.
- Under $600 per month: may file quarterly.
- $15 or less per month: may file annually.
Returns are due by the 20th of the month after the reporting period closes.14Department of Revenue – Taxation. Colorado Taxes and Fees Due Date Guide January sales reported monthly are due February 20. Quarterly due dates are April 20, July 20, October 20, and January 20. Annual filers submit by January 20 of the following year. If the 20th falls on a weekend or holiday, the deadline moves to the next business day.
The Retail Delivery Fee
Any retail sale that includes a motor-vehicle delivery to a Colorado address also triggers a flat Retail Delivery Fee. From July 2025 through June 2026, the fee is $0.28 per delivery, charged once per order rather than per item.15Department of Revenue – Taxation. Retail Delivery Fee Rates It does not apply to in-store pickups, out-of-state deliveries, wholesale sales for resale, deliveries made entirely by bicycle or electric scooter, or orders where every item is already exempt from sales tax.16Department of Revenue – Taxation. Retail Delivery Fee Deliveries
Penalties for Late Filing
A missed deadline triggers both a penalty and interest. The penalty is the greater of $15 or 10 percent of the unpaid tax, plus half a percent for each additional month the balance remains unpaid, capped at 18 percent.17Department of Revenue – Taxation. Tax Topics – Penalties and Interest Interest accrues on top of the penalty from the original due date. For 2026, the regular annual interest rate on underpayments is 11 percent, with a discounted 8 percent rate for taxpayers who meet certain qualifying criteria. Filing on time with an estimated amount is almost always cheaper than filing late.