Colorado Sales Tax

If you make sales to customers in Colorado, either from within the state or from outside, you need to understand the laws concerning the collection and remittance of tax collected to the State of Colorado.

Colorado Sales Tax Rates

The state sales tax rate in Colorado is 2.9%, which is the lowest for any state in the country, aside from the five that have no state sales tax at all. However, Colorado allows localities broad discretion when it comes to imposing their own sales tax, resulting in combined rates that are as high as 11.2% in some places. A combination of local and county sales taxes are collected in addition to the state rate.

Local sales tax can be imposed in Colorado at the levels of city, county, school, transportation, and special purpose district, or SPD. This is further complicated by the fact that some Colorado cities are considered “home rule” while others are “statutory.” Statutory cities generally follow the guidelines and rates for sales tax laid out by the state, but home rule cities may or may not do the same.

If you operate a business with a physical location that you sell from in Colorado, you will have to collect taxes at the rate applicable at your location. Some of these may be state-administered, while others may be administered by the local governments, and you may be required to register for a tax license locally as well as at the state level before you can begin making sales and collecting taxes.

If you are a remote seller with an obligation to collect sales tax from your Colorado customers, you’ll have to collect at the rate that’s in force at the destination of the product purchased. A list of local tax rates is available here, and you will also have to determine if you need to register with any localities in addition to registering with the state Department of Revenue for a tax license.

While Colorado is a destination-based sales tax state, a new law passed in 2019 added nuance to these collection requirements, to which many small businesses remained exempt into 2022. Retail sales are now sourced according to where the buyer takes possession of the item. That means if they buy in person, they pay the retail sales rate of that location. If the item is delivered to them or to someone else as a gift, the sales tax rate is charged based on the final destination.

Colorado Retail Delivery Fee

In 2022, Colorado implemented a Retail Delivery Fee, or RDF. This fee applies to “deliveries by motor vehicle to a location in Colorado with at least one item of tangible personal property subject to state sales or use tax.” The fee is currently $0.28 per order in 2026, regardless of the number of shipments. Each year the fee is subject to increase. The RDF fee is itself non-taxable. For more information see this page, or visit this page on the Colorado DOR website.

Colorado Nexus

Physical Nexus

Any business with a physical connection to Colorado is required to register for a sales tax license. Physical nexus is established by:

• Maintaining an office, warehouse, or retail storefront in the state.
• Storing inventory in Colorado, including goods kept in Amazon FBA warehouses.
• Having employees, contractors, or sales reps living or working in the state.
• Making more than one sale while attending a trade show or “special event” in Colorado.

Economic Nexus

For remote sellers with no physical presence, Colorado uses a single revenue threshold. You must register and collect tax if your total retail sales of tangible personal property and services into Colorado exceed $100,000 in the current or previous calendar year.

Note: Colorado repealed its transaction-count threshold (formerly 200 transactions). Only the $100,000 revenue mark matters for 2026.

Marketplace Facilitators

Marketplace facilitators (like Amazon, Etsy, or DoorDash) are required to collect and remit Colorado sales tax on behalf of their third-party sellers. If you sell only through a facilitator, you may not need a license; however, if you sell through your own website and exceed the $100,000 threshold, you must register to collect tax on those direct sales.

What Is Taxable in Colorado

Tangible Goods

Sales, leases, and rentals of tangible personal property are subject to Colorado state sales tax.

While these regulations are in force at the state level, other jurisdictions are free to impose their own taxes, and they may or may not maintain the same exemptions. In some areas, more items like farm equipment are exempt, and in others, even food is subject to local sales tax rates.

Services

Most professional services (accounting, legal, consulting) are not taxable. However, certain services are specifically taxed by the state, including:

• Telecommunications and gas/electric utilities.
• Intrastate transportation of property (shipping).
• Certain short-term lodging and room rentals.

Shipping and Handling

If the item being sold is taxable, the shipping charge is also taxable. If the item is exempt, the shipping is exempt.

Unlike some states, even if shipping is separately stated on the invoice, it remains taxable if the product itself is taxable.

Digital Goods and Services

Colorado considers digital goods (e-books, music downloads, streaming video/audio) to be tangible personal property and are therefore taxable. However, SaaS (Software as a Service) is generally considered a non-taxable service at the state level, though some “Home Rule” cities (like Denver or Boulder) may choose to tax it.

Exemptions

• Groceries: Unprepared food for home consumption is exempt from state tax (though local taxes may still apply).
• Medical: Prescription drugs and certain medical devices are exempt.
• Resale: Items purchased for the purpose of reselling are exempt if a valid Colorado Resale Certificate is provided.

Sales Tax Holidays

Colorado does not have any sales tax holidays.

Registration and Filing

If you plan to make taxable sales to Colorado customers, you must register with the state Department of Revenue and receive a Colorado Account Number. In addition, you may also need to register with individual municipalities for a tax license, depending on the location of your business and whether you ship goods to certain parts of the state. You can register online, and a $50 deposit is required for in-state businesses. This deposit will be returned after collecting and remitting $50 in sales tax.

Filing Frequencies and Deadlines

The frequency with which you will need to file your Colorado sales tax returns will depend on the amount of tax you collect per month. Companies with less than $15 in average monthly tax liability may file annually, while those with between $15 and $300 must file quarterly. If you collect more than $300 per month in sales tax on average, you must file and pay monthly, and companies that pay more than $75,000 annually must pay using electronic funds transfer.

The deadline for annual sales tax filing is January 20^th of the following year.

If you file quarterly, due dates are as follows:

Period	Due Date
January – March (Q1)	April 20
April – June (Q2)	July 20
July – September (Q3)	October 20
October – December (Q4)	January 20

If you file monthly, your returns and payments will be due on the 20th of the following month.

Period	Due Date
January	February 20
February	March 20
March	April 20
April	May 20
May	June 20
June	July 20
July	August 20
August	September 20
September	October 20
October	November 20
November	December 20
December	January 20

Penalties and Interest

Even if you don’t collect any sales tax over a given period, you must file a zero return to avoid penalties. If you do file or pay late, a 10% penalty will be assessed immediately, followed by an additional 0.5% penalty for every subsequent month you’re late. There are also interest charges that will be added on, and the particular rate varies considerably from year to year, although it’s generally between 3% and 10%.

The Colorado service fee allowing retailers to retain a percentage of sales tax collected was eliminated on January 1, 2022 if sales exceeded $1 million. The return for smaller businesses is limited to $1000.

Resources

• Colorado Sales Tax Guidance Publications
• Colorado Department of Revenue

Colorado Sales Tax Software

No matter where your company is based or how many states you do business in, it’s essential that you abide by the applicable sales tax laws in all areas. That can be a particular challenge in a state like Colorado, where there are so many types of local taxes, some of which are collected and redistributed by the state and others of which are not. These types of regulations make it difficult to determine when you need to collect sales tax and at what rate, and so it’s good to have a tool to help you with these types of assessments.

TaxTools is just such a system, and it provides a comprehensive suite of features designed to streamline your sales tax collection and reporting, whether you operate solely in Colorado or you ship to customers in multiple states. TaxTools integrates smoothly with all eCommerce platforms, so you don’t have to change anything about the way you currently do business. Once this system is in place, however, you won’t have to worry about missing a filing deadline or miscalculating the proper sales tax rate, as TaxTools will handle all of that for you.

So if you’re ready to see how TaxTools can give you peace of mind as you try to navigate the complexities of state sales tax regulations, click here to learn more or sign up for a free trial.

Last updated January 2026