Individual Taxes

Colorado assesses a flat tax of 4.63 percent of an individual's federal taxable income, one of just eight states having a single-rate tax structure. The state sales tax rate of 2.9 percent is the lowest of the states that levy a sales tax. .

Since most small businesses are either S Corporations or partnerships or sole proprietorships, these companies pay the individual rate for their business taxes. Colorado's low individual income tax rate results in an extremely competitive tax environment compared to other states for small businesses.