Taxes

Colorado ranks among the top-20 states (16th) for best corporate tax system and business-friendly tax climate according to the Tax Foundation's 2017 State Business Tax Climate Index.

Sales & Use

Colorado levies a 2.9 percent sales tax on goods purchased by a business that are not intended for resale. Services and food items are excluded from sales tax, with the exception of soda and candy. Use taxes substitute for sales taxes in cases where an item is purchased for consumption in Colorado from a source outside Colorado, or other circumstances where a sales tax was not paid.

Like many other states, Colorado allows its cities and towns to assess a local sales tax. The maximum municipal sales tax rate currently charged by any of the towns and cities in Colorado is 5 percent.

Various special districts impose additional sales taxes in Metro Denver, including the Regional Transportation District (1 percent) and the Cultural Facilities District (0.1 percent).

Combined state, local, and special district sales tax rates in Metro Denver and Northern Colorado range from 2.9 percent to 9.25 percent.

Colorado's gasoline tax is 22 cents per gallon, which is near the national average, while its cigarette tax is $0.84 per pack, and subject to 2.9 percent sales tax.

Colorado refunds state sales and use taxes paid on the sale, storage, use, or consumption of tangible personal property to be used in Colorado directly and predominantly in the research and development of biotechnology.

State Sales Tax Exemptions

(Relevant to Business)

  • Purchases of manufacturing equipment or machine tools of over $500
  • Component parts
  • Fuels and electricity used for agriculture, railroad transportation, and power generation
  • Ink and newsprint
  • Aircraft parts used in general maintenance
  • Interstate long distance telephone charges
  • Farm equipment and machinery
  • Some packaging materials
  • Products made from Pine Beetle wood
  • Components used in the production of electricity from a renewable energy source 
  • Personal property used in an orbital space facility, a space propulsion system, satellite, or space station