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. Colorado municipalities may collect up to an additional 4.15 percent tax. Combined state and local sales tax rates in Metro Denver and Northern Colorado range from 2.90 percent to 8.85 percent.
Various special districts impose additional sales taxes in Metro Denver, including the Regional Transportation District (1 percent); the Cultural Facilities District (0.1 percent); and the Football Stadium District (0.1 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.
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
Industry State Sales Tax Refunds
- 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.
- Colorado refunds 50 percent of sales and use taxes paid on tangible personal property used for research and development in any industry, provided there is a state revenue surplus.