Sales and Use Tax
Colorado levies a 2.9% general sales or use tax on consumers, the lowest rate among states levying a sales taxes. The sales tax is levied only on goods purchased by a business that are not intended for resale.
Colorado's state sales tax rate is the lowest among the 45 states that collect sales tax. Services are not taxed, only sales of non-food items. 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 at local option. Colorado municipalities may collect up to an additional 4.1% sales tax. Local sales tax assessments average 3.7%, for a total average sales tax rate of 6.6%.
Colorado's gasoline tax stands at 22 cents per gallon, which is near the national average, while its cigarette tax stands at $0.84 per pack of twenty.
State Sales Tax Exemptions (Relevant to Business):
- Purchases of manufacturing equipment or machine tools of over $500
- Component parts
- Fuels and electricity
- Ink and newsprint
- Aircraft parts used in general maintenance
- Interstate long distance telephone charges
- Farm equipment and machinery
- Packaging materials
- Pollution control equipment (if certain conditions are met)
State Sales Tax Refund for Biotechnology: Colorado will refund 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 research and development of biotechnology.
Colorado will also refund 50% of sales & use taxes paid on tangible personal property used for research and development in any industry, provided there is a state revenue surplus.
For additional information on Sales and Use Taxes please see the state of Colorado's Department of Revenue web site: http://www.revenue.state.co.us/
Personal Sales and Use Taxes
The State of Colorado levies a 2.9 percent sales tax on all non-food retail sales. Cities, counties, and special districts are permitted to add up to 4.0 percent additional local sales tax by public referendum. Various special districts may impose additional sales taxes, including the Regional Transportation District in the Denver metro area and Mass Transit districts in Pitkin and Summit counties; the Cultural Facilities District and the Major League Baseball Stadium District; Jefferson County Open Space; and others. In no case does the cumulative special district sales tax exceed 0.8 percent. Note that business purchases are generally not affected by special district sales taxes.