Colorado Sales Tax

If you operate a business online or at a physical location in Colorado, you must register for and collect sales tax. Colorado Sales tax applies to selling, leasing, or renting tangible personal property and most services. However, this rule has some exceptions, such as commercial gas and electricity utilities for commercial use, hotel rooms, intrastate telephone services, and certain medical equipment. Colorado’s state sales tax is 2.9%, and local districts may add a variety of taxes, including regional transportation district and scientific and cultural facilities district taxes. If your business has a sales tax nexus in Colorado, you must collect and report the combined state and local rates. Services are generally not taxable in Colorado, but tangible products like medical-related items and machinery are taxable.

The City of Fruita, for example, charges an 8.27% rate and contracts with the state to collect the sales tax. This arrangement differs from home-rule cities that collect their own sales tax and must follow state regulations for filing returns and making payments. The Colorado sales tax rate varies by district, and there are also specific exemptions for groceries intended for home consumption, prescription drugs, and over-the-counter medications, prepared food, non-essential packaging (like that morning to-go box), beverages, and candy. In addition, the state also exempts services that foster national or international amateur sports competitions or provide certain types of charitable and scientific services.

Colorado Sales Tax Lookup Tool

You can use the free Colorado sales tax lookup tool to find the rates for any address in Colorado. Enter the amount, select whether to include or exclude the tax and then Wise will calculate your total. You can also download the rate table to input into your sales tax system or as a reference. If you’re a seller with nexus in Colorado (physical, economic, or both), you must register with the Department of Revenue.

Colorado Sales Tax Exemption

Some products and services are exempt from sales tax in Colorado, including food and beverages sold at restaurants, retail gas stations, beetle wood products, and machinery. To determine if your product or service is exempt, consult the state’s list of exemptions. Other products and services may be subject to sales tax if they are bundled with a taxable service. If you are a business or nonprofit organization that is exempt from federal income tax, you must submit an application for sales tax exemption with the state to qualify for the same status for sales tax.