Colorado state sales tax is 2.9%, according to the Colorado Department of Revenue's Sales Tax Guide, as of October 2026. On top of that, a sale can carry state-administered local sales taxes and, in home-rule cities, a city sales tax that the city collects itself. Returns are due by the 20th of the month after each tax period.
Colorado's state rate is low, but the system around it isn't simple. The Department of Revenue collects its own 2.9% plus taxes for many cities, counties and special districts, while some home-rule cities run their own sales tax completely separately. Here's how the pieces fit, what's taxable, and the rules on filing, fees and penalties from the Department's own guide.
The three layers of Colorado sales tax
| Layer | Who collects it | What the guide says |
|---|---|---|
| State sales tax | Colorado Department of Revenue | Imposed at a rate of 2.9% |
| State-administered local sales taxes | Colorado Department of Revenue, for cities, counties and special districts | Rates are listed in the Department's publication Colorado Sales/Use Tax Rates (DR 1002) |
| Home-rule city sales taxes | The home-rule city itself | Self-collected and not administered by the Department |
So the real rate on a sale depends on where it's sourced. That's why the same item can carry a different total in two Colorado towns a few miles apart. If you sell in a home-rule city, you'll deal with that city as well as the state, because the Department's licence and return don't cover it.
Where a Colorado sale is taxed
Colorado uses destination sourcing. The guide says that, in general, a retail sale is sourced to the location where the purchaser takes possession of the property. The same sourcing rules apply to the state tax and the state-administered local taxes. If a sale can't be sourced that way, section 39-26-104(3)(a) of the Colorado statutes gives fallback rules based on the seller's records, the buyer's payment instrument or where the goods were shipped from.
For a shop that only sells over the counter, that's simple: it's your own location. For anyone who delivers or ships, it means working out the rate at the delivery address, which is where a sales tax software tool earns its keep.
What's taxable in Colorado
- Retail sales of tangible personal property, unless a specific exemption applies.
- Prepared food and drink sold by restaurants, bars and similar places.
- Rooms and accommodations, on the entire amount charged.
- Certain listed services. The guide says sales of services are generally not taxable, so most service businesses won't charge state sales tax on their own work.
- Most leases of goods, although a lease of 36 months or less is exempt if the lessor already paid Colorado sales or use tax on buying the item.
Wholesale sales aren't subject to sales tax. Exempt sales still have to be reported, on the Colorado Retail Sales Tax Return (DR 0100) and its schedules, even though you don't collect tax on them.
The $100,000 rule for sellers without a Colorado location
If you don't have a physical location in Colorado, the guide says you're exempt from state sales tax licensing and collection if your retail sales into Colorado were less than $100,000 in both the current and the previous calendar year. All retail sales count toward that figure.
- If your Colorado sales last year were more than $100,000, you must be licensed and collect for the whole of this calendar year.
- If last year was under $100,000 but this year's sales pass it, you must get a licence and start collecting by the first day of the first month that begins at least 90 days after you crossed the line.
- If you only sell through an online selling platform that collects all the state and state-administered local taxes for you, you may be exempt from licensing, collection and filing.
Once you need a licence, our guide to the Colorado sales tax license covers the application, the fee and the renewal cycle.
Filing dates and the retailer's service fee
Most retailers file monthly. If your average or estimated monthly Colorado sales tax is less than $1,100 but more than $50, the guide says you may file quarterly instead. Whatever your frequency, the return and payment are due by the 20th day of the month after the tax period, so a June monthly return is due July 20 and a third quarter return is due October 20. If the 20th falls on a weekend or legal holiday, the guide moves the due date to the next business day.
You may keep a small service fee for collecting the tax. In general it's 4% of the state sales tax due for the period, but the total you can keep for any filing period is limited to $1,000, even with several locations. And you can't keep any state service fee for a period in which your total taxable sales were greater than $1,000,000.
For the official steps in another state, see the Maryland sales tax guide.
Want AI doing the heavy lifting in your marketing?
I build the systems that handle the boring 80 percent, so you get your week back. Done properly, with the human kept in.
Electronic filing and penalties
Colorado is moving every retailer to electronic filing. For filing periods from January 2026, you must file electronically if your annual gross sales in the prior calendar year were $500,000 or more. From January 2027 the threshold drops to $50,000, and all returns reporting sales from January 2028 must be filed electronically. Missing a required e-file carries a penalty of $50 or 5% of the tax due, whichever is greater.
If you don't file or pay on time, or don't account for all the tax due, the penalty is 10% of the unpaid tax plus 0.5% for each month it stays unpaid, up to a total of 18%. Interest is charged on top.
If you're hiring in the state as well, check the Colorado minimum wage rates at the same time as you set up your sales tax account.
Related: the sales page.
Frequently asked questions
What is the Colorado state sales tax rate?
The Colorado Department of Revenue's Sales Tax Guide says state sales tax is imposed at a rate of 2.9%, as of October 2026. Local and home-rule city taxes can apply on top.
Do I charge Colorado sales tax on services?
The guide says sales of services are generally not subject to Colorado sales tax, apart from specific taxable services. Prepared food and drink and rooms and accommodations are taxable.
When do remote sellers have to collect Colorado sales tax?
A retailer with no physical location in Colorado must be licensed and collect once its retail sales into Colorado reach $100,000 in the current or previous calendar year, as the guide sets out.
When are Colorado sales tax returns due?
By the 20th day of the month after the end of the tax period, whether you file monthly, quarterly or annually.
Can Colorado retailers keep part of the tax they collect?
Yes, in general a service fee of 4% of the state sales tax due, capped at $1,000 for each filing period, and none in a period when total taxable sales were greater than $1,000,000.
