Colorado's statewide sales tax is 4.63 percent
Colorado charges a statewide sales tax of 4.63 percent on most retail purchases. This is the base rate that applies everywhere in the state. However, your actual sales tax bill is usually higher because counties and cities add their own local taxes on top of the state rate.
The total tax you pay depends on where you make the purchase. A transaction in Denver will have a different total rate than one in Boulder or Colorado Springs, even though the state portion stays the same. When you see a price tag, the 4.63 percent is not the final number you will pay at checkout.
Key Takeaways
- Colorado's state sales tax rate is 4.63 percent, but local taxes add 2 to 8 percent more depending on your county and city.
- Food purchased at grocery stores is not taxed, but prepared food, alcohol, and restaurant meals are fully taxable.
- Clothing and shoes under $110 are exempt from sales tax, but items over that threshold are taxed at the full rate.
- Your total sales tax rate varies by location, so the same item costs different amounts in different Colorado cities.
How local taxes stack on top of the state rate
Colorado allows counties and cities to add their own sales tax on top of the 4.63 percent state rate. These local rates vary widely. Some counties add as little as 2 percent; others add 8 percent or more. The combination of state and local taxes is what you actually pay.
For example, Denver's combined rate is 10.25 percent (4.63 state plus 5.62 local). Boulder's combined rate is 8.81 percent. Fort Collins is 8.3 percent. If you buy the same item in three different cities, you will pay three different total amounts in tax. There is no single "Colorado sales tax" that applies everywhere — the rate depends entirely on your location at the time of purchase.
You can find your specific local rate by entering your address into the Colorado Department of Revenue's sales tax lookup tool, or by asking a retailer in your area. The rate can even vary between neighborhoods in the same city if special districts have added their own taxes.
What is and is not taxed in Colorado
Colorado taxes most goods and services, but several categories are exempt. Unprepared food — groceries you cook at home — is not taxed. This includes raw meat, vegetables, bread, milk, and canned goods. Once food is prepared for immediate consumption, the exemption ends. A sandwich from a deli counter is taxed. A rotisserie chicken is taxed. Groceries you take home and cook yourself are not.
Clothing and shoes under $110 per item are exempt from sales tax. A $100 pair of shoes is not taxed. A $150 pair is taxed on the full amount. This threshold applies per item, not per transaction, so you could buy five $100 shirts tax-free, but a $120 jacket would be taxed.
Prescription medications are not taxed. Over-the-counter drugs and vitamins are taxed. Alcohol and tobacco products are taxed at the regular sales tax rate (plus additional excise taxes that are separate from sales tax). Gasoline is taxed. Utilities are taxed. Haircuts and personal services are taxed. Digital goods like e-books and streaming subscriptions are taxed.
When you do not pay sales tax
Certain transactions are exempt from sales tax even though the items themselves are normally taxable. If you hold a resale certificate — a document showing you are a business buying goods to resell — you do not pay sales tax on those purchases. The tax is collected later when the end customer buys the item.
Sales to the federal government, state government, and some nonprofit organizations are exempt. If you are buying on behalf of a government agency or a may have access to nonprofit, you may not owe sales tax, but you will need documentation to prove your status at the time of purchase.
Items shipped out of state are generally not subject to Colorado sales tax. If you order something online and it is shipped to an address outside Colorado, Colorado sales tax does not apply (though the destination state's tax may). This rule has exceptions for certain sellers and situations, so the actual tax depends on the retailer's policies and where they are located.
Sales tax on services and digital purchases
Colorado taxes many services that other states do not. Repair services — fixing a car, repairing a computer, tailoring clothes — are taxed. Cleaning services are taxed. Landscaping is taxed. Labor charges are taxed. If you pay someone to perform work, that labor is subject to sales tax in most cases.
Digital products are taxed as of 2024. E-books, audiobooks, streaming music, streaming video, and digital software are all subject to Colorado sales tax. This applies whether you buy them from a Colorado seller or from an out-of-state company. The tax is calculated on the purchase price and collected by the seller.
How sales tax is collected and reported
Retailers collect sales tax at the point of sale and remit it to the Colorado Department of Revenue. As a customer, you do not file sales tax yourself — the store handles the collection and payment. The tax appears on your receipt as a separate line item.
Businesses that sell taxable goods or services must register with the Colorado Department of Revenue and obtain a sales tax license. They collect the tax from customers, hold it, and send it to the state on a schedule determined by their sales volume. Most businesses file monthly; very large retailers may file more frequently.
If you are a business owner, you are responsible for understanding which of your products and services are taxable and charging the correct rate for your location. Mistakes can result in penalties and interest, so many businesses use point-of-sale systems that calculate the tax automatically based on the item type and location.
Frequently Asked Questions
Is Colorado's sales tax higher or lower than other states?
Colorado's state rate of 4.63 percent is moderate compared to other states. However, when you add local taxes, Colorado's combined rates (typically 8 to 10 percent) are in the middle range nationally. Some states have no sales tax; others have combined rates above 10 percent.
Do I pay sales tax on online purchases from out-of-state sellers?
Most large online retailers now collect Colorado sales tax on purchases shipped to Colorado addresses, even if the seller is based elsewhere. Smaller sellers may not. If tax was not collected at checkout, you may owe it when you file your Colorado income tax return, though enforcement is limited.
Can I get a refund of sales tax I already paid?
No. Sales tax is final once the transaction is complete. If you return an item, the retailer refunds the purchase price including the tax. You do not file for a separate sales tax refund with the state.
Why does the same item cost different amounts in different Colorado cities?
Each city and county sets its own local sales tax rate on top of the state rate. Denver's combined rate is different from Boulder's, which is different from Colorado Springs. The state portion (4.63 percent) is the same everywhere, but the local portion varies by location.
Are there any upcoming changes to Colorado's sales tax rate?
The state rate of 4.63 percent is set by state law. Local rates can change if a city or county votes to adjust them, but this requires a local decision and ballot measure in most cases. Check your local government website or the Colorado Department of Revenue for any proposed changes in your area.