As an e-commerce seller, you will need to collect sales tax in Colorado if you have:
(1) $100,000 in retail sales during the current and previous calendar year (economic nexus), or
(2) Physical presence in Colorado (physical nexus).
The Colorado Department of Revenue collects sales tax for the state and the “statutory” cities. The tax bases of those cities are congruent with the state base. Colorado also has several “home rule” cities including Denver, Colorado Springs, and dozens of other cities. Those cities generally administer their own taxes. In an attempt to simplify compliance with those taxes, Colorado has formed the Sales & Use Tax System (SUTS) which allows a single point of registration and filing for home rule cities that choose to join the system. More information on SUTS can be found at Sales & Use Tax System (SUTS) | Department of Revenue – Taxation.
Below, we will highlight some of the basic provisions of Colorado sales tax law.
What is the tax rate range for Colorado?
State: Colorado’s general sales tax rate is 2.9%.
Local: Colorado localities impose their own sales tax at rates ranging from 0% to 8.3%.
Colorado Location Codes & Tax Rates
Do you have physical or economic nexus in Colorado?
Physical nexus. Certain business activities create physical nexus in Colorado. If you have physical nexus, you are required to collect and remit sales tax on all taxable sales that are shipped to Colorado. Examples of business activities that can create physical nexus in Colorado include:
An office, distributing house, sales room or house, warehouse, or other place of business
Independent contractors or other representatives in Colorado soliciting business
Colorado Department of Revenue - Code of Regulations
Economic nexus. Colorado recognizes economic nexus for any vendor with $100,000 or more retail sales in the state during the current or previous calendar year. Once you have economic nexus established, you will be obligated to collect sales tax from buyers in the state.
- All retail sales of tangible personal property, commodities, and services are included.
- You do not need to include sales you make through a marketplace facilitator.
- If you exceed the threshold in the current year, you must register and begin collecting tax by the first day of the first month that begins at least 90 days after you pass the threshold. For example, if you pass the threshold on June 15, you register and begin collecting by October 1
- If you exceed the threshold in the prior year, you must begin collecting on January 1. For example, if you exceed the threshold on November 15, 2022, you must register and begin collecting by January 1, 2023.
- Colorado Department of Revenue's Out-of-State Business Details
What are examples of sales of taxable items?
- Tangible personal property, unless specifically exempted
- Prepared food and food for home consumption
- Digital goods
What are examples of sales of nontaxable/exempt items?
- Some medical related items
- Medical devices
- Beetle Wood products
- Software as a service (SaaS) is not taxable in Colorado because it is not delivered through a tangible method.
Colorado Sales Tax Exemptions & Deductions
Are there any sales tax holidays?
Currently, Colorado does not recognize any sales tax holidays.
Is Colorado a member of the SST (Streamlined Sales Tax)?
Currently, Colorado is not a full or associate member of the Streamlined Sales Tax Governing Board (SSTGB).
How to get a sales tax permit / links to register in this state?
You can register online at: My Biz Colorado
For more information on Colorado rates, see: Colorado Location Codes and Tax Rates