2024 Guide to Sales Tax in Denver, Colorado

What is the Sales Tax in Denver?

Denver has a combined sales tax rate of 8.81%. In Colorado, the sales tax rate is composed of multiple components:

• The Colorado state sales tax rate: 2.90%
• A Denver County sales tax rate: 0.00%
• A Denver city sales tax rate: 4.81%
• Special sales tax rates: 1.10%

What is Denver County Sales Tax?

Denver County does not impose an additional sales tax beyond the state and city rates. The sales tax rate you charge in Denver is consistent across the county, simplifying the tax calculation process but requiring attention to city-specific and special district rates.

Tax Rates in Denver, Colorado

Wondering how the sales tax rates are distributed across different parts of Denver? Here’s a breakdown of the sales tax rates for the top 10 zip codes in Denver:

Other Tax Rates for Denver

In addition to the main tax rates, here are some other tax rates that might apply to your business in Denver:

What Items are Taxable in Denver?

In Colorado, not all items are subject to sales tax. For example, certain groceries and medical products may be exempt. To ensure you’re charging the correct tax, consider adding a Tax Information Code (TIC) to each item you sell. A TIC is a unique identifier that categorizes goods or services.

Here are some examples of taxable items in Denver:

What Items are Exempt from Taxes in Denver?

Colorado exempts several items from sales tax to encourage their purchase or because they are deemed essential. To avoid mistakenly charging tax on exempt items, apply a Tax Information Code (TIC) to each of these products.

Here is a list of some tax-exempt items in Denver:

Who Needs to Collect Sales Tax in Denver?

Businesses must collect sales tax in Denver if they have either a physical presence (nexus) or an economic nexus in Colorado.

What is Physical Nexus in Colorado?

Physical nexus in Colorado means that your business has some kind of physical presence in the state. This can include having an office, warehouse, employees, or even a significant amount of inventory within the state.

What is Economic Nexus in Colorado?

If your business doesn’t have a physical presence in Colorado, you can still be required to collect sales tax if you exceed the economic nexus threshold. This is defined as making $100,000 in sales in the state within a year.

How you qualify for economic nexus in Colorado (full details):

• Count all sales into Colorado, including wholesale transactions, toward your $100,000 sales threshold.
• Sales made through a marketplace where the facilitator collects tax on your behalf do not count toward the threshold.
• Once you reach the threshold, you must register for sales tax in Colorado and begin collecting and remitting the appropriate taxes.

How to Get a Sales Tax Permit in Denver?

If your business meets the physical or economic nexus criteria, you’ll need to obtain a sales tax permit in Colorado. This process is simple and free.

Here are the steps:

1. Visit the Colorado Department of Revenue website.
2. Complete the online registration form with details about your business.
3. The system will identify the necessary permits and register you for them.
4. You’re all set!

For more information, refer to the State of Colorado’s Sales Tax website.

How Do You Charge the Right Amount for Sales Tax in Denver?

Ensuring you charge the correct sales tax in Denver can be challenging due to potential rate changes and differing rates across regions. Here’s how to stay compliant:

1. Manually update rates: Keep track of changes by regularly checking the Colorado Department of Revenue’s website. This approach requires updating your ecommerce platform frequently to ensure accurate tax rates.
2. Use sales tax software: Automate the process with sales tax compliance software like TaxCloud. These tools update rates automatically across all jurisdictions, saving you time and reducing errors.

How Do You File and Remit Sales Tax in Denver?

Do you need to file sales tax returns specifically for the city of Denver or Denver County? No, you don’t. If you have sales tax nexus in Colorado, you collect sales taxes from across the state and file a single state-wide return. The Colorado Department of Revenue will then distribute the funds to the appropriate city or county.

If filing Colorado sales taxes is time-consuming for you, TaxCloud can help. Our platform automates the entire sales tax management process, from tracking nexus and registering for sales tax to filing returns. With TaxCloud, you can focus on growing your business while we handle your sales tax compliance.

Learn how TaxCloud can simplify sales tax for your business.