The 2016 Colorado State Sales Tax
What is the 2016 Colorado Sales Tax Rate?
The Colorado state sales tax rate is 2.9%, and the average CO sales tax after local surtaxes is 7.44%.
- Groceries and prescription drugs are exempt from the Colorado sales tax
- Counties and cities can charge an additional local sales tax of up to 7.1%, for a maximum possible combined sales tax of 10%
- Colorado has 560 special sales tax jurisdictions with local sales taxes in addition to the state sales tax
- Colorado has a lower state sales tax than 71.2% of states
Colorado allows cities and counties to collect additional local sales taxes on top of the Colorado sales tax - Denver, for example, has a sales tax of 3.62% on tangible items and Falcon, Colorado is subject to an additional 1% county sales tax.
Most of Denver is located in a special tax district which collects an additional 1.2% sales tax (broken up into the Regional Transportation District at 1%, Scientific and Cultural Facilities District at 0.1%, and the Metropolitan Football Stadium District tax at 0.1%). Collectively, these additional taxes are known as the RTD/CD/FD sales tax. Special sales taxes are also collected on rental cars, food, and beverages.
If you are a Colorado business owner, you can learn more about how to collect and file your Colorado sales tax return at the 2016 Colorado Sales Tax Handbook .
Colorado Sales Tax Exemptions
Colorado doesn't collect sales tax on purchases of most prescription drugs and groceries. In most states, necessities such as groceries, clothes, and drugs are exempted from the sales tax or charged at a lower sales tax rate.
Some items may not be eligible for these reduced sales tax rates, such as expensive clothing, unhealthy food or drinks like soda, and certain non-essential pharmaceuticals. Colorado does not treat candy or soda as groceries, which means they are not subject to reduced grocery sales tax rates. Other items including gasoline, alcohol, and cigarettes are subject to various Colorado excise taxes in addition to the sales tax.
In some states, items like alcohol and prepared food (including restaurant meals and some premade supermarket items) are charged at a higher sales tax rate. The CO sales tax applicable to the sale of cars, boats, and real estate sales may also vary by jurisdiction. Colorado's sales tax rates for commonly exempted items are as follows:
$100 Restaurant Dinner
$100 of groceries
$100 in clothes
$100 of consumer products
$2.90 sales tax
$0.00 sales tax
$2.90 sales tax
$2.90 sales tax
Colorado Sales Tax Exemption Certificate
Unlike a Value Added Tax (VAT), the Colorado sales tax only applies to end consumers of the product. Individuals and companies who are purchasing goods for resale, improvement, or as raw materials can use a Colorado Sales Tax Exemption Form to buy these goods tax-free.
Companies or individuals who wish to make a qualifying purchase tax-free must have a Colorado state sales tax exemption certificate, which can be obtained from the Colorado Department of Revenue . On making an exempt purchase, Exemption Certificate holders may submit a completed Colorado Sales Tax Exemption Form to the vendor instead of paying sales tax.
Sales tax exemption forms (as well as business sales tax id applications, sales tax returns, and the full Colorado sales tax code) can be downloaded from the Colorado Department of Revenue here .
Colorado Sales Tax Calculator
Whenever you make a purchase at a licensed Colorado retailer, your sales tax will be automatically calculated and added to your bill. To lookup the sales tax due on any purchase, use our Colorado sales tax calculator.
Colorado Use Tax
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If you buy goods and are not charged the Colorado Sales Tax by the retailer, such as with online and out-of-state purchases, you are supposed to pay the 2.9% sales tax (less any foreign sales tax paid) for these items yourself as the Colorado Use Tax.
Your are expected to voluntarily list your liable purchases on a Colorado Use Tax Return, which should be attached with payment to your Colorado Income Tax Return. Historically, compliance rates with with the Colorado Use Tax have been low.
Colorado Local Sales Taxes
Colorado allows counties and cities to collect a maximum local sales tax of 4.20% on all non-exempt purchases within their jurisdiction. The local sales tax is collected in addition to the Colorado sales tax of 2.9%, so the actual sales tax you pay on purchases in Colorado may vary between 2.9% and 7.100% depending on which county or city the sale is made in.
You can find local sales tax rates on our list of Colorado local sales taxes by county, city, and zip code, or you can lookup your local sales tax rates with our free Colorado sales tax lookup tool. If you need to download Colorado local sales tax rates, visit the Colorado sales tax database download page.
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